CREDIT FACILITY AGREEMENT DRILLSHIP SKOPELOS OWNERS INC. as Owner DEUTSCHE BANK AG, LONDON BRANCH as Bookrunner and Joint Mandated Lead Arranger DEXIA CRÉDIT LOCAL, NEW YORK BRANCH as Joint Mandated Lead Arranger VARIOUS FINANCIAL INSTITUTIONS as...

Exhibit 10.6

CREDIT FACILITY AGREEMENT

18 JULY 2008

DRILLSHIP SKOPELOS OWNERS INC. as Owner     DEUTSCHE BANK AG, LONDON BRANCH   as Bookrunner and Joint Mandated Lead Arranger     DEXIA CRÉDIT LOCAL, NEW YORK BRANCH   as Joint Mandated Lead Arranger     VARIOUS FINANCIAL INSTITUTIONS as Lenders   DEUTSCHE BANK AG, LONDON BRANCH   and   DEXIA CRÉDIT LOCAL, NEW YORK BRANCH as Swap Banks   DEUTSCHE BANK LUXEMBOURG S.A. as Facility Agent   and   DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHÄFT as Security Trustee

 

 

 

▇▇▇▇▇ & ▇▇▇▇▇   ▇▇▇▇▇ & ▇▇▇▇▇ LLP   15437-06552 BK:9430134.1

 

 

 

 

 

 

 

1.

Original Lenders

111

2.

Conditions Precedent

112

Part 1

Incidental Costs Loan

112

Part 2

Instalment Loan 1

115

Part 3

Instalment Loan 2

116

Part 4

Instalment Loan 3

117

Part 5

Delivery Loan

118

Part 6

Incidental Vessel Costs Loan

121

3.

Form of Request

122

4.

Form of Transfer Certificate

124

5.

Loan Repayment Schedule

126

6.

Calculation Certificate

127

7.

Incidental Vessel Costs

128

8.

Calculation of the Mandatory Cost

129

 

 

1.

Form of Delivery General Assignment

131

2.

Form of Mortgage

132

3.

Form of Charter Assignment

133

4.

Form of Swap Agreement Assignment

134

5.

Form of DPP

135

6.

Form of General Assignment

136

7.

Form of Share Charge

137

8.

Form of Accounts Charge Agreement

138

9.

Form of Equity Account Charge

139

10.

Form of Management Agreement Assignment

140

11.

Form of Floating Charge

141

12.

Approved Budget

142

 

Signatories	143

 

 

 

 

(1)	DRILLSHIP SKOPELOS OWNERS INC. a corporation incorporated in the ▇▇▇▇▇▇▇▇ Islands with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ as borrower (the Owner);

 

(2)	DEUTSCHE BANK AG, LONDON BRANCH as bookrunner and joint mandated lead arranger and bookrunner (in this capacity the Bookrunner and Joint Mandated Lead Arranger);

 

(3)	DEXIA CRÉDIT LOCAL, NEW YORK BRANCH as joint mandated lead arranger (in this capacity the Joint Mandated Lead Arranger);

 

(4)	THE FINANCIAL INSTITUTIONS listed in  Schedule 1 (Original Lenders) as original lenders (the Original Lenders);

 

(5)	DEUTSCHE BANK AG, LONDON BRANCH as swap bank (in this capacity a Swap Bank);

 

(6)	DEXIA CRÉDIT LOCAL, NEW YORK BRANCH as swap bank (in this capacity a Swap Bank);

 

(7)	DEUTSCHE BANK LUXEMBOURG S.A. as facility agent (in this capacity the Facility Agent); and

 

(8)	DEUTSCHE BANK AG FILIALE DEUTSCHLANDGESCHÄFT as security trustee (in this capacity the Security Trustee).

 

 

1.	INTERPRETATION

 

1.1	Definitions

 

 

 

 

 

 

 

 

 

 

 

(a)

during the Pre-Completion Period, the Contract Price, the Incidental Costs, any other costs approved by the Lenders and any other costs and expenses incurred or to be incurred in relation to the construction of the Vessel and containing sufficient information and details to enable the Equity Collateral to be calculated; and

 

(b)

during the Post-Completion Period:

 

(i)

the anticipated Earnings;

 

(ii)

the anticipated Operating Expenses; and

 

(iii)

the anticipated CAPEX Expenses,

 

 

 

 

(a)

during the Pre-Completion Period, the Pre-Completion Margin; or

 

(b)

during the Post-Completion Period, the Post-Completion Margin,

 

 

 

 

 

 

(a)

for the Incidental Costs Loan, the Incidental Costs Loan Availability Period;

 

(b)

for the Instalment Loan 1, the Instalment Loan 1 Availability Period;

 

(c)

for the Instalment Loan 2, the Instalment Loan 2 Availability Period;

 

(d)

for the Instalment Loan 3, the Instalment Loan 3 Availability Period;

 

(e)

for the Delivery Loan, the period from and including the Delivery Date to and including the earlier of:

 

(i)

the Final Completion Date; and

 

(ii)

the Longstop Date;

 

(f)

for the Undrawn Amount Loan, the period from and including the date falling ten (10) Business Days after the Final Completion Date to and including the date falling thirty (30) Business Days after the Final Completion Date; and

 

(g)

for an Incidental Vessel Costs Loan, the period from and including the date of this Agreement to and including the Final Completion Date.

 

 

(a)

the aggregate of all costs payable or reasonably expected to be payable by the Owner to the Builder under the Shipbuilding Contract; less

 

(b)

the aggregate of the Expected Contract Price and any Balancing Equity Contributions already paid by the Owner into the Proceeds Account in accordance with Clause 12.2 (Proceeds Account).

 

 

 

 

 

 

 

 

(a)

the period from (and including) the Final Completion Date of the Vessel to (and excluding) the first Repayment Date; and

 

(b)

each subsequent period from (and including) a Repayment Date to (and excluding) the next Repayment Date or, as the case may be, the Final Maturity Date.

