CREDIT AGREEMENT PROVIDING FOR A SENIOR SECURED TERM LOAN OF UP TO US$32,000,000

EXHIBIT 10.1

 

 

 

CREDIT AGREEMENT PROVIDING FOR A
SENIOR SECURED TERM LOAN
OF UP TO US$32,000,000

EAST GULF SHIPHOLDING, INC.,
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

April 20, 2015

 

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TABLE OF CONTENTS

 

1.1Specific Definitions 1

1.2Computation of Time Periods; Other Definitional Provisions 20

1.3Accounting Terms 20

1.4Certain Matters Regarding Materiality 20

2.1Representations and Warranties 20

3.1Purposes 25

3.2Receipt of Funds 25

3.3Drawdown Notice 25

3.4Effect of Drawdown Notice 25

4.1Conditions Precedent to this Agreement 26

4.2Breakfunding Costs 30

4.3Satisfaction after Drawdown 30

5.1 Repayment 30

5.2Voluntary Prepayment; No Re-borrowing 30

5.3Mandatory Prepayment 30

5.4Interest and Costs with Prepayments/Application of Prepayments 31

5.5Borrower's Obligation Absolute 31

6.1Payment of Interest; Interest Rate 31

6.2Maximum Interest 31

7.1Time and Place of Payments, No Set Off 31

7.2Taxes 31

7.3Sharing of Setoffs 33

7.4Computations; Banking Days 33

8.1Events of Default 33

8.2Application of Moneys 36

9.1Affirmative Covenants 36

9.2Negative Covenants 42

9.3Financial Covenants 45

9.4Asset Maintenance 46

 

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TABLE OF CONTENTS
(continued)

 

 

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TABLE OF CONTENTS

(continued)

Page

16.3 WAIVER OF IMMUNITY 55

16.4 WAIVER OF JURY TRIAL 55

17.1 Appointment of Facility Agent 55

17.2 Appointment of Security Trustee 56

17.3 Distribution of Payments 56

17.4 Holder of Interest in Note 56

17.5 No Duty to Examine, Etc 56

17.6 Agents as Lenders 56

17.7 Acts of the Agents 57

17.8 Certain Amendments 57

17.9 Assumption regarding Event of Default 57

17.10 Limitations of Liability 58

17.11 Indemnification of the Facility Agent and Security Trustee 58

17.12 Consultation with Counsel 58

17.13 Resignation 58

17.14 Representations of Lenders 58

17.15 Notification of Event of Default 59

17.16 Reversal of Redistribution 59

17.17 Parallel Debt. 59

18.1 Notices 60

19.1Right of Set-off 61

19.2 Time of Essence 61

19.3Unenforceable, etc., Provisions – Effect 61

19.4 References 61

19.5 Further Assurances 61

19.6 Prior Agreements, Merger 61

19.7 Entire Agreement; Amendments 62

19.8 Indemnification 62

19.9 USA PATRIOT Act Notice; OFAC and Bank Secrecy Act 62

19.10 Remedies Cumulative and Not Exclusive; No Waiver 63

19.11 Counterparts; Electronic Delivery 63

19.12 Headings 63

19.13 Disclosure 63

19.14 Securitization 64

19.15 Pari Passu Intercreditor Agreement. 64

 

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TABLE OF CONTENTS (continued)

SCHEDULES

IThe Lenders and the Commitments

IIApproved Ship Brokers

IIILiens

IVIndebtedness

VInitial Charter Party Agreement

EXHIBITS

AForm of Promissory Note

BForm of Drawdown Notice

CForm of Compliance Certificate

DForm of Assignment and Assumption Agreement

EForm of Earnings and Charterparties Assignment

FForm of Insurances Assignment

G-1Form of Mortgage

G-2Form of GREEN BAY Mortgage

H-1Classification Society Instruction Letter

H-2Classification Society Undertaking

I-1Form of Earnings Account Pledge

I-2Form of Retention Account Pledge

JForm of Manager’s Undertaking

KForm of Asset Maintenance Compliance Certificate

LForm of Pari Passu Intercreditor Agreement

MForm of Loan Administration Form

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SENIOR SECURED TERM LOAN CREDIT AGREEMENT

THIS SENIOR SECURED TERM LOAN CREDIT AGREEMENT (this “Agreement”) is made as of the 20th day of April, 2015, by and among (1) EAST GULF SHIPHOLDING, INC., a corporation organized and existing under the laws of the ▇▇▇▇▇▇▇▇ Islands (the “Borrower”), as 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 such 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 Two Million Dollars ($32,000,000);

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:

“Acceptable Accounting Firm”shall mean PricewaterhouseCoopers LLP, or such other Securities

and Exchange Commission recognized accounting firm as shall be approved by the Facility Agent, such approval not to be unreasonably withheld;

“Account Bank”shall mean DVB Bank SE (Frankfurt);

“Account Pledge”shall mean the German law-governed pledge of the Earnings

Account and the Retention Account to be executed by the Borrower in favor of the Security Trustee pursuant to Section 4.1(s)(iii) substantially in the form set out in Exhibit I-1 or I-2;

“Advance”shall mean the amount of the Facility advanced to the Borrower

pursuant to Section 3.1;

“Affiliate”shall mean with respect to any Person, any other Person who

directly or indirectly controls, is controlled by or under common control with such Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as applied to any Person means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of that Person whether through ownership of voting securities or by contract or otherwise;

 

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“Agents”shall have the meaning ascribed thereto in the preamble;

“Agreement”shall mean this Agreement, as the same shall be amended,

restated, modified or supplemented from time to time;

“Amortization Reduction Conditions”shall mean (A) as certified by the Guarantor on the relevant

Compliance Certificate, the Guarantor is in compliance with the Amortization Reduction Financial Covenants and (B) no Default or Event of Default has occurred and is continuing;

“Amortization Reduction Financial  shall mean (A) a Consolidated Fixed Charge Coverage Ratio of at Covenants”              least 1.20:1.00, (B) a ratio of Consolidated EIBTDA to Consolidated

              Interest Expense of not less than 2.50:1.00, (C) a Consolidated Tangible

 Net Worth $254,880,000, (D) a Consolidated Leverage Ratio of not 

                Greater than 4.25: 1.00, (E) a ratio of current assets to current

               liabilities of not less than 1.00:1.00 and (F) Liquidity of not less

  than $20,000,000, in each case measured in accordance with the

  the requirements set forth in Section 9.3;

 

“Amortization Reduction Period”shall mean the period (A) commencing on the first Payment Date

following at least 90 days after the date that a Compliance Certificate is provided to the Facility Agent showing that the Amortization Reduction Conditions have been satisfied and (B) ending on the date that the Borrower is no longer in compliance with the Amortization Reduction Conditions;

“Applicable Rate”shall mean the rate of interest applicable to the Facility per annum,

which is equal to (i) from the Drawdown Date to January 31, 2020, Margin plus the rate agreed upon by the Facility Agent and the Borrower as the fixed rate plus Mandatory Costs (if applicable), and (ii) from February 1, 2020 until the Final Payment Date, Margin plus LIBOR plus Mandatory Costs (if applicable);

“Approved Charter”shall mean the Initial Charter Party Agreement and any other

charter party to be entered with an internationally recognized PCTC operator acceptable to the Facility Agent (such consent not to be unreasonably withheld); provided, that such other charter party has charter hire rates that are comparable to the then current market charter hire rates for similar vessels and having other prevailing market terms;

“Approved Jurisdiction”shall mean the Republic of ▇▇▇▇▇▇▇▇ Islands or such other

jurisdiction acceptable to the Facility Agent (such acceptance not to be unreasonably withheld);

“Approved Ship Broker”shall mean any of the ship brokers listed on Schedule II;

“Asset Maintenance Complianceshall mean a certificate certifying as of the last day of the second

Certificate”and fourth quarter of the Borrower’s fiscal year the compliance by

the Borrower with the covenants contained in Section 9.4 and showing the calculations thereof in reasonable detail, delivered by

 

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the chief financial officer of the Guarantor to the Facility Agent from time to time pursuant to Section 9.1(d)(iii) in the form set out in Exhibit K or in such other form as the Facility Agent may agree;

“Assigned Moneys”shall mean any and all sums assigned to the Security Trustee

pursuant to (i) in relation to the Vessel, the Earnings and Charterparties Assignment and the Insurances Assignment or (ii) in relation to the GREEN BAY, the GREEN BAY Earnings and Charterparties Assignment and the GREEN BAY Insurances Assignment;

“Assignment and Assumptionshall mean any Assignment and Assumption Agreement(s)

Agreement(s)”executed pursuant to Section 12.3 substantially in the form set out

in Exhibit D;