 

 

 

 

(a)

its rights under that Drilling Charter; and

 

(b)

its rights under any applicable Charterer Parent Guarantee.

 

 

(a)

any material breach by the Charterer of the terms of a Drilling Charter or, as applicable, by the Charterer Parent of the terms of a Charter Parent Guarantee which material breach is not cured by the date which falls 20 days after the date on which the Facility Agent gives written notice to the Owner of the breach and such breach is not remedied, or otherwise compensated for, in each case, to the satisfaction of the Majority Lenders within such period or if the matter has been referred to arbitration within that 20 day period, upon the earlier of a settlement being reached in respect of such arbitration and 15 days after the receipt of the final arbitration award; or

 

(b)

the termination of a Drilling Charter by the Owner or the Charterer.

 

 

 

 

 

 

 

 

 

(a)

for an Original Lender, the amount set opposite its name in Schedule 1 (Original Lenders) under the heading “Commitments” and the amount of any other Commitment it acquires; and

 

(b)

for any other Lender, the amount of any other Commitment it acquires,

 

 

 

 

(a)

the Expected Contract Price; and

 

(b)

the total amount actually paid to the Builder by or on behalf of the Owner under the Shipbuilding Contract, as adjusted in accordance with the provisions of the Shipbuilding Contract.

 

 

(a)

in the case of an actual total loss, on the actual date and at the time the Vessel was lost or, if such date is not known, on the date on which the Vessel was last reported;

 

(b)

in the case of a constructive total loss, upon the date and at the time notice of abandonment is given to the Insurers for the time being (provided a claim for total loss is admitted by such Insurers) or, if such Insurers do not forthwith admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by the Insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

 

(c)

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

 

(d)

in the case of requisition for title or other compulsory acquisition, on the date upon which the relevant requisition for title or other compulsory acquisition occurs; or

 

(e)

in the case of 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, government authority or any other person or entity which deprives the Owner of the Vessel or, as the case may be, the Charterer of the use of the Vessel for more than 60 days, upon the expiry of the period of 60 days after the date upon which the relevant capture, seizure, arrest, detention or confiscation occurred.

 

 

 

(a)

Financing Costs accruing; and

 

(b)

Financing Principal payable (other than as a result of a prepayment obligation),

 

 

 

 

 

 

(a)

an Event of Default; or

 

(b)

an event or circumstance which would be (with the expiry of a grace period, the giving of notice or the making of any determination under the Finance Documents or any combination of them) an Event of Default.

 

 

 

 

 

 

 

 

 

 

 

(a)

freights, passage and hire moneys (howsoever earned), including, for the avoidance of doubt, charterhire and charterhire performance bonuses payable under any Drilling Charter;

 

(b)

Liquidated Damages Payments;

 

(c)

remuneration for salvage and towage services;

 

(d)

demurrage and detention moneys;

 

(e)

all moneys and claims in respect of the requisition for hire of the Vessel;

 

(f)

payments received in respect of off-hire insurance; and

 

(g)

damages for breach or payments for termination of a Drilling Charter or any other contract for the employment of the Vessel.

 

 

 

 

 

 

 

(a)

any land including, without limitation, surface land and sub-surface strata, sea bed or river bed under any water (as referred to below) and any natural or man-made structures;

 

(b)

water including, without limitation, coastal and inland waters, surface waters, ground waters and water in drains and sewers;

 

(c)

air including, without limitation, air within buildings and other natural or man-made structures above or below ground; and

 

(d)

flora, fauna and ecological systems.

 

 

 

 

 

(a)

pollution or contamination of the Environment, including any remediation of any pollution or contamination on the restoration or repair of any damage to the Environment;

 

(b)

the protection of the Environment and human health or safety or any living organisms which inhabit the Environment or any ecological system;

 

(c)

the generation, manufacture, processing, distribution, use (including abuse), treatment, storage, deposit, disposal, transport or handling of Hazardous Materials;

 

(d)

the Release or other form of transmission into the Environment of noise, vibration, dust, fumes, gas, odours, smoke, steam, effluvia, heat, light, radiation (of any kind), infection, electricity or any Hazardous Material and any matter or thing capable of constituting a nuisance or an actionable tort or breach of statutory duty of any kind in respect of such matters; and

 

(e)

the provision and maintenance of bonds, guarantees or other forms of financial assurance required by any Governmental Entity in connection with activities that could have an adverse effect on the Environment.

 

 

 

 

 

 

 

 

(a)

the proportion of claims for general average, salvage and salvage charges which are not recoverable as a result of the value at which the Vessel is assessed for the purpose of such claims exceeding her hull and machinery insured value; and

 

(b)

collision liabilities not recoverable in full under the hull and machinery insurance by reason of those liabilities exceeding such proportion of the insured value of the Vessel as is covered by the hull and machinery insurance.

 

 

 

 

 

 

(a)

the date of actual delivery of the Vessel by the Owner to the Charterer under the Drilling Charter and unconditional acceptance by the Charterer under the terms thereof; and

 

(b)

the date of confirmation to the Facility Agent from the Technical Adviser that the Vessel’s design and performance fulfils the technical specifications required under the Shipbuilding Contract and the Drilling Charter.

 

 

 

 

 

(b)

each Security Document;

 

(c)

the DPP;

 

(d)

the GIEK Security Trustee Letter;

 

(e)

each Swap Agreement;

 

(f)

each Fee Letter;

 

(g)

each Transfer Certificate;

 

(h)

the Account Bank Mandate; and

 

(i)

any other document designated as such by the Facility Agent and the Owner.

 

 

 

(a)

moneys borrowed;

 

(b)

any amount raised by acceptance under any acceptance credit agreement (including any dematerialised equivalent);

 

(c)

any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or other similar instrument;

 

(d)

any redeemable preference share;

 

(e)

the amount of any liability in respect of a lease or hire purchase contract which would, in accordance with IFRS, be treated as a finance or capital lease;

 

(f)

receivables sold or discounted (otherwise than on a non-recourse basis);

 

(g)

the acquisition cost of any asset or service to the extent payable after its acquisition or possession by the party liable where the advance or deferred payment is arranged primarily as a method of raising finance or of financing the acquisition of that asset or service;

 

(h)

any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, except for non-payment of an amount, the then ▇▇▇▇ to market value of the derivative transaction will be used to calculate its amount);

 

(i)

any amount raised under any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing other than trade credits incurred in the ordinary course of business with credit terms of no longer than 90 days;

 

(j)

any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or

 

(k)

the amount of any liability in respect of any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in the above paragraphs.

 

 

(a)

interest, fees and any other costs or expenses payable under the Finance Documents;

 

(b)

any Swap Costs; and

 

(c)

any Tax in respect of any of the above.

 

 

 

 

 

 

 

 

 

 

 

 

(a)

any natural government, political subdivision thereof, or local jurisdiction therein; and

 

(b)

any instrumentality, board, commission, court or agency thereof, however constituted.

 

Gross Revenue means, for any Calculation Period, the aggregate Earnings received in such period in respect of the Vessel.

 

 

 

 

 

 

 

 

 

(a)

each of the fees referred to in Clause 22 (Fees) and payable under the terms of the Fee Letters during the Pre-Completion Period;

 

(b)

any and all costs and expenses which are payable by the Owner to the Secured Parties pursuant to Clause 24.1 (Initial costs) within a period of three (3) months from the date of this Agreement; and

 

(c)

interest in the Pre-Completion Period calculated and payable in accordance with Clause 7.1(a).

 

 

(a)

reasonable and properly incurred costs paid by the Owner in connection with the Vessel in excess of the Contract Price, in respect of those items detailed in Schedule 7 (Incidental Vessel Costs), for which supporting invoices or receipts have been provided to the Security Trustee;

 

(b)

the Initial Debt Service Reserve Contribution; and

 

(c)

any interest accrued and payable to the Eksportfinans Lenders in respect of the Eksportfinans Loans drawn under this Facility.

 

 

 

(a)

an additional or increased cost;

 

(b)

a reduction in the rate of return from a Facility or on a Finance Party’s (or its Affiliate’s) overall capital; or

 

(c)

a reduction of an amount due and payable under any Finance Document,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

an Original Lender; or

 

 

 

 

 

(a)

the applicable Screen Rate; or

 

(b)

if no Screen Rate is available for the relevant currency or for any Term of that Loan or overdue amount, the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Security Trustee at its request, quoted by the Reference Banks to leading banks in the London interbank market,

 

 

 

 

 

 

 

 

 

 

(a)

whose share in the outstanding Loans and whose undrawn Commitments then aggregate not less than 80% of the aggregate of all the outstanding Loans and the undrawn Commitments of all the Lenders and who include at least (but without limitation) one (1) Commercial Lender whose share in the outstanding Loans and whose undrawn Commitments in connection with the Loans then aggregate more than 1 % of the aggregate of all the outstanding Loans and the undrawn Commitments of the Lenders; or

 

(b)

if there is no Loan then outstanding, whose undrawn Commitments then aggregate not less than 80% of the Total Commitments and who include at least (but without limitation) one (1) Commercial Lender whose undrawn Commitments in connection with the Loans then aggregate more than 1% of the aggregate of all the undrawn Commitments of the Lenders; or

 

 

 

 

 

 

 

(a)

the net present value of the expected Net Cash Flow to be derived from each existing Drilling Charter as calculated by the Facility Agent in its sole discretion on the basis of a discount rate of 6 per cent. per annum and information then available to it and on the basis that:

 

(i)

during the first year of each Drilling Charter the Operating Expenses shall be US$150,000 per day and utilization rate of 95 per cent. for the Vessel; and

 

(ii)

thereafter the Operating Expenses and the utilization rate of the Vessel shall be the Operating Expenses actually incurred and utilization rate actually achieved during the previous twelve month period of the relevant Drilling Charter; and

 

(b)

the forecasted fair market value of the Vessel derived from a valuation of the Vessel obtained from one Approved Broker with or without physical inspection of the Vessel (as the Security Trustee may reasonably require) on the basis of a sale for prompt delivery for cash at arm’s length on normal commercial terms as between a willing buyer and a willing seller, on an “as is, where is” basis, as at the latest expiry date of the then existing Drilling Charters.

 

 

(a)

the ability of the Owner or the Sponsor to perform its obligations under the Transaction Documents;

 

(b)

the validity or enforceability of, or the effectiveness or ranking of any Security Interest granted or purported to be granted pursuant to any Finance Document; or

 

(c)

any right or remedy of a Finance Party in respect of a Finance Document.

 

 

 

 

 

 

 

 

(a)

Gross Revenues received; minus

 

(b)

Operating Expenses and CAPEX Expenses payable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Security Interests created by the Security Documents;

 

(b)

liens for unpaid crew’s wages including wages of the master and stevedores employed by the Vessel, outstanding in the ordinary course of business for not more than one month after the due date for payment;

 

(c)

any Security Interest constituted by or securing any netting or set-off arrangement entered into in the normal course of the Owner’s banking arrangements in respect of any bank accounts opened by it and which have not been secured in favour of the Finance Parties pursuant to the Security Documents;

 

(d)

liens for salvage;

 

(e)

liens for classification or scheduled dry-docking or for necessary repairs to the Vessel whose aggregate cost does not exceed US$10,000,000 at any one time in respect of the Vessel;

 

(f)

liens for collision;

 

(g)

liens for master’s disbursements incurred in the ordinary course of business;

 

(h)

statutory and common law liens of carriers, warehousemen, mechanics, suppliers, materials men, repairers or other similar liens, including maritime liens, in each case arising in the ordinary course of business, due and outstanding for not more than one month whose aggregate value does not exceed US$10,000,000; and

 

(i)

any lien created or permitted to subsist with the prior written consent of the Security Trustee (acting on instructions of the Majority Lenders),

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

the Owner and the Sponsor; and

 

(b)

from time to time, any of the Builder, the Manager, any Charterer Parent and/or Charterer (but only to the extent, in any such case, that the same has or may in the future have, outstanding liabilities owing to the Owner, the Sponsor or any Finance Party under any Finance Document or Related Contract to which it is a party).