“Assignment Notices”shall mean (A) in relation to the Vessel, (a) the notice with respect

to the Earnings and Charterparties Assignment substantially in the form set out in Exhibit 1 thereto, and (b) the notice with respect to the Insurances Assignment substantially in the form set out in Exhibit 3 thereto or (B) in relation to the GREEN BAY, (a) the notice with respect to the GREEN BAY Earnings and Charterparties Assignment substantially in the form set out in Exhibit 1 thereto, and (b) the notice with respect to the GREEN BAY Insurances Assignment substantially in the form set out in Exhibit 3 thereto;

“Assignments”shall mean the Earnings and Charterparties Assignment and the

Insurances Assignment;

“Attributable Principal Amount”shall mean (a) in the case of Synthetic Leases, an amount

determined by capitalization of the remaining lease payments thereunder as if it were a Capital Lease determined in accordance with GAAP, and (b) in the case of asset securitization programs, the outstanding principal amount of such financing, after taking into account reserve amounts and making appropriate adjustments, determined by the Facility Agent in its reasonable judgment;

“Availability Period”shall mean the period of time beginning on the Closing Date and

ending on the earlier of (a) the date on which the Advance is made pursuant to Section 3 and (b) April 30, 2015;

“Banking Day(s)”shall mean any day that is not a Saturday, Sunday or other day on

which (a) banks in London, England (in relation to LIBOR fixing only), Frankfurt, Germany or New York, New York (in relation to payments in Dollars only) are authorized or required by law to remain closed, or (b) banks are not generally open for dealing in dollar deposits in the London interbank market;

“Blocked Person”shall mean any of the following currently or in the future: (i) an

individual, entity or vessel named on a Blocked Persons List, or any entity owned or controlled by, directly or indirectly, such individual, entity or vessel, or (ii) (A) an agency or instrumentality

 

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of, or an entity owned or controlled by, or acting on behalf of or at the direction of, directly or indirectly, the government of any country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan and Syria) (each, a “Sanctioned Country”), (B) an entity located, resident in or organized under the laws of a Sanctioned Country, or (C) a national or permanent resident of a Sanctioned Country, or a person located or residing in a Sanctioned Country, to the extent such agency, instrumentality, entity, or person is targeted by Sanctions, or (iii) without duplication of any Person set forth in clause (i) or (ii), any Person located or residing in, organized under the laws of, or operating in a Sanctioned Country;

“Blocked Persons List”shall mean the “Specially Designated Nationals List and Blocked

Persons List” maintained by OFAC and any other similar or equivalent published list of individuals or entities maintained by a Governmental Authority, as the same may be amended, supplemented or substituted from time to time;

“Borrower”shall have the meaning ascribed thereto in the preamble;

“Borrower Restructuring”shall mean, collectively, the transactions contemplated by Section

9.5 hereof and Section 9.5 of the GREEN BAY Credit Facility;

“Capital Expenditures”shall mean with respect to the Guarantor and the Subsidiaries, on a

consolidated basis, for any period (without duplication), any expenditure for fixed assets or that is properly chargeable to capital account in accordance with GAAP;

“Capital Lease”shall mean, as applied to any Person, any lease of any property

(whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person;

“Cash Equivalents”means, as at any date of determination, any of the following: (a)

marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the United States government, or (ii) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one (1) year after such date; (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one (1) year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from ▇▇▇▇▇’▇; (c) commercial paper maturing no more than one (1) year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-I from ▇▇▇▇▇’▇; (d) certificates of deposit or bankers’ acceptances maturing within one (1) year after such date and issued or accepted by (x) any Lender, (y) any foreign lending institution so long as it holds Indebtedness of the Guarantor or its Subsidiaries or (z) by any commercial bank organized under the

 

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laws of the United States or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary federal or other applicable banking regulator), and (ii) has Tier 1 capital (as defined in such regulations, or the equivalent foreign regulations, if applicable) of not less than $100,000,000; (e) shares of any money market mutual fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less than $500,000,000, and (iii) has the highest rating obtainable from either S&P or ▇▇▇▇▇’▇; (f) overnight repurchase investments and overnight Eurodollar sweep investments; and (g) corporate bonds maturing within one (1) year after such date and having a rating of at least A- from S&P or at least A3 from ▇▇▇▇▇’▇; provided that, for purposes of this Agreement, such corporate bonds shall be valued at a margin of 90% thereof;

“Change of Control”shall mean (a) any “person” (as such term is used in Sections 13(d)

and 14(d) of the Exchange Act), other than the existing owners, becoming the beneficial owner (as defined in Rules 13d-3 under the Exchange Act), directly or indirectly, of more than 30% of the total voting power of the Guarantor or (b) the Guarantor ceases to own directly 100% of the Borrower or (c) the Board of Directors of the Guarantor ceases to consist of a majority of the directors existing on the date hereof or directors nominated by at least two-thirds (2/3) of the then existing directors;

“Classification Society”shall mean American Bureau of Shipping or any other member of

the International Association of Classification Societies reasonably acceptable to the Lenders (with whom the Vessel is entered and who conducts periodic physical surveys and/or inspections of the Vessel);

“Closing Date”shall mean the day and year first written above;

“Code”shall mean the Internal Revenue Code of 1986, as amended, and

any successor statute and regulation promulgated thereunder;

“Collateral”shall mean, all property or other assets, real or personal, tangible

or intangible, whether now owned or hereafter acquired in which the Security Trustee or any Lender has been granted a security interest pursuant to any Transaction Document;

“Commercial Manager”shall mean Borrower or such other manager acceptable to the

Facility Agent;

“Commodity Exchange Act”shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as

amended from time to time, and any successor statute;

“Commitment(s)”shall mean in relation to a Lender, the portion of the Facility set

out opposite its name in Schedule I hereto or, as the case may be, in any relevant Assignment and Assumption Agreement, as changed from time to time pursuant to the terms of this

 

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Agreement;

“Compliance Certificate”shall mean a certificate certifying the compliance by each of the

Security Parties with all of its covenants contained herein and showing the calculations thereof in reasonable detail, delivered by the chief financial officer of the Guarantor to the Facility Agent from time to time pursuant to Section 9.1(d) in the form set out in Exhibit C or in such other form as the Facility Agent may agree;

“Consolidated EBITDA”shall mean, for any period, with respect to the Guarantor and its

Subsidiaries, the sum of (without duplication) (a) Consolidated Net Income; (b) all Consolidated Interest Expense of the Guarantor and its Subsidiaries; (c) income taxes of the Guarantor and its Subsidiaries; (d) depreciation and amortization of the Guarantor and its Subsidiaries determined on a consolidated basis in accordance with GAAP for such period; and (e) the unamortized balance of the gain with respect to the sale of the vessel GREEN BAY pursuant to the sale/leaseback transaction that occurred on February 22, 2012, for the four rolling quarters commencing with the quarter ending September 30, 2014 and ending with the quarter ending June 30, 2015; provided, that if any Subsidiary is not wholly-owned by the Guarantor, Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (i) the amount of Consolidated Net Income attributable to such Subsidiary multiplied by (ii) the percentage ownership interest in the income of such Subsidiary not owned by the Guarantor on the last day of such period; provided, further, that, for the period of four fiscal quarters commencing with the quarter ending September 30, 2014 and ending with the quarter ending June 30, 2015, all non-cash gains and/or losses from dispositions of any assets allowed under the Regions Credit Agreement or consented to by the Required Lenders thereunder shall be excluded in the calculation of Consolidated EBITDA; provided, however, that if any acquisition or disposition of assets permitted to be made under this Agreement (other than non-material acquisitions or dispositions in the ordinary course of business, each with a total value of less than $2,000,000) occurs during such period of determination, Consolidated EBITDA for such period shall be calculated on a pro forma basis to give effect to such acquisition or disposition as if each such acquisition or disposition has been consummated on the first day of such period; provided, further that Consolidated EBITDA based on any such acquisition shall only be based on contracted cash flow;

“Consolidated EBITDAR”shall mean, with respect to the Guarantor and its Subsidiaries, on a

consolidated basis, for any period (without duplication) the sum of (i) Consolidated EBITDA for such period and (ii) Consolidated Lease Expense for such period;

 

 

“Consolidated Fixed Charge Coverage   shall mean, as of any date of determination, the ratio of (a)

Ratio”  Consolidated EBITDAR for the period of the four fiscal quarters

of the Guarantor most recently ended, minus taxes paid in cash      during such period, minus maintenance Capital Expenditures for the four fiscal quarters of the Guarantor most recently ended: provided that maintenance Capital Expenditure shall be calculated at 50% of consolidated depreciation expense;