 

 

(a)

for the purpose of determining a Lender’s share in a utilisation of a Facility, the proportion which its Commitment under that Facility bears to all the Commitments under that Facility; and

 

(b)

for any other purpose on a particular date:

 

(i)

the proportion which a Lender’s share of the Loans (if any) bears to all the Loans;

 

(ii)

if there is no Loan outstanding on that date, the proportion which its Commitment bears to the Total Commitments on that date; or

 

(iii)

if the Total Commitments have been cancelled otherwise, the proportion which its Commitments bore to the Total Commitments immediately before being cancelled.

 

 

 

 

 

 

 

 

(a)

the Refund Guarantee;

 

(b)

the Shipbuilding Contract;

 

(c)

the Other Shipbuilding Contract;

 

(d)

the Obligatory Insurances;

 

(e)

each Drilling Charter;

 

(f)

any Charterer Parent Guarantee;

 

(g)

the Management Agreement; and

 

(h)

the Sister Shipbuilding Contract.

 

 

Repeating Representations means at any time the representations and warranties which are then made or deemed to be repeated under Clause 14.30 (Times for making representations).

 

 

 

Required Insurance Amount means, on an agreed value basis, the higher of (a) 125 % of the aggregate of the outstanding Loans and (b) the Insurance Market Value of the Vessel.

 

 

 

 

 

            C

 

 

A

is the aggregate of B and C;

 

B

is the amount of all of the Loans (as defined in the Sister Loan Agreement) outstanding under the Sister Loan Agreement; and

 

C

is the amount of all of the Loans outstanding under this Agreement.

 

 

 

 

(a)

for the Instalment payable on the Instalment Loan 1 Utilisation Date, the lower of 15.45% of the Expected Contract Price and US$106,789,466;

 

(b)

for the Instalment payable on the Instalment Loan 2 Utilisation Date, the lower of 15.05% of the Expected Contract Price and US$104,040,750;

 

(c)

for the Instalment payable on the Instalment Loan 3 Utilisation Date, the lower of 15.05% of the Expected Contract Price and US$104,040,750;

 

(d)

for the Instalment payable on the Delivery Loan Utilisation Date, the lower of 40.125% of the Expected Contract Price and US$277,442,000.

 

 

 

 

 

(a)

the Mortgage;

 

(b)

the General Assignment;

 

(c)

the Share Charge;

 

(d)

the Sponsor Construction and Post-Delivery Guarantee;

 

(e)

the Swap Agreement Assignment;

 

(f)

the Delivery General Assignment;

 

(g)

the Accounts Charge Agreement;

 

(h)

the Equity Account Charge;

 

(i)

the Charter Assignment;

 

(j)

the Charterer Direct Agreement;

 

(k)

the Management Agreement Assignment;

 

(l)

the Floating Charge; and

 

(m)

any other document designated as such in writing by the Owner and the Facility Agent.

 

 

 

(a)

each Security Agreement; and

 

(b)

any other document evidencing or creating security over any asset of the Owner to secure any obligation of the Owner to the Finance Parties or any of them under the Finance Documents.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

the Operational Software;

 

(b)

the identity of the then current suppliers of the Operational Software;

 

(c)

all upgrades carried out in respect of the Operational Software or changes to the Software Licences; and

 

(d)

all Software Licences.

 

Sponsor means Dryships Inc., a corporation incorporated in the ▇▇▇▇▇▇▇▇ Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.

 

 

 

(a)

the Initial Equity Contribution, each Equity Contribution (including any bonus payments to the Builder if the Vessel is delivered early), the Equity Collateral, amounts to be paid into the Debt Service Reserve Account and each Balancing Equity Contribution at the relevant time; and

 

(b)

during the Post-Completion Period, up to U.S.$225,000,000.

 

 

(a)

a subsidiary within the meaning of section 736 of the Companies ▇▇▇ ▇▇▇▇; and

 

(b)

unless the context otherwise requires, a subsidiary undertaking within the meaning of section 258 of the Companies ▇▇▇ ▇▇▇▇.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

actual, constructive, compromised, agreed or arranged total loss of the Vessel;

 

(b)

requisition for title or other compulsory acquisition of the Vessel otherwise than by requisition for hire; and

 

(c)

capture, seizure, arrest, detention or confiscation of the Vessel by any Government Entity or by persons acting or purporting to act on behalf of any government or any other person or entity which deprives the Owner of the Vessel or, as the case may be, the Charterer of the use of the Vessel for more than 60 days after that occurrence.