 

“Consolidated Fixed Charges”shall mean with respect to the Guarantor and the Subsidiaries, on a

consolidated basis, for any period (without duplication), the sum of (i) Consolidated Interest Expense for such period; (ii) Consolidated Lease Expense for such period; (iii) scheduled principal payments for any outstanding Indebtedness during the applicable period, and (iv) the amount of cash dividends and other distributions made by the Guarantor during such period (other than dividends paid on common stock of the Guarantor in such period in an amount up to $10,000,000). For purposes of this definition, “scheduled principal payments” (a) shall be determined without giving effect to any reduction of such scheduled payments resulting from the application of any voluntary or mandatory prepayments made during the applicable period, (b) shall be deemed to include the Attributable Principal Amount in respect of asset securitization programs and Synthetic Leases and (c) shall not include any voluntary prepayments or mandatory prepayments required pursuant to Section 2.11 of the Regions Credit Agreement;

“Consolidated Interest Expense”shall mean, with respect to the Guarantor and the Subsidiaries, on

a consolidated basis, for any period (without duplication), interest expense, whether paid or accrued (including the interest component of asset securitization programs and Synthetic Leases), on all Indebtedness of the Guarantor and its Subsidiaries for such period, net of interest income, all determined in accordance with GAAP;

“Consolidated Lease Expense”shall mean with respect to the Guarantor and its Subsidiaries, on a

consolidated basis, for any period (without duplication), all amounts payable under any leases (whether Capital Leases or operating leases) and time charter agreements which may be classified as operating lease expenses, charter hire expenses or rent as determined in accordance with GAAP during the period in question;

“Consolidated Lease Adjustmentshall mean the sum of (i) all Indebtedness of the Guarantor and its      Subsidiaries (other than obligations under any Swap Contract) determined on a consolidated basis in accordance with GAAP and (ii) the product of 6 times the Consolidated Lease Expence of the Guarantor and its Subsidiaries for the past 12 months determined on a consolidated basis in accordance with GAAP;

“Consolidated Tangible Net Worth”         shall mean, with respect to the Guarantor and its Subsidiaries, at

                                                          any date for which a determination is to be made (determined on a

 

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consolidated basis without duplication in accordance with GAAP) (a) total stockholders’ equity minus (b) goodwill;

“Consolidated Leverage Ratio”shall mean, as of any date of determination, the ratio of (a)

Consolidated Lease Adjusted Indebtedness as of such date to (b) Consolidated EBITDAR for the period consisting of the four fiscal quarters of the Guarantor most recently ended;

“Consolidated Net Income”shall mean, for any period, the consolidated net income of the

Guarantor and its Subsidiaries for such period, as shown on the consolidated financial statements of the Guarantor and its Subsidiaries delivered in accordance with Section 9.1(d);

“Creditor(s)”shall mean, together, the Mandated Lead Arrangers, the Agents

and the Lenders, each a “Creditor”;

“Debt Service”shall mean the scheduled principal amortization payments, the

scheduled interest payments and payment of any fees payable under the Transaction Documents;

“Default”shall mean any event that would, with the giving of notice or

passage of time, or both, be an Event of Default;

“Default Rate”shall mean a rate per annum equal to two percent (2%) over the

Applicable Rate;

“DOC”shall mean a document of compliance issued to an Operator in

accordance with rule 13 of the ISM Code;

“Dollars” and the sign “$”shall mean the legal currency, at any relevant time hereunder, of

the United States of America and, in relation to all payments hereunder, in same day funds settled through the New York Clearing House Interbank Payments System (or such other Dollar funds as may be determined by the Facility Agent to be customary for the settlement in New York City of banking transactions of the type herein involved);

“Drawdown Date”shall mean the date, being a Banking Day, upon which the

Borrower has requested that the Facility be made available to the Borrower, and the Facility is made available to the Borrower, as provided in Section 3;

“Drawdown Notice”shall have the meaning ascribed thereto in Section 3.3;

“Earnings”means, in relation to the Vessel, all moneys whatsoever which are

now, or later become, payable (actually or contingently) to the Borrower or the Security Trustee (net of charter commissions payable in respect of the Vessel) and which arise out of the use or operation of the Vessel, including (but not limited to):

(a)except to the extent that they fall within paragraph (b):

(i)all freight, hire and passage moneys;

 

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(b)if and whenever, with the consent of the Facility Agent,

the Vessel is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other Person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel;

 

“Earnings Account”shall mean the bank account no. ▇▇▇▇▇▇▇▇▇▇ maintained in the

Name of the Borrower with Account Bank:

 

“Earnings and Charterpartiesshall mean the first priority assignment of Earnings, charterparties Assignment”and requisition compensation in respect of (i) the Earnings of the 

Vessel from, any and all sources (including requisition   compensation) and (ii) any charter or other contract relating to the

Vessel, to be executed by the Borrower in favor of the Security

Trustee pursuant to Section 4.1(s)(i), substantially in the form set

Out in Exhibit E:

 

“Environmental Affiliate(s)”shall mean, with respect to a Security Party, any Person or entity,

the liability of which for Environmental Claims any Security Party may have assumed by contract or operation of law;

“Environmental Approval(s)”shall have the meaning ascribed thereto in Section 2.1(q);

“Environmental Claim(s)”shall have the meaning ascribed thereto in Section 2.1(q);

“Environmental Law(s)”shall have the meaning ascribed thereto in Section 2.1(q);

“ERISA”shall mean the Employee Retirement Income Security Act of

1974, as amended, and any successor statute and regulation promulgated thereunder;

“ERISA Affiliate”shall mean a trade or business (whether or not incorporated) which

is under common control with any Security Party or any of their respective subsidiaries within the meaning of Sections 414(b), (c), (m) or (o) of the Code or which would be considered a member of a “controlled group” with any Security Party or any of their respective subsidiaries under Section 4001 of ERISA;

“ERISA Funding Event”shall mean (i) any failure by any Plan to satisfy the minimum

funding standards (for purposes of Section 412 of the Code or

 

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Section 302 of ERISA), whether or not waived; (ii) the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (iii) the failure by any Security Party, any of their respective subsidiaries or any ERISA Affiliate to make any required contribution to a Multiemployer Plan; (iv) a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430(i) of the Code); (v) the incurrence by any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (vi) the receipt by any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Section 4245 of ERISA, in reorganization within the meaning of Section 4241 of ERISA, or in endangered or critical status within the meaning of Section 432 of the Code or Section 305 of ERISA; (vii) any “reportable event”, as defined in Section 4043 of ERISA with respect to a Plan (other than an event for which the 30-day notice period to the PBGC is waived); or (viii) the existence with respect to any Plan of a “prohibited transaction” for purposes of Section 406 of ERISA or Section 4975 of the Code;

“ERISA Termination Event”shall mean (i) the imposition of any lien under Section 430(k) of

the Code or any other lien in favor of the PBGC or any Plan or Multiemployer Plan on any asset of any Security Party, any of their respective subsidiaries or any ERISA Affiliate in connection with any Plan or Multiemployer Plan; (ii) the receipt by any Security Party, any of their respective subsidiaries or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Multiemployer Plan or to appoint a trustee to administer any Plan or Multiemployer Plan under Section 4042 of ERISA; (iii) the filing of a notice of intent to terminate a Plan under Section 4041 of ERISA or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA; (iv) the institution of proceeding to terminate a Plan or a Multiemployer Plan; (v) the incurrence by any Security Party, any of their respective subsidiaries or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; or (vi) the occurrence of any other event or condition which might constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan;

“Event(s) of Default”shall mean any of the events set out in Section 8.1;

“Excess Cash Flow”shall mean the aggregate amount of the Earnings of the Vessel

during each fiscal quarter of the Borrower’s fiscal year minus

 

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during each such period:

“Exchange Act”shall mean the Securities and Exchange Act of 1934, as amended;

“Facility”shall mean the facility to be made available by the Lenders to the

Borrower hereunder pursuant to Section 3 in the maximum principal amount equal to the lesser of (i) Thirty Two Million Dollars ($32,000,000) and (ii) sixty percent (60%) of the Fair Market Value of the Vessel, or the balance thereof from time to time outstanding;

“Facility Agent”shall have the meaning ascribed thereto in the preamble;

“Fair Market Value”shall mean, at any time and from time to time, a desk-top charter-

free appraisal on an “as is”, “willing seller, willing buyer” basis of the Vessel from one independent ship broker selected by the Facility Agent (which shall be one of Maritime Strategies International Ltd., Hesnes Shipping, Fearnley’s A/S and ▇. ▇▇▇▇▇▇▇▇ & Company unless the Facility Agent advises the Borrower otherwise in its sole discretion) or at the Borrower’s option, the average of two (2) appraisals from one ship broker selected by the Facility Agent above and one Approved Ship Broker selected by the Borrower and appointed by the Facility Agent; provided, that if the higher of the two valuations exceeds the lower of the two valuations by more than 10%, Fair Market Value will be the average of three (3) such appraisals by adding another appraisal from one Approved Ship Broker selected by the Facility Agent;

“FATCA”shall mean Sections 1471 through 1474 of the Code, as of the date

of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof;

“Fee Letter”shall mean the fee letter of even date herewith between the

Borrower and the Facility Agent;

 

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“Final Payment Date”shall mean March 31, 2020;

“Foreign Plan”shall mean an employee benefit plan, program, policy, scheme or

arrangement that is not subject to U.S. law and is maintained or contributed to by any Security Party or any of their respective subsidiaries or for which any Security Party or any of their respective subsidiaries has or could have any liability;

“Foreign Termination Event”shall mean the occurrence of an event with respect to the funding

or maintenance of a Foreign Plan, that could reasonably be expected to result in a lien on, or seizure of, any collateral hereunder;

“Foreign Underfunding Event”shall mean the excess, if any, of the accrued benefit obligations of

a Foreign Plan (based on those assumptions used to fund that Foreign Plan or, if that Foreign Plan is unfunded, based on those assumptions used for financial accounting statement purposes or, if accrued benefit obligations are not calculated for financial accounting purposes, based on such reasonable assumptions as may be approved by the applicable Security Party’s independent auditors for these purposes) over the sum of (i) the assets of such Foreign Plan and (ii) the liability related to such Foreign Plan accrued for financial accounting statement purposes;

“GAAP”shall have the meaning ascribed thereto in Section 1.3;

“GLOVIS COUNTESS-$38.5M Credit shall mean the “GLOVIS COUNTESS Mortgage” as defined in

Facility Mortgage”the GREEN BAY Credit Facility;

“GREEN BAY”shall mean that certain pure car truck carrier GREEN BAY with

IMO No. 9339818;

“GREEN BAY Assignments”shall mean the GREEN BAY Earnings and Charterparties

Assignment and the GREEN BAY Insurances Assignment;

“GREEN BAY Credit Facility”shall mean the credit facility contemplated by that certain credit

agreement providing for a senior secured term loan of up to $38,500,000, dated August 26, 2014, between LCI Shipholdings, as borrower, and DVB Bank SE, as facility agent and security trustee and as lender, as amended, amended and restated, supplemented or otherwise modified from time to time;

“GREEN BAY-$38.5M Credit Facility shall mean the “Mortgage” as defined in the GREEN BAY Credit

Mortgage”Facility;

“GREEN BAY Earnings Account”shall mean the bank account no. 2910053652 (or such other bank

account designed as “Earnings Account” under the GREEN BAY Credit Facility), maintained in the name of the Borrower with Account Bank;

“GREEN BAY Earnings andshall mean the assignment of Earnings, charterparties and

Charterparties Assignment”requisition compensation in respect of (i) the Earnings of the

GREEN BAY from any and all sources (including requisition

 

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compensation) and (ii) any charter or other contract relating to the GREEN BAY, substantially in the form set out in Exhibit E;

“GREENBAY Insurances Assignment” shall mean the assignment in respect of the insurances over the GREEN BAY, substantially in the form set out in Exhibit F;

“GREEN BAY Mortgage”shall mean the preferred ▇▇▇▇▇▇▇▇ Islands mortgage over the

GREEN BAY, securing the Facility, substantially in the form attached hereto as Exhibit G-2;

“GREEN BAY Retention Account”shall mean the bank account no. 2910053660 (or such other bank

account designed as “Earnings Account” under the GREEN BAY Credit Facility) maintained in the name of the Borrower with Account Bank;

“Guaranteed Obligations”shall have the meaning ascribed thereto in Section 11.1;

“Guarantor”shall have the meaning ascribed thereto in the preamble;

“Indebtedness”shall mean, with respect to any Person at any date of determination

(without duplication), (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery thereof or the completion of such services, except trade payables, (v) all obligations on account of principal of such Person as lessee under capitalized leases, (vi) all indebtedness of other Persons secured by a lien on any asset of such Person, whether or not such indebtedness is assumed by such Person; provided that the amount of such indebtedness shall be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such indebtedness, and (vii) all indebtedness of other Persons guaranteed by such Person to the extent guaranteed; the amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that the amount outstanding at any time of any indebtedness issued with original issue discount is the face amount of such indebtedness less the remaining unamortized portion of the original issue discount of such indebtedness at such time as determined in conformity with GAAP; and provided further that Indebtedness shall not include any liability for current or deferred federal, state, local or other taxes, or any current trade payables;

“ING Credit Agreement”shall mean the facility agreement, dated as of August 2, 2010,

providing for a senior secured term loan of up to $55,200,000

 

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between the Borrower, as borrower, and ING Bank N.V., as facility agent and security trustee and lender, as such agreement is amended, amended and restated, supplemented or otherwise modified from time to time;

“Indemnitee”shall have the meaning ascribed thereto in Section 19.8;

“Initial Charter Party Agreement”shall mean the time charter agreement set forth on Schedule V;

“Initial Charterer”shall mean Hyundai Glovis Co. Ltd.;

“Initial Payment Date”shall mean July 31, 2015;

“Insurances Assignment”shall mean the first priority assignment in respect of the insurances

over the Vessel, to be executed by the Borrower in favor of the Security Trustee pursuant to Section 4.1(s)(ii), substantially in the form set out in Exhibit F;

“Interest Expense”shall mean, with respect to the Guarantor and the Subsidiaries, on

a consolidated basis, for any period (without duplication), interest expense, whether paid or accrued (including the interest component of capitalized leases), on all Indebtedness of the Guarantor and the Subsidiaries for such period, net of interest income, all determined in accordance with GAAP;

“Interest Period”shall mean a period of three (3) months or as otherwise agreed

upon by the Facility Agent and the Borrower;

“ISM Code”shall mean the International Safety Management Code for the Safe

Operating of Ships and for Pollution Prevention constituted pursuant to Resolution A.741(18) of the International Maritime Organization and incorporated into the Safety of Life at Sea Convention and includes any amendments or extensions thereto and any regulation issued pursuant thereto;

“ISPS Code”shall mean the International Ship and Port Facility Security Code

adopted by the International Maritime Organization at a conference in December, 2002 and amending the Safety of Life at Sea Convention and includes any amendments or extensions thereto and any regulation issued pursuant thereto;

“ISSC”shall mean the International Ship Security Certificate issued

pursuant to the ISPS Code;

“LCI Shipholdings”shall mean LCI Shipholdings, Inc., a corporation existing under

the laws of the ▇▇▇▇▇▇▇▇ Islands;

“Lenders”shall have the meaning ascribed thereto in the preamble;

“LIBOR”shall mean the rate (rounded upward to the nearest 1/16th of one

percent) for deposits of Dollars for the relevant Interest Period at or about 11:00 A.M. (London time) on the second London Banking Day before the first day of such period as displayed on the Reuters screen “LIBOR01”, or any successor service for the

 

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purpose of displaying the London Interbank rates of major banks for Dollars (the Reuters screen “LIBOR01” is the display designated as the Reuters screen “LIBOR01”, or such other page as may replace the Reuters screen “LIBOR01” on that service or such other service or services as may be administered by ICE Benchmark Administration Limited (or any other Person which takes over the administration of that rate) for the purpose of displaying London Interbank offered rates for Dollar deposits), provided, however, that LIBOR shall never be less than 0%;

“Liquidity”means the sum of Revolver Undrawn Availability plus

“Loan Administration Form”shall mean the DVB loan administration form as attached in

Exhibit M;

“Majority Lenders”at any time shall mean Lenders holding an aggregate of more than

66.67% of the Facility then outstanding;

“Manager’s Undertaking”shall mean letters of undertaking to the Facility Agent to be issued

by any party that is or becomes the Commercial Manager (unless the Borrower is the Commercial Manager) or the Technical Manager, substantially in the form set out in Exhibit J or in such form acceptable to the Facility Agent, pursuant to which such manager shall subordinate its rights to those of the Creditors;

“Mandated Lead Arranger”shall have the meaning ascribed thereto in the preamble;

“Mandatory Costs”shall mean in relation to the Facility or an unpaid sum the rate per

annum notified by any Lender to the Facility Agent to be the cost to that Lender of compliance with all reserve asset, liquidity or cash margin or similar requirement of any Federal Reserve Bank, any other central bank or European Central Bank or the Financial Services Authority or similar institution whose requirements such Lender complies with;