 

 

 

 

 

 

 

 

 

 

1.2	Construction

 

(a)

In this Agreement, unless the contrary intention appears, a reference to:

 

(i)

an amendment includes a supplement, novation, restatement or re-enactment and amended will be construed accordingly;

 

(ii)

assets includes present and future properties, revenues and rights of every description;

 

(iii)

an authorisation includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration or notarisation;

 

(iv)

disposal means a sale, transfer, grant, lease or other disposal, whether voluntary or involuntary, and dispose will be construed accordingly;

 

(v)

indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money;

 

(vi)

a person includes any individual, company, corporation, unincorporated association or body (including a partnership, trust, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality and shall include its successors, permitted assignees and permitted transferees;

 

(vii)

a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a type with which any person to which it applies is accustomed to comply) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

 

(viii)

know your customer requirements are the identification checks that a Finance Party requests in order to meet its obligations under any Applicable Law to identify a person who is (or is to become) its customer;

 

(ix)

a currency is a reference to the lawful currency for the time being of the relevant country;

 

(x)

a Default being outstanding or continuing means that it has not been cured, remedied or waived;

 

(xi)

a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation;

 

(xii)

a Clause, a Subclause, an Appendix or a Schedule is a reference to a clause, subclause, appendix of, or a schedule to, this Agreement;

 

(xiii)

a Party or any other person includes its successors in title, permitted assigns and permitted transferees;

 

(xiv)

a Finance Document, Sister Finance Document, other document or security includes (without prejudice to any prohibition on amendments) any amendment to that Finance Document, Sister Finance Document or other document or security, including any change in the purpose of, any extension of or any increase in the amount of a facility or any additional facility;

 

(xv)

a time of day is a reference to London time; and

 

(xvi)

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

 

(b)

Unless the contrary intention appears, a reference to a month or months is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month or the calendar month in which it is to end, except that:

 

(i)

if the numerically corresponding day is not a Business Day, the period will end on the next Business Day in that month (if there is one) or the preceding Business Day (if there is not);

 

(ii)

if there is no numerically corresponding day in that month, that period will end on the last Business Day in that month; and

 

(iii)

notwithstanding subparagraph (i) above, a period which commences on the last Business Day of a month will end on the last Business Day in the next month or the calendar month in which it is to end, as appropriate.

 

(c)

Unless expressly provided to the contrary in a Finance Document, a person (other than any Secured Party or Affiliate of such Secured Party) who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ and notwithstanding any term of any Finance Document, no consent of any third party is required for any amendment (including any release or compromise of any liability) or termination of that Finance Document.

 

(d)

Unless the contrary intention appears or unless the context otherwise permits:

 

(i)

a reference to a Party will not include that Party if it has ceased to be a party under this Agreement;

 

(ii)

a word or expression used in any other Finance Document or in any notice given in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement; and

 

(iii)

any obligation of the Owner under the Finance Documents which is not a payment obligation remains in force in accordance with its terms for so long as any payment obligation of the Owner is or may be outstanding under the Finance Documents.

 

(e)

If, following the occurrence of an Event of Default which is continuing, any Finance Party acting reasonably considers that an amount paid to it under a Finance Document is capable of being avoided or otherwise set aside on the liquidation or administration of the payer or otherwise, then that amount shall not be considered to have been irrevocably paid for the purposes of that Finance Document.

 

(f)

The headings in this Agreement do not affect its interpretation.

 

(g)

Where the Owner requests any amendment, waiver or grace period in respect of any provision of the Transaction Documents which would conflict with any provision of the GIEK Guarantee or require consent from GIEK under the GIEK Guarantee, the Eksportfinans Lenders may request the Facility Agent to ask GIEK for a response to such request and the Facility Agent shall not be obliged to respond to the Owner until it receives a response from GIEK.

 

(h)

Where the Owner requests any amendment, waiver or grace period in respect of any provision of the Transaction Documents which would conflict with any provision of the KEXIM Guarantee or require consent from KEXIM, the KEXIM Lenders may request the Facility Agent to ask KEXIM for a response to such request and the Facility Agent shall not be obliged to respond to the Owner until it receives a response from KEXIM.

 

2.	FACILITIES

 

2.1	Loan Facility

 

(a)

Subject to the terms of this Agreement, the Lenders make available to the Owner a term loan facility in a maximum aggregate amount equal to the Maximum Facility Amount.

 

2.2

Purpose

 

 

(a)

financing the cost of construction of the Vessel pursuant to the Shipbuilding Contract;

 

(b)

financing such other items and costs as are included in the Vessel Cost; and

 

 

2.3

No obligation to monitor

 

 

2.4	Nature of a Finance Party’s rights and obligations

 

(a)

Unless otherwise agreed in writing by all the Finance Parties:

 

(i)

the obligations of a Finance Party under the Finance Documents are several;

 

(ii)

failure by a Finance Party to perform its obligations does not affect the obligations of any other Party under the Finance Documents;

 

(iii)

no Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents;

 

(iv)

the rights of a Finance Party under the Finance Documents are separate and independent rights;

 

(v)

a Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights; and

 

(vi)

a debt arising under the Finance Documents to a Finance Party is a separate and independent debt.

 

(b)

If at any time a Finance Party fails to pay when due its share of any Loan amount when required to do so, the Mandated Lead Arranger agrees that it shall consult with the Owner for a reasonable period of time and act in good faith to assist the Owner in resolving the matter, but at all times without any liability on the part of the Mandated Lead Arranger.

 

(c)

Each Swap Bank is a Party to this Agreement only in order to take the benefit of the rights given to the Finance Parties by this Agreement.

 

3.	CONDITIONS PRECEDENT

 

3.1	Conditions precedent documents

 

(a)

A Request in respect of any Loan may not be given until the Facility Agent has notified the Owner and the Lenders that it has received all of the documents and evidence set out in Schedule 2 (Conditions Precedent) in respect of the Loan the subject of that Request in form and substance satisfactory to the Facility Agent (acting on the instructions of all of the Lenders) or that it expects to receive outstanding documents or evidence on or before the Utilisation Date of such Loan or, in the case of evidence on the payment of the Equity Contribution, Balancing Equity Contribution or Equity Collateral, on or before the date which falls one (1) Business Day after the date of service of the relevant Request to the Facility Agent (provided that it will be a condition precedent to the obligations of each Lender to advance such Loan that, as at the relevant Utilisation Date (or, in the case of evidence of the payment of the Equity Contribution, Balancing Equity Contribution or Equity Collateral, as at the date which falls one (1) Business Day after the date the Request is served), such outstanding documents or evidence have been received by the Facility Agent in form and substance satisfactory to the Facility Agent (acting on the instructions of all of

 

the Lenders)).  The Facility Agent must give this notification to the Owner and the Lenders promptly upon being so satisfied.