“Margin”shall mean 275 basis points;

“Material Adverse Effect”shall mean a material adverse effect on the ability or prospective

ability of the Borrower and/or the Guarantor to meet any of their respective obligations with regard to (i) the Facility and the financing arrangements established in connection therewith or (ii) any of their respective Indebtedness or other obligations that, considered as a whole, are material to the Borrower and/or the Guarantor;

“Materials of Environmental Concern” shall have the meaning ascribed thereto in Section 2.1(q);

“Mortgage”shall mean the first preferred ▇▇▇▇▇▇▇▇ Islands mortgage on the

Vessel, substantially in the form attached hereto as Exhibit G-1;

“MTSA”shall mean the Maritime & Transportation Security Act, 2002, as

amended, inter alia, by Public Law 107-295;

 

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“Multiemployer Plan”shall mean, at any time, a “multiemployer plan” (as defined in

Section 4001(a)(3) of ERISA) to which any Security Party, any of their respective Subsidiaries or any ERISA Affiliate has any liability or obligation to contribute or has within any of the six preceding plan years had any liability or obligation to contribute;

“Note”shall mean the promissory note to be executed by the Borrower to

the order of the Facility Agent pursuant to Section 4.1(c), to evidence the Facility substantially in the form set out in Exhibit A;

“OFAC”shall have the meaning ascribed thereto in Section 19.9;

“Operator”shall mean the Person who is concerned with the operation of the

Vessel and falls within the definition of “Company” set out in rule 1.1.2 of the ISM Code;

“OpEx Cap Amount”shall mean $6,652 per day to be increased as of March 1 of each

subsequent year following the Closing Date by 3.0% for each subsequent one-year period;

“Other Borrower Vessels”shall mean (i) the 23,054 gross registered tons and 11,349 net

registered tons currently named “EGS CREST”, IMO Number 9576727 and (ii) the 23,054 gross registered tons and 11,349 net registered tons currently named “EGS WAVE”, IMO Number 9576741;

“Parallel Debt”shall have the meaning ascribed to it in Section 17.17(a);

“Pari Passu Intercreditor Agreement”shall mean the intercreditor agreement substantially in the form set

out in Exhibit L;

“PATRIOT Act”shall have the meaning ascribed to it in Section 19.9;

“Payment Dates”shall mean the Initial Payment Date and the dates falling at three

(3) month intervals thereafter, the last of which is the Final Payment Date;

“PBGC”shall mean the Pension Benefit Guaranty Corporation or any

successor entity thereto;

“Person”shall mean any individual, sole proprietorship, corporation,

partnership (general or limited), limited liability company, business trust, bank, trust company, joint venture, association, joint stock company, trust or other unincorporated organization, whether or not a legal entity, or any government or agency or political subdivision thereof;

“Plan”shall mean any employee benefit plan (other than a Multiemployer

Plan subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect to which any Security Party, any of their respective subsidiaries or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as

 

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defined in Section 3(5) of ERISA;

“Prepayment Premium”shall mean, with respect to prepayments made (i) on or prior to the

first anniversary of the Drawdown Date, an amount equal to three percent (3%) of the amount to be prepaid, (ii) after the first anniversary of the Drawdown Date but on or prior to the second anniversary of the Drawdown Date, an amount equal to two percent (2%) of the amount to be prepaid, (iii) after the second anniversary of the Drawdown Date but on or prior to the third anniversary of the Drawdown Date, an amount equal to one percent (1%) of the amount to be prepaid or (iv) after the third anniversary of the Drawdown Date, zero;

“Principal Obligations”shall mean, in relation to the Borrower or the Guarantor all

monetary obligations (other than its Parallel Debt) which now or at any time hereafter may be or become due, owing or incurred by the Borrower or the Guarantor to any Creditor, whether due or not, whether contingent or not and whether alone or jointly with others, as principal, surety or otherwise, under or in connection with or pursuant to the Transaction Documents, as such obligations may be extended, restated, prolonged, amended, renewed or novated from time to time;

“Proceeding”shall have the meaning ascribed thereto in Section 8.1(i);

“Regions Credit Agreement”shall mean that certain credit agreement, dated as of September 24,

2013, between, among others, the Guarantor as a borrower and Regions Bank as administrative agent and collateral agent, as such agreement is amended, amended and restated, supplemented or otherwise modified from time to time;

“Required Percentage”shall mean (i) on or prior to the second anniversary of the

Drawdown Date, one hundred thirty-five percent (135%), (ii) after the second anniversary of the Drawdown Date but on or prior to the fourth anniversary of the Drawdown Date, one hundred fifty percent (150%) and (iii) after the fourth anniversary of the Drawdown Date, one hundred seventy-three percent (173%);

“Retention Account”shall mean the bank account no. ▇▇▇▇▇▇▇▇▇▇ maintained in the

name of the Borrower with Account Bank;

“Revolver Undrawn Availability”shall mean, at any time, the maximum amount of revolving loans

that could be incurred by the borrowers under the Regions Credit Agreement (but not to exceed the unutilized revolving commitments of the lenders thereof at such time) such that the Guarantor would remain in compliance with the financial covenants set forth in sections 8.8(a)(i) and 8.8(a)(vi) thereof, determined on a pro forma basis, after giving effect to such revolving loans thereunder;

“Sanctions”shall mean any trade, economic or financial sanctions, laws,

regulations, embargoes or restrictive measures (i) enacted, enforced or imposed by the United States, including without

 

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limitation, the Trading With The Enemy Act, the International Emergency, Economic Powers Act, the Iran Sanctions Act of 1996, as amended, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, the National Defense Authorization Act of 2012 (including the Iran Freedom Counter-Proliferation Act), the Iran Threat Reduction and Syria Human Rights Act of 2012, all as amended; any executive order, directive, or regulation pursuant to the authority of any of the foregoing, including the regulations of the U.S. Treasury Department set forth under 31 CFR, Subtitle B, Chapter V, as amended, or any orders or licenses issued or administered thereunder by OFAC (including the Specially Designated Nationals List), and (ii) any non-U.S. economic or financial sanctions, regulations, trade embargoes or other restrictive measures promulgated or administered by the United Nations Security Council, the European Union or its Member States (including, without limitation, the United Kingdom and France), or the respective governmental institutions and agencies of any of the foregoing, including without limitation, OFAC, the United States Department of State, and Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (all of the foregoing collectively referred to as the “Sanctions Authorities”) that are applicable to (A) a Security Party or any Affiliate thereof in the operation of its business or (B) a Lender and have been designated as “Sanctions” by the Facility Agent (acting on the request of such Lender) but only to the extent that compliance with such sanctions, regulations, trade embargoes or other restrictive measures so designated does not conflict with any of the provisions listed in (i) and (ii)(A) hereof;

“Security Document(s)”shall mean the Mortgage, the GREEN BAY Mortgage, the

Assignments, the GREEN BAY Assignments, the Account Pledges, the Pari Passu Intercreditor Agreement and any other documents that may be executed as security for the Facility and the Borrower’s obligations in connection therewith or to establish any form of subordination or priorities arrangement in relation therewith;

“Security Party”shall mean each of the Borrower and the Guarantor;

“Security Trustee”shall have the meaning ascribed thereto in the preamble;

“SMC”shall mean the safety management certificate issued in respect of

the Vessel in accordance with rule 13 of the ISM code;

“subsidiary”shall mean, with respect to any Person, any business entity of

which more than 50% of the outstanding voting stock or other equity interest is owned directly or indirectly by such Person and/or one or more other subsidiaries of such Person;

“Subsidiary”shall mean with respect to any Person, any subsidiary of such

Person or if the context requires, any subsidiary of the Guarantor;

“Swap Contract”shall mean (a) any and all rate swap transactions, basis swaps,

 

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credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transaction, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement;

“Synthetic Lease”shall mean (a) a so-called synthetic, off-balance sheet or tax

retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment);

“Taxes”shall mean any present or future income or other taxes, levies,

duties, charges, fees, deductions or withholdings of any nature now or hereafter imposed, levied, collected, withheld or assessed by any taxing authority whatsoever, except for (i) taxes on or measured by the overall net income of each Lender imposed by its jurisdiction of incorporation or applicable lending office, the United States of America, the State or City of New York or any governmental subdivision or taxing authority of any thereof or by any other taxing authority having jurisdiction over such Lender (unless such jurisdiction is asserted by reason of the activities of the Borrower or any of the Subsidiaries) ), (ii) taxes imposed under FATCA, or (iii) any Taxes that are attributable solely to the failure of any Lender to comply with Section 7.2(c);

“Technical Manager”shall mean LMS Shipmanagement, Inc. (which may subcontract

the services to Wallem Shipmanagement Limited) or such other manager acceptable to the Facility Agent;

“Total Loss”shall have the meaning ascribed thereto in the Mortgage;

“Transaction Documents”shall mean each of this Agreement, the Note, the Security

Documents and the Fee Letter;

“Unrestricted Cash”shall mean all unencumbered (other than security interests in favor

of the Security Trustee securing the Facility) cash and Cash

 

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Equivalents of the Guarantor and its Subsidiaries at such time;

“Vessel”shall mean that certain pure car truck carrier GLOVIS

COUNTESS with IMO No. 9476721; and

“Withdrawal Liability(ies)”shall mean liability to a Multiemployer Plan as a result of a

complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.

1.2Computation of Time Periods; Other Definitional Provisions. In this Agreement, the Note

and the other Transaction Documents, 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 Transaction Document, as applicable; references to agreements and other contractual instruments (including this Agreement, the Note and the Transaction 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 Transaction 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 Transaction 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 Reporting 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 December 31, 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 Transaction Documents to which it is a party, and is in compliance with all statutory, regulatory and other requirements relative to such business and such agreements;

 

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risks and in such amounts as are customary for companies engaged in similar businesses;

(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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(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.

 

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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;

(bb)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.

 

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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 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 Borrower 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 therefor, 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.

 

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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:

(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.

(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) ▇▇▇▇▇ ▇▇▇▇▇▇, L.L.P., special counsel to the

 

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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 the Earnings Accounts and the Retention

Accounts in the name of the Borrower, in each case, with Account Bank.

(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.

(l)Financial Statements. Each of the Security Parties shall deliver to the Facility Agent

consolidated financial statements for the period ending December 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 and the other Transaction Documents have been obtained.

(n)Know Your Customer Requirements. The Facility Agent shall have received

documentation, with respect to the Security Parties, to its satisfaction in connection with its know your customer requirements, including but not limited to:

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

(p)[Intentionally Omitted].

(q)[Intentionally Omitted].

 

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

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

 

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Initial Charterer, to be provided by the Borrower by the Drawdown Date on a best efforts basis, but in no event later than 90 days following the Drawdown Date);

(aa)No Material Adverse Effect. Since December 31, 2014, there having been

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.

 

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(bb) Amendment to the GREEN BAY Credit Facility. The Facility Agent shall have received an amendment to the Green Bay Credit Facility in form and substance satisfactory to it, duly executed by parties thereto.

(cc) ING Amendment. The Facility Agent shall have received an amendment agreement executed by the administrative agent, the collateral agent, the “Required Lenders” and the loan parties under the ING Credit Agreement, in form and substance satisfactory to it, to reflect, among other changes, the new financial covenant levels and to permit the Borrower Restructuring.

(dd)Miscellaneous. The Facility Agent shall be satisfied with any other document, authorization,

opinion or assurance it may require.

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 Borrower 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 provisions of this Section 5 regarding application of

prepayments, the Borrower shall repay the principal of the Facility in twenty (20) consecutive quarterly installments beginning on the Initial Payment Date and ending on the Final Payment Date, each of the twenty (20) installments being in an amount equal to $800,000.00 (or during the Amortization Reduction Period, $727,272.73), in each case, accompanied by, in the case of the last such installment, a balloon payment in an amount equal to the then-outstanding principal amount of the Facility 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 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, and the remainder of the proceeds of such Sale or the insurance proceeds may, in the Borrower’s discretion, be applied to repay the GREEN BAY Credit Facility in an amount equal to the face amount of the Debt Service Letter of Credit (as defined in GREEN BAY Credit Facility) in which case the Debt Service Letter of Credit (as defined in GREEN BAY Credit Facility) shall be terminated.

 

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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 Borrower 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 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

 

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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.

 

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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:

 

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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

 

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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 other Transaction 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:

Facility;

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 other Transaction Documents, it will:

 

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be distributed to the Lenders by the Facility Agent promptly upon the receipt thereof:

 

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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:

(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 therefor, 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 9.1(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;

(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

 

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contested in good faith and by appropriate proceedings or other acts and it shall set aside on its books adequate reserves with respect thereto;

 

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(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 case 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;

 

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(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 (and, upon the consummation of the Borrower Restructuring, the GREEN BAY);

(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 (and, upon the consummation of the Borrower Restructuring, the GREEN BAY) 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:

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

 

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(3)to provide any other information reasonably requested;

(aa) GREEN BAY Credit Facility Requirements. Comply with the terms of the GREEN BAY Credit Facility;

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

9.2Negative 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 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:

 

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(q)Nuclear Waste, War Zone, Etc.

(r)GREEN BAY Credit Facility. Amend, or enter into any transaction that has the effect of

amending, the GREEN BAY Credit Facility without the prior written consent of the Facility Agent.

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 other Transaction Documents, it will:

 

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9.4 Asset 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, within 30 days 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.

9.5 Borrower Restructuring. The Borrower and the Guarantor shall, as soon as possible after the

Closing Date but in no event later than 90 days thereafter, ensure that:

(1)in the sole and absolute ownership of the Borrower and duly registered in

the Borrower’s name in the Republic of the ▇▇▇▇▇▇▇▇ Islands, free of all liens and encumbrances of record other than the GREEN BAY Mortgage and the GREEN BAY-$38.5M Credit Facility Mortgage;

 

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(iii)Charter and NYK Consent. (A) copies of the charter party, along with the relevant

addenda, entered by the Borrower with Nippon Yusen Kaisha in respect of the GREEN BAY, each certified as true and complete by an officer of the Borrower, and (B) a copy of the executed and countersigned notice and acknowledgment of assignment of earnings and time charter and subordination agreement from Nippon Yusen Kaisha;

(iv)Security Documents.

(v)Registration of the GREEN BAY Mortgage. satisfactory evidence that the GREEN

BAY Mortgage has been duly registered under the laws of the Republic of the ▇▇▇▇▇▇▇▇ Islands and constitutes a preferred mortgage lien under such jurisdiction;

(vi)Pari Passu Intercreditor Agreement. a Pari Passu Intercreditor Agreement, duly

executed by the Borrower, the Guarantor, and the security trustee and the facility agent in respect of the GREEN BAY Credit Facility;

 

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(vii) UCC Filings. 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;

(viii) Legal Opinions. opinions addressed to the Facility Agent from (i) ▇▇▇▇▇ ▇▇▇▇▇▇, L.L.P., special counsel to the Borrower (including a no conflicts opinion with the other material agreements of the Borrower and the Guarantor) 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 New York and the Republic of the ▇▇▇▇▇▇▇▇ Islands;

(ix)ING Credit Agreement Amendment. evidence that the ING Credit Agreement is

amended to provide for the change of the borrower thereunder, to reset financial covenant levels and to effect other changes relating to the Borrower Restructuring in form and substance satisfactory to the Facility Agent;

(x)Consent. evidence that all third party consent, including that of Citizens Asset

Finance, Inc. as lender under the credit facility entered into by LCI Shipholdings with respect to the ▇▇▇▇▇ ▇▇▇▇, required or necessary to effect the transfer of the GREEN BAY to the Borrower has been obtained;

(xi)Officer’s Certificate. an officer’s certificate of the Borrower certifying as of the date

of the GREEN BAY Mortgage that after giving effect to the Borrower Restructuring

(xii) ING Credit Agreement. evidence that the EGS Borrower is released from all obligations under the ING Credit Agreement; and

(xiii) Miscellaneous. any other certificates, instruments or other documents (including any amendment to the GREEN BAY Credit Facility) that the Facility Agent may reasonably require in connection with the Borrower Restructuring and the GREEN BAY.

(c)The Borrower shall comply with the obligations set forth in Sections 9.5 and 12.2(c) of the

GREEN BAY Credit Facility.

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.

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

 

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10.3 Monthly Retentions. The Borrower shall ensure that (x) all Earnings of the Vessel paid into the Earnings Account on or prior to the 15th 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 15th 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 Borrower hereby authorizes the Facility Agent and the Account Bank to make such transfer(s). 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.

10.4Intentionally Omitted.

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.

10.6 Transfers 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 or any

breach under Section 9.3 or 9.4, 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:

(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.

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

10.8 Debits 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.

 

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

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 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.

11.2 Obligations 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 referred 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 irrevocable as described above:

 

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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 Borrower 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.

11.4 Subrogation. 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.

11.5 Remedies. 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 forthwith become due and payable by the Guarantor for purposes of Section 11.1.