 

(b)

That part of the Delivery Loan which relates to all or part of the Instalment payable on the Delivery Date shall, if the Delivery Date has not at such time occurred, be deposited by the Facility Agent into the account of [the Refund Guarantor]1 (the Escrow Account) with its correspondent bank in New York three Business Days prior to the proposed Delivery Date, subject to the following irrevocable instructions (addressed to [the Refund Guarantor] with a copy to the correspondent bank):

 

 

(c)

If the Delivery Date has not occurred at the time the Request for the Delivery Loan is served, the Owner undertakes with the Finance Parties not to sign a Protocol of Delivery and Acceptance in respect of the Vessel unless the Facility Agent has confirmed that the conditions precedent referred to the Clause 3.1(a) in respect of the Delivery Loan above have been or will, simultaneously with such signing, be satisfied.

 

3.2	Further conditions precedent

 

 

(a)

the Repeating Representations are correct in all material respects;

 

(b)

no Default or Mandatory Prepayment Event or Potential Mandatory Prepayment Event is outstanding or would result from the Loan;

 

(c)

the Facility Agent has received an officer’s certificate from the Owner confirming that:

 

(i)

save as permitted by the Finance Documents, there have been no material amendments or variations agreed to the Related Contracts existing at such time that have not been agreed by the Facility Agent in accordance with the terms of this Agreement;

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(ii)

no Related Contracts have been rescinded or terminated by any party to them;

 

(iii)

no action has been taken by (a) the Owner (b) the Sponsor or (c) by any other party which might in any way render any Related Contract inoperative or unenforceable, in whole or in any part; and

 

(d)

the Facility Agent has received such other documents which, based on legal advice received from the relevant advisers referred to in this Agreement are necessary to evidence the legality, validity and enforceability of the obligations of the parties to any Finance Document being delivered on such Utilisation Date.

 

3.3	Waiver of conditions precedent

 

 

4.	UTILISATION

 

4.1	Giving of Requests

 

(a)

The Owner may borrow a Loan by giving to the Facility Agent a duly completed Request.

 

(b)

Unless the Facility Agent otherwise agrees, the latest time for receipt by the Facility Agent of a duly completed Request is 11.00 a.m. three Business Days prior to the date of the proposed borrowing and, in respect of the Delivery Loan, ten Business Days prior to the date of the proposed borrowing.  The Owner undertakes that any advance notices regarding expected payment dates of Instalments shall be promptly delivered to the Facility Agent at the same time as such notices are received by the Owner, Manager or Sponsor, as the case may be, from the Builder. The Facility Agent shall provide copies of such advance notices promptly to KEXIM upon receipt of the same from the Owner and to the other Lenders upon request.

 

(c)

The Owner may, subject to Clauses 4.1(d) and 4.1(e), submit up to only four Requests, one in respect of each of the Instalment Loan 1, the Instalment Loan 2, the Instalment Loan 3, and the Delivery Loan (each an Instalment Loan).

 

 

require, submit a Request for an amount not exceeding the Undrawn Amount to be used to reimburse the Owner for amounts of Vessel Costs paid by it and not already financed hereunder or such other purposes as the Lenders may agree.

 

(f)

Each Request is irrevocable.

 

4.2	Completion of Requests

 

 

(a)

the Utilisation Date is a Business Day falling within the relevant Availability Period for that Loan and:

 

(i)

for an Instalment Loan (other than the Delivery Loan), is the date on which the corresponding Instalment is payable under the terms of the Shipbuilding Contract;

 

(ii)

for the Delivery Loan, is the Final Completion Date; or

 

(iii)

for an Incidental Vessel Costs Loan:

 

(A)

for the first Incidental Vessel Costs Loan, is a date on or after the date of this Agreement; and

 

(B)

for any other Incidental Vessel Costs Loan, is a date falling at least three (3) months after the previous Incidental Vessel Costs Loan Utilisation Date;

 

(b)

the requested Incidental Costs Loan is in an amount not exceeding the aggregate amount of:

 

(i)

the Incidental Loan Costs incurred in the period up to and including the Utilisation Date of the Incidental Costs Loan;

 

(ii)

the aggregate amount of the Approved Incidental Vessel Costs payable in the period up to and including the Utilisation Date of the Incidental Costs Loan and supported by invoices or receipts; and

 

(iii)

the aggregate estimated amount of Approved Incidental Vessel Costs which will become payable in the period up to and including the Utilisation Date of the Instalment Loan 1, supported by evidence satisfactory to the Facility Agent (acting in its sole discretion);

 

(c)

the requested Loan (other than the requested Incidental Costs Loan) is in an amount not exceeding:

 

(i)

if a Drilling Charter and a Sister Drilling Charter has been entered into ten (10) Business Days prior to the relevant Utilisation Date and:

 

(A)

the Drilling Charter is a Five Year Drilling Charter and the Sister Drilling Charter is a Sister Five Year Drilling Charter; or

 

(B)

the Drilling Charter is a Five Year Drilling Charter and the Sister Drilling Charter is a Sister Three Year Drilling Charter; or

 

(C)

the Drilling Charter is a Three Year Drilling Charter and the Sister Drilling Charter is a Sister Five Year Drilling Charter,

 

 

(ii)

if the conditions in Clause 4.2(c)(i) have not been met, a percentage of the Scheduled Instalment Amount or, as applicable the Approved Incidental Vessel Costs (in each case determined by the Facility Agent) to be derived from an iterative process in a manner that the expected LTC Ratio at the Utilisation Date following the advance of the Loan equals zero point four (0.4),

 

 

(d)

the amount requested for any Loan when aggregated with:

 

(i)

existing Loans advanced by the Lenders;

 

(ii)

the amounts to be drawn down under any other Request issued for drawdown on the proposed Utilisation Date; and

 

 

 

(f)

subject to Clause 4.3, the amount of the Loan requested is apportioned pro rata to the Eksportfinans Loan, the KEXIM Loan and the Commercial Loan by reference to the proportion of the Total Commitments borne by the Commitments of the Eksportfinans Lenders, the KEXIM Lenders and Commercial Lenders respectively at the relevant time.

 

 

4.3	Advance of Loan

 

(a)

The Facility Agent must promptly notify each Lender of the details of the requested Loan and the amount of its share in that Loan (as calculated by the Facility Agent in accordance with this Clause 4.3).

 

(b)

No Eksportfinans Lender is obliged to participate in the Incidental Costs Loan or any Incidental Vessel Costs Loan.

 

(c)

The amount of each Lender’s share of each requested Instalment Loan will be its Pro Rata Share on the proposed Utilisation Date but adjusted so that the total amount lent by the Eksportfinans Lenders in respect of such Loan is equal to the aggregate which would have been, and would be, lent by the Eksportfinans Lenders, if:

 

(i)

they had participated to the extent of their Pro Rata Share in the Incidental Costs Loan and each Incidental Vessel Costs Loan drawn on or prior to the Utilisation Date of the relevant Instalment Loan; and

 

(ii)

they were to participate to the extent of their Pro Rata Share in the relevant Instalment Loan,

 

 

(d)

The Facility Agent shall calculate the amount to be lent by each of the Lenders in connection with each Instalment Loan and shall notify each of the Lenders of such amount as soon as practicable after receipt by the Facility Agent of the Request relating to that Instalment Loan.

 

(e)

No Lender is obliged to participate in a Loan if, as a result:

 

(i)

its share in the Loans under the Facility would exceed its Commitment;

 

(ii)

the Loans would exceed the Total Commitments;

 

(iii)

in respect of the Eksportfinans Lenders, the aggregate of the Eksportfinans Loans would exceed the Maximum Eksportfinans Loan Amount;

 

(iv)

in respect of the KEXIM Lenders, the aggregate of the KEXIM Loans would exceed the Maximum KEXIM Loan Amount; or

 

(v)

in respect of the Commercial Lenders, the aggregate of the Commercial Loans would exceed the Maximum Commercial Loan Amount;

 

(f)

If the conditions set out in this Agreement have been met, each Lender must ensure that its share in the requested Loan will be available to the Facility Agent for the Owner through its Facility Office by 10.00 a.m. on the relevant Utilisation Date.

 

4.4	Capitalisation of Incidental Loan Costs

 

 

(b)

The amount of any Incidental Loan Costs to be capitalised may not in any circumstances exceed, when aggregated with the Loans already made and amounts of Incidental Loan Costs already capitalised under the relevant Loan, the Maximum Facility Amount or cause the applicable LTC Ratio set out in Clause 4.2(c)(i) or 4.2(c)(ii) to be breached. Any Incidental Loan Costs due and payable which cannot be capitalised in accordance with this Clause 4.4 must be paid by the Owner on the due date.

 

5.

REPAYMENT

 

(a)

The Owner must repay the Loans to the Facility Agent on each Repayment Date in accordance with the Repayment Schedule.

 

(b)

The Facility Agent shall notify the Owner and the Lenders of any change in the amount or the timing of any Repayment Instalment as soon as practicable prior to or, as the case may

 

be, after the Final Completion Date.  In the event of any such notification, the Facility Agent shall replace the Repayment Schedule attached at Schedule 5 (Loan Repayment Schedule) with a new Repayment Schedule reflecting the correct Repayment Instalments and the correct Repayment Dates and promptly provide a copy thereof to the Owner and the Lenders.

 

(c)

The Loans shall be repaid in full on the Final Maturity Date.

 

(d)

Any amounts repaid under this Clause 5 may not be re-borrowed.

 

6.	PREPAYMENT AND CANCELLATION

 

6.1	Mandatory prepayment – illegality

 

(a)

If it becomes, or to the knowledge of any Lender is to become, unlawful or otherwise prohibited (whether temporarily or permanently) in any jurisdiction for a Lender to perform any of its obligations as contemplated by a Finance Document or to fund or maintain its share in one or more of the Loans, or to exercise any of its material rights under the Finance Documents, that Lender shall notify the Facility Agent and the Owner (any such event being a Lender Event).

 

(b)

After notification under paragraph (a) above (and subject always to satisfactory alternate arrangements being put into place in accordance with paragraph (d) below):

 

(i)

the Owner must repay or prepay the share of that Lender in the relevant Loan or Loans on the date specified in paragraph (c) below; and

 

(ii)

the Commitments of that Lender will be immediately cancelled.

 

(c)

The date for prepayment of a Lender’s share in a Loan will be:

 

(i)

the last day of the current Term of that Loan; or

 

(ii)

if earlier, the date specified by that Lender in the notice delivered to the Owner under paragraph (a) above (being no earlier than the last day of any applicable grace period permitted by Applicable Law).

 

(d)

If, prior to the occurrence of a Lender Event, a Lender receives notice or becomes aware that a Lender Event will occur, that Lender and the Owner shall enter into discussions in good faith for a period of twenty (20) days (or such shorter period, if any, as may be available prior to the Lender Event taking effect) (the Lender Consultation Period) with a view to agreeing how the effects of the Lender Event can be avoided or mitigated so that alternative legal, valid and binding obligations, in form and substance satisfactory to that Lender and the Owner, are put in place.  If that Lender and the Owner cannot agree and complete such arrangements prior to the end of the Lender Consultation Period, the Owner shall be obliged to immediately prepay the share of that Lender in the Loan on the date specified in paragraph (c) above.

 

6.2	Mandatory prepayment – Total Loss, sale and Related Contracts

 

 

 

(i)

the date falling 90 days after the Date of Total Loss; and

 

(ii)

the date of receipt by the Owner or the Security Trustee of the proceeds of insurance relating to such Total Loss;

 

(b)

if the Owner fails to deliver the Vessel to the Charterer in accordance with the terms of a Drilling Charter (other than in circumstances where there is a Charter Termination Event), on the date of such failure;

 

(c)

if either the Builder or the Owner is in breach of any of its material obligations under the Shipbuilding Contract, or either the Manager or the Owner is in breach of any of its material obligations under any other Related Contract, on the date falling 20 days after the date on which the Facility Agent gives written notice to the Owner that the Majority Lenders have so determined and such breach is not remedied or otherwise compensated for, in each case, to the satisfaction of the Majority Lenders within such period, or if the matter has been referred to arbitration within that 20-day period, upon the earlier of a settlement being reached in respect of such arbitration and 5 days after the receipt of the final arbitration award;

 

(d)

if the Vessel has not been delivered by the Builder and accepted unconditionally by the Charterer under the relevant Drilling Charter by the date falling 210 days after the Scheduled Delivery Date (the Longstop Date), on the Business Day immediately succeeding the Longstop Date;

 

(e)

if a material part of the assets of the Charterer or, if applicable, the Charterer Parent are seized, expropriated, or compulsorily acquired, nationalised, confiscated or requisitioned by any Government Entity or by persons purporting to act on behalf of any Government Entity, subject, however, to the provisions of Clause 16.23 (Breach or Termination of Drilling Charter or Management Agreement);

 

(f)

if a Charter Termination Event occurs, on the date of the occurrence of such Charter Termination Event, subject, however, to the provisions of Clause 16.23 (Breach or Termination of Drilling Charter or Management Agreement);

 

(g)

if the Vessel is sold, on or before the date on which the sale is completed;

 

(h)

if the Shipbuilding Contract is terminated in circumstances where the Refund Guarantee is payable upon the earlier of:

 

(i)

the date of receipt of the moneys under the Refund Guarantee; and

 

(ii)

20 days after the date of termination or if the matter has been referred to arbitration within that 20-day period, upon the earlier of a settlement being reached in respect of such arbitration and 5 days after the receipt of the final arbitration award;

 

(i)

if the Shipbuilding Contract is terminated in circumstances other than those referred to in paragraph (c), on the date of its termination;

 

(j)

if either:

 

(A)

the Owner ceases to be a Subsidiary of the Sponsor; or

 

(B)

the Sponsor ceases to have direct or indirect control of the Owner or to own directly or indirectly more than 50% of the voting capital or similar right of ownership of the Owner (and control for this purpose means the power to direct the management and the policies of the Owner whether through the ownership of voting capital, by contract or otherwise),

 

 

(k)

if either:

 

(i)

on the Drilling Charter Cut-off Date neither a Five Year Drilling Charter nor a Sister Five Year Drilling Charter has been entered into;

 

(ii)

on the Drilling Charter Cut-off Date, either:

 

(A)

a Five Year Drilling Charter has been entered into but no Sister Drilling Charter for a minimum term (excluding any optional extensions) of 3 years from the Final Completion Date has been entered into; or

 

(B)

a Sister Five Year Drilling Charter has been entered into, but no Drilling Charter for a minimum term (excluding any optional extensions) of 3 years from the Final Completion Date has been entered into.

 

6.3	Mandatory prepayment amount – Sister Vessel

 

 

(a)

if the Sister Vessel is sold, on or before the date on which the sale is completed; or

 

(b)

if the Sponsor ceases, for whatever reason, to own or retain the legal and beneficial interest in at least 50% of the shares of the Sister Owner.

 

6.4	Mandatory Prepayment – Invalidity of Finance Documents or Related Contracts

 

 

(i)

any Finance Document or Related Contract or any material provision of any such document ceasing to be valid in any way which, in the case of a Finance Document, is material and, in the case of a Related Contract, in any way which has a Material Adverse Effect or is alleged by the Owner to be ineffective in accordance with its terms for any reason;

 

(ii)

any Security Document creating a Security Interest in favour of the Security Trustee (on trust for the Finance Parties) ceasing to provide a perfected first priority security interest in favour of the Security Trustee (on trust for the Finance Parties) (subject to any Permitted Liens having priority in law); or

 

(iii)

the Owner repudiates a Finance Document,

 

 

(b)

If, prior to the occurrence of an Invalidity Event, the Facility Agent or the Owner receives an Invalidity Notice, the Facility Agent (acting on the instructions of the Majority Lenders) and the Owner shall enter into discussions in good faith for a period of 20 days or such shorter period, if any, as may be available prior to the Invalidity Event taking effect (the Consultation Period) with a view to agreeing how the effects of the Invalidity Event can be avoided so that alternative legal, valid and binding obligations, in form and substance satisfactory to the Facility Agent (acting on the instructions of the Majority Lenders) are provided in replacement of the affected Finance Document or Related Contract.  In conducting such discussions and reaching a conclusion, the Lenders shall act in good faith but otherwise in their absolute discretion.  If the Facility Agent (acting on the instructions of the Majority Lenders) and the Owner cannot agree on and complete such arrangements prior to the earlier of the end of the Consultation Period and the date upon which the relevant Invalidity Event becomes effective, the Owner shall be obliged to immediately prepay all outstanding Loans together with accrued interest and all other amounts accrued under the Finance Documents, and the Commitments of the Lenders shall be immediately cancelled.