11.6Joint, Several and Solidary Liability. The Guarantor’s obligations and liability under this

Agreement shall be on a “solidary” 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 “solidary” 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.

12.2 Assignment by Security Parties. The Security Parties may not assign any of their respective rights or obligations hereunder without the written consent of the Lenders.

12.3 Assignment 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

 

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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) Banking 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 Borrower 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.

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

 

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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.

13.2 Increased 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:

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:

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.

 

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13.4 Compensation 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.

14.1Currency 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.

14.2 Change 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.

14.3 Additional 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.

14.4 Rate 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.

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

15.2 Expenses. 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

 

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(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 therefor 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).

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

16.2 Jurisdiction. 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.

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

16.4 WAIVER 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.

17.1 Appointment 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

 

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other Transaction Documents or in connection therewith, except for its or their own gross negligence or willful misconduct.

17.2 Appointment 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 in connection therewith, except for its or their own gross negligence or willful misconduct.

17.3 Distribution 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, 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.

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

17.5 No 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 connection 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.

17.6 Agents 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

 

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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.

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

17.8 Certain Amendments. Neither this Agreement, the Note nor any of the other Transaction 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 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 Transaction Document except as expressly provided herein or in such Transaction 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.

17.9 Assumption 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

 

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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 the other Transaction Documents as the Majority Lenders shall request in writing.

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

17.11 Indemnification 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.

17.12 Consultation 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.

17.13 Resignation. 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.

17.14 Representations 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

 

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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.

17.15 Notification 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.

17.16 Reversal 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 Transaction 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.

17.17 Parallel Debt.

 

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(c)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

18.1 Notices. 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.

If to the Borrower or the Guarantor:

▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇

Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: Chief Financial Officer

With a copy to

▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇

Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇

If to the Facility Agent or the Security Trustee:

DVB Bank SE

Park House

▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇

Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Department: Transaction and Loan Services

Email: ▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇ 

Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

with a copy to:

DVB TRANSPORT (US) LLC

▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇

Facsimile: + 1 212 858 2664/+ 1 917 369 2196

 

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Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ / ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇/ ▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

19. MISCELLANEOUS

19.1 Right 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.

19.2 Time 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.

19.3 Unenforceable, 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 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.

19.4 References. 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.

19.5 Further 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.

19.6 Prior 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

 

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parties, which alone fully and completely express the agreements between the Security Parties, the Agents, and the Lenders.

19.7 Entire Agreement; Amendments. This Agreement constitutes the entire agreement of the parties hereto including all parties 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.

19.8 Indemnification. 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 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.

19.9 USA 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

 

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relating thereto; and (c) comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act laws and regulations, as amended.

19.10 Remedies 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, and 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.

19.11 Counterparts; 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.

19.12 Headings. 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.

19.13 Disclosure. 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 Transaction Documents, the Commitments, any agreement entered into by any of the Security Parties in connection with this Agreement, the Note or the Transaction 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 Transaction Documents 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 Transaction 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; provided, that if such information and details have been expressly communicated to the Creditors to be material non-public information, the relevant Creditor shall inform the relevant Security Party of its obligations to make such information or details available prior to giving, divulging or revealing such information or details.

 

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Securitization. The Credit Parties hereby agree and acknowledge that the Facility Agent or any Lender may include all or part of the Facility in a securitization or similar transaction without any consultation with or consent of the Borrower or the Guarantor and that the Credit Parties shall provide such information as required by the Facility Agent or such Lender to effect such transaction.

19.15 Pari Passu Intercreditor Agreement. The terms of this Agreement and the other Transaction Documents are subject to the terms of the Pari Passu Intercreditor Agreement. Where a conflict exists between this Agreement and the Intercreditor Agreement, the Intercreditor Agreement shall govern. The Creditors hereby authorize the Facility Agent and the Security Trustee to enter into the Pari Passu Intercreditor Agreement and any necessary amendment, modification or termination thereof.

[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.

 

 

 

EAST GULF SHIPHOLDING, INC, as Borrower

 

By: /s/ ▇. ▇. ▇▇▇▇▇

Name:   ▇. ▇. ▇▇▇▇▇

Title: V/P - Treasurer

 

INTERNATIONAL SHIPHOLDING CORPORATION, as Guarantor

 

By: /s/ ▇. ▇. ▇▇▇▇▇

Name: ▇.▇. ▇▇▇▇▇

Title: V/P – Treasurer

 

 

DVB BANK SE, as Mandated Lead Arranger, Facility Agent, Security Trustee and Lender

 

By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Title: Senior Vice President

 

 

By: /s/ Kartal Cona

Name: Kartal Cona

Title: Vice President

 

 

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ACKNOWLEDGMENT AND AGREEMENT

The undersigned, an Affiliate of the Borrower, hereby acknowledges and agrees to be bound by the subordination provisions set forth in Section 9.1(w) of the foregoing Agreement to the same extent as if the undersigned were a party to said Agreement.

LCI SHIPHOLDINGS, INC.

 

 

By: /s/ ▇. ▇. ▇▇▇▇▇

Name: ▇. ▇. ▇▇▇▇▇

Title: V/P Vice President

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LENDERSCOMMITMENT

DVB Bank SE        $32,000,000

▇▇▇▇ ▇▇▇▇▇

▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇

Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Department: Transaction and Loan Services

Email: ▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

 

 

With a copy to:

 

DVB TRANSPORT (US) LLC

▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇

Facsimile:/▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Attention Christoph Class/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

Email:  ▇▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

 

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SCHEDULE II

 

APPROVED SHIP BROKERS

 

▇.▇. ▇▇▇▇▇▇ Shipbrokers a.s. ▇▇▇▇▇▇ ▇▇▇'▇ ▇▇▇▇ ▇▇

▇▇▇▇, ▇▇▇▇▇▇

Telephone No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇ Facsimile No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇

Fearnleys A/S

▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇

▇▇▇▇, ▇▇▇▇▇▇

Telephone No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇

Facsimile No.: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇

▇. ▇▇▇▇▇▇▇▇ & Company

▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇

▇▇▇▇▇▇▇

Telephone No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Facsimile No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Braemar Shipbrokers Ltd.

▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇ ▇▇▇

▇▇▇▇▇▇▇

Telephone No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Facsimile No.: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Jacq. Pierot Jr. & Sons, Inc. (USA) ▇▇ ▇▇▇▇▇▇▇▇

▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇

Telephone No.: (▇▇▇) ▇▇▇ ▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇ ▇▇▇▇

▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (BRS)

▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇-▇▇▇▇▇

▇▇▇▇▇▇

Telephone No. : ▇▇▇ (▇)▇ ▇▇ ▇▇ ▇▇ 34

Hesnes Shipping AS ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇

▇▇▇▇▇▇

 

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SCHEDULE III

Security Party Liens as of the Closing Date

LIENS AS OF THE CLOSING DATE International Shipholding Corporation

Multiple Indebtedness Mortgage, Assignment of Leases and Rents and Security Agreement in favor of Regions Bank on real estate located at ▇▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇.

Security Agreement covering various collateral in favor of Regions Bank in connection with the Credit Agreement providing revolving and term loan facilities up to a maximum amount of $145,000,000

East Gulf Shipholding, Inc.

Mortgages, Earnings Assignments, and Insurance Assignments in favor of ING N.V. on vessels EGS Crest and EGS Wave.

 

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SCHEDULE IV

Security Party Indebtedness as of the Closing Date International Shipholding Corporation

Guarantee of indebtedness of East Gulf Shipholding, Inc. in the amount of $26,986,666.56 to ING Bank N.V., which indebtedness has a maturity date of January 24, 2018.

Guarantee of indebtedness of Dry Bulk Australia Ltd. and Dry Bulk Americas Ltd. in the amount of $26,246,071.41 to ING Bank N.V., which indebtedness has a maturity date of June 20, 2018.

Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of $21,120,000.00 to Citizens Asset Finance, Inc., which indebtedness has a maturity date of July 31, 2021.

Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of $8,397,321.54 to Capital One N.A. which indebtedness has a maturity date of January 1, 2017.

Guarantee of indebtedness of Oslo Bulk 6 Pte Ltd in the amount of $1,000,000.00 to Pareto Bank ASA which has a maturity date of January 2023 dependent upon vessel delivery date.

Indebtedness to Regions Bank of up to $10,000,000 secured by real estate located at ▇▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇.

Guarantee of indebtedness of LCI Shipholdings, Inc. in the amount of $37,019,230.76 to DVB Bank, SE which indebtedness has a maturity date of August 28, 2020.

Secured Indebtedness of up to $145,000,000 under a Credit Agreement dated September 23, 2013, between International Shipholding Corporation, Enterprise Ship Company, Inc, Sulphur Carriers, Inc, CG Railway, Inc, Central Gulf Lines, Inc, Coastal Carriers, Inc, ▇▇▇▇▇▇▇▇ Steamship Corporation, Inc, ▇.▇. ▇▇▇▇▇▇▇ & Co., Inc, LMS Shipmanagement, Inc, U.S. united Ocean Services, LLC, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLC, Tower, LLC, and Frascati Shops, Inc, as borrowers, and Regions Bank, among others, as Administrative Agent and Collateral Agent.

East Gulf Shipholding, Inc.

Indebtedness to ING Bank N.V. in the amount of $26,986,666.56 which has a maturity date of January 24, 2018.

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SCHEDULE V

 

Initial Charter Party Agreement

 

 

 

 

 

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EXHIBIT A

PROMISSORY NOTE

New York, New York

$32,000,000

___________, 2015

FOR VALUE RECEIVED, the undersigned, EAST GULF SHIPHOLDING, INC., a corporation organized and existing under the laws of the Republic of the ▇▇▇▇▇▇▇▇ Islands, as borrower (the “Borrower”), hereby promises to pay to the order of DVB BANK SE, a banking corporation organized under the laws of Germany ("DVB"), as facility agent (the “Facility Agent”) for the Lenders (as defined herein), at its offices located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, or as it may otherwise direct, the principal sum of Thirty Two Million Dollars ($32,000,000) or such lesser amount as may be owing under the Credit Agreement (as defined below). The Borrower, shall repay the indebtedness represented by this Promissory Note (this “Note”) as provided in Section 5 of that certain credit agreement dated as of April __, 2015, (the “Credit Agreement”) made by and among (i) the Borrower, (ii) International Shipholding Corporation, as guarantor, (iii) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement (the “Lenders”)), (iv) DVB, as facility agent for the Lenders, and security trustee for the Lenders and (v) DVB, as mandated lead arranger. This Promissory Note (this “Note”) may be prepaid on such terms as provided in the Credit Agreement. Interest shall be paid on the indebtedness represented by this Note at the rate (the “Applicable Rate”) determined from time to time in accordance with Section 6 of the Credit Agreement and at the times provided in Section 6 of the Credit Agreement, which provisions are incorporated herein with full force and effect as if they were more fully set forth herein at length.

Any principal payment not paid when due, whether on the maturity date thereof or by acceleration, shall bear interest thereafter at a rate per annum equal to the Default Rate (as defined in the Credit Agreement). All interest shall accrue and be calculated on the actual number of days elapsed and on the basis of a 360 day year.

Words and expressions used herein and defined in the Credit Agreement shall have the same meaning herein as therein defined.

Both principal and interest are payable in Dollars to the Facility Agent, for the account of the Lenders, as the Facility Agent may direct, in immediately available same day funds.

The Facility Agent may endorse the amount and the date of the making of an Advance and any prepayment or payment of principal hereunder on the grid annexed hereto and made a part hereof, which endorsement shall constitute prima facie evidence of the accuracy of the information so endorsed; provided, however, that any failure to endorse such information on such grid shall not in any manner affect the obligation of the Borrower, to make payment of principal and interest in accordance with the terms of the Credit Agreement and this Note.

 

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If this Note or any payment required hereunder becomes due and payable on a day which is not a Banking Day the due date thereof shall be extended until the next following Banking Day (in which event, interest shall be payable during such extension at the rate applicable immediately prior thereto), unless such next following Banking Day falls in the following month, in which case such payment shall be payable immediately preceding the Banking Day.

This Note is the Note referred to in, and is entitled to the security and benefits of, the Credit Agreement and the Security Documents. Upon the occurrence of any Event of Default under the Credit Agreement, the principal hereof and accrued interest hereon may be declared to be, and shall thereupon become, forthwith, due and payable.

Presentment, demand, protest and notice of dishonor of this Note or any other notice of any kind are hereby expressly waived.

THE BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE FACILITY AGENT HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS NOTE.

This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to principles of conflicts of law.

IN WITNESS WHEREOF, the Borrower has executed and delivered this Note on the date and year first above written.

 

[Signature page follows]

 

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EAST GULF SHIPHOLDING, INC., as Borrower

 

By: ______________________

Name:

Title:

 

 

 

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PAYMENTS OF PRINCIPAL

 

 

 

 

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EXHIBIT B

Drawdown Notice

DVB BANK SE2015

Park House

▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇

E-mail: ▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇ 

Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇

Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Department: Transaction and Loan Services

Ladies and Gentlemen:

Please be advised that, in accordance with Section 3 of the credit agreement among (1) yourselves, as mandated lead arranger, facility agent, and security trustee, (2) East Gulf Shipholding Inc., as borrower (the “Borrower”), (3) the banks and financial institutions listed on Schedule I of the Credit Agreement (as hereinafter defined), as lenders, and (4) International Shipholding Corporation, as guarantor,

dated as of___, 2015 (the “Credit Agreement”), the undersigned hereby request that the

Advance (as defined in the Credit Agreement) in the aggregate principal amount of_____________________________________________

Dollars ($) be advanced to the Borrower as follows:

Drawdown Date:

Amount to be drawn down: Interest Period:

Disbursement Instructions:

The undersigned hereby represents and warrants that (a) the representations and warranties stated in Section 2 of the Credit Agreement (updated mutatis mutandis) are true and correct on the date hereof and will be true and correct on the Drawdown Date specified above as if made on such date, (b) no Default or Event of Default has occurred and is continuing or will have occurred and be continuing on the Drawdown Date, and (c) no Default or Event of Default will result from the making of the Advance (as defined in the Credit Agreement).

The undersigned hereby covenants and undertakes that, in the event that on the date specified for making available the Advance as stated above, the Lenders (as defined in the Credit Agreement) shall not be obliged under the Credit Agreement to make such Advance available, the undersigned shall indemnify and hold the Lenders fully harmless against any losses which the Lenders may sustain as a result of borrowing or agreeing to borrow funds to meet the drawdown requirements as stated above, and the certificate of the relevant Lender or Lenders shall (save and except for manifest error) be conclusive and binding on the undersigned as to the extent of any such loss.

 

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This Drawdown Notice is effective upon receipt by you and shall be irrevocable.

Very truly yours,

EAST GULF SHIPHOLDING, INC., as Borrower

By: ________________

Name:

Title:

 

 

 

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EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

CERTIFICATE OF THE CHIEF FINANCIAL OFFICER

OF

INTERNATIONAL SHIPHOLDING CORPORATION FOR THE PERIOD ENDED

The undersigned, being the chief financial officer of INTERNATIONAL SHIPHOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("ISH"), hereby certifies, on behalf of ISH and the Borrower (as defined below), to DVB BANK SE ("DVB"), as facility agent for the Lenders, in connection with that certain credit agreement, dated as of April ___, 2015 (the "Credit Agreement"), by and among, (1) East Gulf Shipholding, Inc., as borrower (together with any successor thereto, the “Borrower”), (2) ISH, as guarantor, (3) the banks and financial institutions listed on Schedule I of the Credit Agreement, as lenders (together with any bank or financial institution which becomes a Lender pursuant to Section 12 of the Credit Agreement (the "Lenders")), (4) DVB, as facility agent for the Lenders, and security trustee for the Lenders and (5) DVB, as mandated lead arranger, that:

Subsidiaries dated as of and for the __________period
then ended and (ii) the separate financial report of the Borrower dated as of

and for the period then ended, and such
statements and reports fairly present the financial condition of ISH and its Subsidiaries and the Borrower, as the case may be, as of the dates indicated and the results of their operations and cash flows for the periods indicated; and

 

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Capitalized terms used herein without definition have the meaning ascribed thereto in the Credit Agreement.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this_____ day of 201_.

INTERNATIONAL SHIPHOLDING CORPORATION

By: ____________________

Name:

Title:

 

 

 

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ANNEX A

Financial Covenant Analyses

 

 

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ANNEX B

 

GAAP Changes

 

 

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ANNEX C

 

Contingent Liabilities

 

 

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EXHIBIT D

ASSIGNMENT AND ASSUMPTION AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), dated as of ______, 201_ among [NAME OF ASSIGNOR], a [bank]/[corporation] organized under the laws of [JURISDICTION OF ASSIGNOR] (the "Assignor"), as assignor, and [NAME OF ASSIGNEE], a [bank]/[corporation] organized under the laws of [JURISDICTION OF ASSIGNEE] (the "Assignee"), as assignee, supplemental to:

Except as otherwise defined herein, terms defined in the Credit Agreement shall have the same meaning when used herein.

In consideration of the premises and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: