As filed
with the Securities Exchange Commission on July 2, 2008
Registration Statement No. 333
-
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
F-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
EUROSEAS
LTD.
(Exact
name of registrant as specified in its charter)
Republic
of the Marshall Islands
(State
or other jurisdiction of
incorporation
or organization)
|
|
N/A
(I.R.S.
Employer
Identification
No.)
|
Euroseas
Ltd.
Aethrion
Center
40
Ag. Konstantinou Street
151
24 Maroussi Greece
001
30 211 1804005
(Address
and telephone number of Registrant’s principal executive
offices)
|
|
Seward
& Kissel LLP
Attention: Lawrence
Rutkowski, Esq.
One
Battery Park Plaza
New
York, New York 10004
(212)
574-1200
(Name,
address and telephone number of agent for
service)
|
Copies
to:
Euroseas
Ltd.
Aethrion
Center
40
Ag. Konstantinou Street
151
24 Maroussi Greece
001
30 211 1804005
|
|
Lawrence
Rutkowski, Esq.
Seward
& Kissel LLP
One
Battery Park Plaza
New
York, New York 10004
(212)
574-1200
|
|
|
|
|
|
|
Approximate date of commencement of
proposed sale to the public:
From time to time after this
registration statement becomes effective as determined by market conditions and
other factors.
If only
securities being registered on the Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box.
o
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box.
x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
o
If this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective Registration Statement for the same
offering.
o
If this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
o
If this Form is a post-effective
amendment to a registration statement filed pursuant to General Instruction I.D.
filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following box
o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box.
o
CALCULATION
OF
REGISTRATION
FEE
Title
of Each Class
of Securities
to be
Registered
|
Amount
to be Registered (1)(4)
|
Proposed
Maximum Aggregate Price Per Unit (2)
|
Proposed
Maximum Aggregate Offering Price (1)
|
Amount
of Registration Fee
|
Primary
Offering
|
|
|
|
|
Common
Shares, par value $ 0.03 per share (3)
|
|
|
|
|
Preferred
Shares, par value $ 0.01 per share (3)
|
|
|
|
|
Debt
Securities (3)(4)
|
|
|
|
|
Warrants
(5)
|
|
|
|
|
Purchase
Contracts (6)
|
|
|
|
|
Units
(7)
|
|
|
|
|
Primary
Offering Total
|
|
|
$400,000,000
|
$15,720
|
Secondary
Offering
|
|
|
|
|
Common
Shares, par value $ 0.03 per share to be offered by certain selling
shareholders
|
9,955,879
|
$12.51
(8)
|
$124,548,047
(8)
|
$4,895
(8)
|
Total
|
|
|
$524,548,047
|
$20,615
|
(1)
|
Such
amount in U.S. dollars or the equivalent thereof in foreign currencies as
shall result in an aggregate initial public offering price for all
securities of $400,000,000.
|
(2)
|
Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(o). Any securities registered hereunder may be sold separately or
as units with other securities registered hereunder. In no
event will the aggregate offering price of all securities sold by Euroseas
Ltd. pursuant to this registration statement exceed
$400,000,000.
|
(3)
|
Also
includes such indeterminate amount of debt securities and number of
preferred shares and common shares as may be issued upon conversion of or
in exchange for any other debt securities or preferred shares that provide
for conversion or exchange into other
securities.
|
(4)
|
If
any debt securities are issued at an original issue discount, then the
offering may be in such greater principal amount as shall result in a
maximum aggregate offering price not to exceed
$400,000,000.
|
(5)
|
There
is being registered hereunder an indeterminate number of warrants as may
from time to time be sold at indeterminate
prices.
|
(6)
|
There
is being registered hereunder an indeterminate number of purchase
contracts as may from time to time be sold at indeterminate
prices.
|
(7)
|
There
is being registered hereunder an indeterminate number of units as may from
time to time be sold at indeterminate prices. Units may consist
of any combination of the securities registered
hereunder.
|
(8)
|
Pursuant
to Rule 457(c), the offering price and registration fee are computed on
the average of the high and low prices for the common stock on the Nasdaq
Global Select Market on July 1,
2008.
|
The
Registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective date until
the Registrants shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section 8(a),
may determine.
|
The information in this prospectus is not complete and may be
changed. This prospectus is not an offer to sell thEse securities and it
is not soliciting an offer to buy or sell these securities in any
jurisdiction where the offer or sale is not permitted. These securities
may not be sold until the registration statement filed with the Securities
and Exchange Commission is effective.
|
Subject
to completion dated July 2, 2008
$400,000,000
and
9,955,879
of our Common Shares
Offered
by Selling Shareholders
Through
this prospectus, we may periodically offer:
(1)
our
common shares,
(2)
our
preferred shares,
(3)
our debt
securities,
(4)
our
warrants,
(5)
our
purchase contracts, and
(6)
our
units
In
addition, the selling shareholders named in the section “Selling Shareholders”
may sell in one or more offerings pursuant to this registration statement up to
9,955,879 of our common shares that were previously acquired in private
transactions. We will not receive any of the proceeds from the sale of our
common shares by the Selling Shareholders.
The
prices and other terms of the securities that we will offer will be determined
at the time of their offering and will be described in a supplement to this
prospectus.
Our
common shares are currently listed on the Nasdaq Global Select Market under the
symbol “ESEA”.
The
securities issued under this prospectus may be offered directly or through
underwriters, agents or dealers. The names of any underwriters,
agents or dealers will be included in a supplement to this
prospectus.
An
investment in these securities involves risks. See the section
entitled “Risk Factors” beginning on page 6.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date
of this prospectus
is ,
2008.
TABLE
OF CONTENTS
|
FORWARD
LOOKING STATEMENTS
|
ii
|
|
PRICE
RANGE OF COMMON STOCK
|
27
|
|
RATIO
OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
|
29
|
|
ENFORCEMENT
OF CIVIL LIABILITIES
|
33
|
|
DESCRIPTION
OF CAPITAL STOCK
|
34
|
|
DESCRIPTION
OF PREFERRED SHARES
|
40
|
|
DESCRIPTION
OF WARRANTS
|
40
|
|
DESCRIPTION
OF DEBT SECURITIES
|
41
|
|
DESCRIPTION
OF PURCHASE CONTRACTS
|
51
|
|
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
|
60
|
|
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
|
62
|
|
GLOSSARY
OF SHIPPING TERMS
|
63
|
FORWARD
LOOKING STATEMENTS
Euroseas
Ltd., or the Company, desires to take advantage of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 and is including this
cautionary statement in connection with this safe harbor
legislation. This prospectus contains forward-looking statements.
These forward-looking statements include information about possible or assumed
future results of our operations or our performance. Words such as “expects,”
“intends,” “plans,” “believes,” “anticipates,” “estimates,” and variations of
such words and similar expressions are intended to identify the forward-looking
statements. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. These statements involve known and
unknown risks and are based upon a number of assumptions and estimates which are
inherently subject to significant uncertainties and contingencies, many of which
are beyond our control. Actual results may differ materially from those
expressed or implied by such forward-looking statements. Forward-looking
statements include, but are not limited to, statements regarding:
·
|
our
future operating or financial
results;
|
·
|
future,
pending or recent acquisitions, business strategy, areas of possible
expansion, and expected capital spending or operating
expenses;
|
·
|
drybulk
and container shipping industry trends, including charter rates and
factors affecting vessel supply and
demand;
|
·
|
our
financial condition and liquidity, including our ability to obtain
additional financing in the future to fund capital expenditures,
acquisitions and other general corporate
activities;
|
·
|
availability
of crew, number of off-hire days, dry-docking requirements and insurance
costs;
|
·
|
our
expectations about the availability of vessels to purchase or the useful
lives of our vessels;
|
·
|
our
expectations relating to dividend payments and our ability to make such
payments;
|
·
|
our
ability to leverage to our advantage our manager’s relationships and
reputations in the drybulk and container shipping
industry;
|
·
|
changes
in seaborne and other transportation
patterns;
|
·
|
changes
in governmental rules and regulations or actions taken by regulatory
authorities;
|
·
|
potential
liability from future litigation;
|
·
|
global
and regional political conditions;
|
·
|
acts
of terrorism and other hostilities;
and
|
·
|
other
factors discussed in the section titled “Risk
Factors.”
|
WE
UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENTS CONTAINED IN THIS PROSPECTUS, OR THE DOCUMENTS TO WHICH WE REFER YOU
IN THIS PROSPECTUS, TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH RESPECT TO
SUCH STATEMENTS OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH
ANY STATEMENT IS BASED.
Unless
otherwise indicated, all dollar references in this prospectus are to U.S.
dollars and financial information presented in this prospectus that is derived
from financial statements incorporated by reference is prepared in accordance
with the U.S. generally accepted accounting principles.
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or Commission, using a shelf registration
process. Under the shelf registration process, we may sell the common
shares, preferred shares, debt securities, warrants, purchase contracts and
units described in this prospectus in one or more offerings up to a total dollar
amount of $400,000,000. In addition, the Selling Shareholders may sell in one or
more offerings pursuant to this registration statement up to 9,955,879 of our
common shares that were previously acquired in private
transactions. This prospectus provides you with a general description
of the securities we or the Selling Shareholders may offer. Each time
we or the Selling Shareholders offers securities, we will provide you with a
prospectus supplement that will describe the specific amounts, prices and terms
of the offered securities. The prospectus supplement may also add,
update or change the information contained in this prospectus. You
should read carefully both this prospectus and any prospectus supplement,
together with the additional information described below.
This
prospectus does not contain all the information provided in the registration
statement that we filed with the Commission. For further information
about us or the securities offered hereby, you should refer to that registration
statement, which you can obtain from the Commission as described below under
“Where You Can Find More Information.”
PROSPECTUS
SUMMARY
This
section summarizes some of the information and consolidated financial statements
that appear later in this prospectus. As an investor or prospective investor,
you should review carefully the risk factors and the more detailed information
and financial statements that appear later in this prospectus. In this
prospectus, references to “Euroseas,” “Company,” “we,” “our,” “ours” and “us”
refer to Euroseas Ltd., and its subsidiaries, unless otherwise stated or the
context requires.
We
use the term “deadweight tons,” or dwt, in describing the capacity of our
drybulk carriers. Dwt, expressed in metric tons, each of which is equivalent to
1,000 kilograms, refers to the maximum weight of cargo and supplies that a
vessel can carry. We use the term “twenty foot equivalent unit,” or teu, the
international standard measure of containers, in describing the capacity of our
containerships. For the definition of certain shipping terms used in this
prospectus, see the “Glossary of Shipping Terms” on page 63 of this prospectus.
Drybulk carriers are categorized as Capesize, Panamax, Handymax and Handysize.
The carrying capacity of a Capesize drybulk carrier is 80,000 dwt and above. The
carrying capacity of a Panamax drybulk carrier ranges from 60,000 to 79,999 dwt.
The carrying capacity of a Handymax drybulk carrier ranges from 40,000 to 59,999
dwt and that of a Handysize drybulk carrier ranges from 10,000 to 39,999 dwt.
Containerships are categorized as Deep Sea, Intermediate, Handysize and Feeder.
The carrying capacity of a Deep Sea containership is 3,000 teu and above. The
carrying capacity of an Intermediate containership ranges from 2,000 to 2,999
teu. The carrying capacity of a Handysize containership ranges from 1,300 to
1,999 teu and that of a Feeder containership is less than 1,300 teu. Unless
otherwise indicated, all references to currency amounts in this prospectus are
in U.S. dollars and all share numbers and per share data give effect to a
1-for-3 reverse stock split effected on October 6, 2006.
Our
Company
We are a
provider of worldwide ocean-going transportation services. We own and operate
drybulk carriers that transport major bulks such as iron ore, coal and grains,
and minor bulks such as bauxite, phosphate and fertilizers. We also own and
operate containerships and multipurpose vessels that transport dry and
refrigerated containerized cargoes, principally manufactured products and
perishables.
Our fleet
consists of a total of 16 vessels consisting of five drybulk carriers, comprised
of three Panamax drybulk carriers and two Handysize drybulk carriers, ten
containerships and one multipurpose vessel with an average age of approximately
18 years. Given current market conditions, we believe that middle-age vessels
offer the most compelling value proposition, particularly in light of the
expertise of our affiliated management company in evaluating, operating and
maintaining middle-age vessels.
We intend
to strategically employ our fleet with time and spot charters. We actively
pursue time charters to obtain adequate cash flow to cover our fleet’s fixed
costs, consisting of vessel operating expenses, management fees, general and
administrative expenses, interest expense and dry-docking costs for the upcoming
12-month period. We look to employ the remainder of our fleet through time
charters, spot charters, shipping pools or contracts of affreightment, depending
on our view of the direction of the markets and other tactical or strategic
considerations. Fourteen of the 16 vessels in our fleet are currently employed
under time charters, one vessel participates in a shipping pool, which provides
us with both stable cash flow and high utilization rates that help us generate
steady earnings and enhance our ability to pay dividends to our shareholders and
one vessel is currently on the spot market. The staggered maturities of our time
charters enable us to constantly reevaluate the market and adjust the balance of
our charter book accordingly. We believe this employment strategy provides us
with more predictable operating cash flows and sufficient downside protection,
while allowing us to participate in the potential upside of the spot market
during periods of rising charter rates.
Our
operations generate significant cash, which provides us with flexibility in our
growth, operating and financial strategy. Our policy is to use this cash to
aggressively pay down debt, maintain financial flexibility, finance future
vessel acquisitions and provide an attractive dividend to our
shareholders.
Our
Fleet
As of
June 30, 2008, the profile and deployment of our fleet is the
following:
Name
|
|
Type
|
|
Dwt
|
|
TEU
|
|
Year
Built
|
|
Employment
|
|
TCE
Rate ($/day)
|
Drybulk
Vessels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IRINI
1
|
|
|
Panamax
|
|
|
|
69,734
|
|
|
|
—
|
|
|
|
1988
|
|
|
|
Baumarine
Spot Pool -until end 2008
|
|
|
|
Spot/Partly
fixed
|
|
ARISTIDES
N.P.
|
|
|
Panamax
|
|
|
|
69,268
|
|
|
|
—
|
|
|
|
1993
|
|
|
|
Time
Charter until
Mar-09
|
|
|
|
$52,000
|
|
IOANNA
P
|
|
|
Panamax
|
|
|
|
64,873
|
|
|
|
—
|
|
|
|
1984
|
|
|
|
Time
Charter until
Aug-08
|
|
|
|
$35,500
|
|
NIKOLAOS
P.
|
|
|
Handysize
|
|
|
|
34,750
|
|
|
|
—
|
|
|
|
1984
|
|
|
|
Time
Charter until Sep-08
|
|
|
|
$36,000
|
|
GREGOS
|
|
|
Handysize
|
|
|
|
38,691
|
|
|
|
—
|
|
|
|
1984
|
|
|
|
Spot
|
|
|
|
$36,750
/ next $42,000
|
|
Drybulk
Total
|
|
|
5
|
|
|
|
277,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multipurpose
Dry
Cargo
Vessels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TASMAN
TRADER
|
|
|
Multipurpose
|
|
|
|
22,568
|
|
|
|
950
|
|
|
|
1990
|
|
|
|
Time
Charter until
Mar-12
|
|
|
|
$8,850
until Dec-08
$9,500
until Dec-10
$9,000
until Mar-12
|
|
Container
Carriers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIGER
BRIDGE
|
|
|
Intermediate
|
|
|
|
31,627
|
|
|
|
2,228
|
|
|
|
1990
|
|
|
|
Time
Charter until
Jul-09
|
|
|
|
$16,500
|
|
ARTEMIS
|
|
|
Intermediate
|
|
|
|
29,693
|
|
|
|
2,098
|
|
|
|
1987
|
|
|
|
Time
Charter until
Dec-08
|
|
|
|
$19,000
|
|
MAERSK
NOUMEA
|
|
|
Intermediate
|
|
|
|
34,677
|
|
|
|
2,556
|
|
|
|
2001
|
|
|
|
Time
Charter until
Aug-11
/ plus three one year extension options
|
|
|
|
$16,800
until Aug-11
$18,735
/ $19,240 / $19,750 extension options
|
|
DESPINA
P
|
|
|
Handysize
|
|
|
|
33,667
|
|
|
|
1,932
|
|
|
|
1990
|
|
|
|
Time
Charter until Feb-09
|
|
|
|
$15,250
|
|
OEL
INTEGRITY (ex JONATHAN P)
|
|
|
Handysize
|
|
|
|
33,667
|
|
|
|
1,932
|
|
|
|
1990
|
|
|
|
Time
Charter until Apr-09
|
|
|
|
$16,500
|
|
OEL
TRANSWORLD (ex
CLAN GLADIATOR)
|
|
|
Handysize
|
|
|
|
30,007
|
|
|
|
1,742
|
|
|
|
1992
|
|
|
|
Time
Charter until
Oct-09
|
|
|
|
$18,500
|
|
YM
XINGANG I
|
|
|
Handysize
|
|
|
|
23,596
|
|
|
|
1,599
|
|
|
|
1993
|
|
|
|
Time
Charter until
Jul-09
|
|
|
|
$26,650
|
|
MANOLIS
P
|
|
|
Handysize
|
|
|
|
20,346
|
|
|
|
1,452
|
|
|
|
1995
|
|
|
|
Time
Charter until
Nov-09
|
|
|
|
$15,800
|
|
NINOS
(ex YM
QINGDAO
I)
|
|
|
Feeder
|
|
|
|
18,253
|
|
|
|
1,169
|
|
|
|
1990
|
|
|
|
Time
Charter until
Apr-09
|
|
|
|
$13,175
|
|
KUO
HSIUNG
|
|
|
Feeder
|
|
|
|
18,154
|
|
|
|
1,169
|
|
|
|
1993
|
|
|
|
Time
Charter until
Feb-09
|
|
|
|
$15,800
|
|
Container
Total
|
|
|
10
|
|
|
|
273,687
|
|
|
|
17,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fleet
Grand Total
|
|
|
16
|
|
|
|
573,571
|
|
|
|
18,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Irini
is employed in
the Baumarine spot pool that is managed by Klaveness, a major global
charterer in the dry bulk area, and also participates in “short” funds
(contracts to carry cargo at agreed rates), reducing its exposure to the
spot market.
|
We plan
to expand our fleet by investing in vessels in the drybulk, containership and
multipurpose markets by targeting primarily mid-age vessels at the time of
purchase under favorable market conditions. We also intend to take advantage of
the cyclical nature of the market by buying and selling ships when we believe
favorable opportunities exist. We employ our vessels in the spot and time
charter market, through pool arrangements and under contracts of affreightment.
Presently, our ten containerships, our multipurpose vessel and three of our
panamax bulkers are employed under time charters. Our other panamax vessel, m/v
Irini
, is employed in
the Baumarine pool that is managed by Klaveness, a major global charterer in the
drybulk area, and also participates in “short” funds (contracts to carry cargo
at agreed rates), reducing its exposure to the spot market.
As
of June 30, 2008, approximately 92% of our ship capacity in 2008 and
approximately 34% in 2009 are fixed time charter contracts or protected from
market fluctuations.
Management
of Our Fleet
The
operations of our vessels are managed by Eurobulk Ltd., or Eurobulk, an
affiliated company founded in 1994 by members of the Pittas family, under a
master management agreement with us and separate management agreements with each
ship-owning company. Under our master management agreement, Eurobulk is
responsible for providing us with executive services and commercial management
services, which include obtaining employment for our vessels and managing our
relationships with charterers. Eurobulk also performs technical management
services, which include managing day-to-day vessel operations, performing
general vessel maintenance, ensuring regulatory and classification society
compliance, supervising the maintenance and general efficiency of vessels,
arranging our hire of qualified officers and crew, arranging and supervising
dry-docking and repairs, arranging insurance for vessels, purchasing stores,
supplies, spares and new equipment for vessels, appointing supervisors and
technical consultants and providing technical support and shoreside personnel
who carry out the management functions described above and certain accounting
services.
Our
master management agreement with Eurobulk is effective as of January 1, 2008 and
has an initial term of 5 years until December 31, 2012. The master management
agreement cannot be terminated by Eurobulk without cause or under other limited
circumstances, such as sale of the Company or Eurobulk or the bankruptcy of
either party. This master management agreement will automatically be extended
after the initial period for an additional five year period unless terminated on
or before the 90th day preceding the initial termination date. Pursuant to the
master management agreement, each new vessel we acquire in the future will enter
into a separate five year management agreement with Eurobulk. In addition, upon
expiration of the current ship management agreements between Eurobulk and each
vessel-owing subsidiary, such subsidiaries will enter into new ship management
agreements with Eurobulk that terminate contemporaneously with the master
management agreement.
In
exchange for providing us with the services described above, we pay Eurobulk 630
euros (approximately $992 based on a exchange rate of 1.5748 U.S. dollars per
euro as of June 30, 2008) per vessel per day adjusted annually for
inflation.
Our
Competitive Strengths
We
believe that we possess the following competitive strengths:
·
|
Experienced Management
Team
. Our management team has significant experience in
all aspects of commercial, technical, operational and financial areas of
our business. Aristides J. Pittas, our Chairman and Chief Executive
Officer, holds a dual graduate degree in Naval Architecture and Marine
Engineering and Ocean Systems Management from the Massachusetts Institute
of Technology. He has worked in various technical, shipyard and ship
management capacities and since 1991 has focused on the ownership and
operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our
Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also
from the Massachusetts Institute of Technology and has over 20 years of
experience, primarily as a partner at a Boston based international
consulting firm focusing on investment and risk management in the maritime
industry.
|
·
|
Cost Effective Vessel
Operations
. We believe that because of the efficiencies
afforded to us through Eurobulk, the strength of our management team and
the quality of our fleet, we are, and will continue to be, a reliable, low
cost vessel operator, without compromising our high standards of
performance, reliability and safety. Despite the average age of our fleet
being approximately 18 years during 2007, our total vessel operating
expenses, including management fees and general and administrative
expenses were $5,624 per day for the year ended December 31, 2007. We
consider this amount to be among the lowest of the publicly listed drybulk
shipping companies in the U.S. Our technical and operating expertise
allows us to efficiently manage and transport a wide range of cargoes with
a flexible trade route profile, which helps reduce ballast time between
voyages and minimize off-hire days. Our professional, well-trained
masters, officers and on board crews further help us to control costs and
ensure consistent vessel operating performance. We actively manage our
fleet and strive to maximize utilization and minimize maintenance
expenditures. For the year ended December 31, 2007, our fleet utilization
was 99.7% and since 2003 our utilization rate has averaged in excess of
99.0%.
|
·
|
Strong Relationships with
Customers and Financial Institutions
. We believe
Eurobulk and the Pittas family have developed strong industry
relationships and have gained acceptance with charterers, lenders and
insurers because of their long-standing reputation for safe and reliable
service and financial responsibility through various shipping cycles.
Through Eurobulk, we offer reliable service and cargo carrying flexibility
that enables us to attract customers and obtain repeat business. We also
believe that the established customer base and reputation of Eurobulk and
the Pittas family helps us to secure favorable employment for our vessels
with well known charterers.
|
Our
Business Strategy
Our
business strategy is focused on providing consistent shareholder returns by
carefully timing and structuring acquisitions of drybulk carriers and
containerships and by reliably, safely and competitively operating our vessels
through Eurobulk. We continuously evaluate purchase and sale opportunities, as
well as long term employment opportunities for our vessels.
·
|
Renew and Expand our
Fleet
. We expect to grow our fleet in a disciplined
manner through timely and selective acquisitions of quality vessels. We
perform in-depth technical review and financial analysis of each potential
acquisition and only purchase vessels as market conditions and
developments present themselves. We continue to be focused on purchasing
well-maintained, secondhand vessels, which should provide a significant
value proposition given the strong charter rates that exist currently.
However, we will also consider purchasing younger vessels or newbuildings
if the value proposition exists at the time. Furthermore, as part of our
fleet renewal, we will continue to sell certain vessels when we believe it
is in the best interests of the Company and our
shareholders.
|
·
|
Maintain Balanced
Employment
. We intend to strategically employ our fleet
between time and spot charters. We actively pursue time charters to obtain
adequate cash flow to cover our fleet’s fixed costs, consisting of vessel
operating expenses, management fees, general and administrative expenses,
interest expense and drydocking costs for the upcoming 12-month period. We
look to deploy the remainder of our fleet through time charters, spot
charters, shipping pools or contracts of affreightment depending on our
view of the direction of the markets and other tactical or strategic
considerations. We believe this balanced employment strategy will provide
us with more predictable operating cash flows and sufficient downside
protection, while allowing us to participate in the potential upside of
the spot market during periods of rising charter rates. On the basis of
our fixed spot and existing time charters, approximately 92% of our vessel
capacity in 2008 and approximately 34% in 2009 are fixed, which will help
protect us from market fluctuations, enable us to make significant
principal and interest payments on our debt and pay dividends to our
shareholders.
|
·
|
Operate a Fleet of Vessels in
the Whole Dry Cargo Sector
. While remaining focused on
the dry cargo segment of the shipping industry, we intend to continue to
develop a diversified fleet of drybulk carriers and containerships. A
diversified drybulk fleet profile will allow us to better serve our
customers in both major and minor bulk trades, as well as to reduce any
dependency on any one cargo, trade route or customer. We currently remain
focused on the smaller size ship segment of the container market, which
has not experienced the same level of expansion in vessel supply that has
occurred with larger containerships. A diversified fleet, in addition to
enhancing the stability of our cash flows, will also help us to reduce our
exposure to unfavorable developments in any one shipping sector and to
benefit from upswings in any one shipping sector experiencing rising
charter rates.
|
·
|
Optimize Use of Financial
Leverage
. We will use bank debt to partly fund our
vessel acquisitions and increase financial returns for our shareholders.
We actively assess the level of debt we incur in light of our ability to
repay that debt based on the level of cash flow generated from our
balanced chartering strategy and efficient operating cost structure. Our
debt repayment schedule as of December 31, 2007 calls for a reduction of
more than 46% of our then outstanding debt by the end of 2009. We expect
this will increase our ability to borrow funds to make additional vessel
acquisitions in order to grow our fleet and pay consistent and possibly
higher dividends to our
shareholders.
|
Corporate
Information
Euroseas
Ltd. is a holding company existing under the laws of the Marshall Islands. We
maintain our principal executive offices at Aethrion Center, 40 Ag.,
Konstantinou Street, 151 24, Maroussi, Greece. Our telephone number at that
address is 011 30 211 1804005. Our website address is
http://www.euroseas.gr. The information on our website is not a part
of this prospectus.
The
Securities
We may
use this prospectus to offer up to $400,000,000 of:
·
|
purchase
contracts; and
|
We may
also offer securities of the types listed above that are convertible or
exchangeable into one or more of the securities listed above.
In
addition, the Selling Shareholders may sell in one or more offerings pursuant to
this registration statement up to 9,955,879 of our common shares that were
previously acquired in private transactions. We will not receive any of the
proceeds from the sale of our common shares sold by the Selling
Shareholders.
A
prospectus supplement will describe the specific types, amounts, prices, and
detailed terms of any of these securities that we or the Selling Shareholders
may offer and may describe certain risks associated with an investment in the
securities. Terms used in the prospectus supplement will have the
meanings described in this prospectus, unless otherwise specified.
RISK
FACTORS
Any
investment in our stock involves a high degree of risk. You should consider
carefully the following factors, as well as the other information set forth in
this prospectus, before making an investment in our common stock. Some of the
following risks relate principally to the industry in which we operate and our
business in general. Other risks relate to the securities market for and
ownership of our common stock. Any of the described risks could significantly
and negatively affect our business, financial condition, operating results and
common stock price. The following risk factors describe the material risks that
are presently known to us.
Industry
Risk Factors
The
cyclical nature of the shipping industry may lead to volatile changes in freight
rates which may reduce our revenues and net income.
We are an
independent shipping company (i.e. not linked in any way to the users of the
cargoes we transport) that operates in the drybulk and container shipping
industry. Our profitability is dependent upon the freight rates we are able to
charge. The supply of and demand for shipping capacity strongly influences
freight rates. The demand for shipping capacity is determined primarily by the
demand for the type of commodities carried and the distance that those
commodities must be moved by sea. The demand for commodities is affected by,
among other things, world and regional economic and political conditions
(including developments in international trade, fluctuations in industrial and
agricultural production and armed conflicts), environmental concerns, weather
patterns, and changes in seaborne and other transportation costs. The size of
the existing fleet in a particular market, the number of new vessel deliveries,
the scrapping of older vessels and the number of vessels out of active service
(i.e., laid-up, drydocked, awaiting repairs or otherwise not available for
hire), determines the supply of shipping capacity, which is measured by the
amount of suitable tonnage available to carry cargo. The cyclical nature of the
shipping industry may lead to volatile changes in freight rates which may reduce
our revenues and net income.
In
addition to the prevailing and anticipated freight rates, factors that affect
the rate of newbuilding, scrapping and laying-up include newbuilding prices,
secondhand vessel values in relation to scrap prices, costs of bunkers and other
operating costs, costs associated with classification society surveys, normal
maintenance and insurance coverage, the efficiency and age profile of the
existing fleet in the market and government and industry regulation of maritime
transportation practices, particularly environmental protection laws and
regulations. These factors influencing the supply of and demand for shipping
capacity are outside of our control, and we may not be able to correctly assess
the nature, timing and degree of changes in industry conditions. Some of these
factors may have a negative impact on our revenues and net income.
The
value of our vessels may fluctuate, adversely affecting our earnings, liquidity
and causing us to breach our secured credit agreements.
The
market value of our vessels can fluctuate significantly. The market value of our
vessels may increase or decrease depending on the following
factors:
·
|
general
economic and market conditions affecting the shipping
industry;
|
·
|
supply
of drybulk, container and multipurpose
vessels;
|
·
|
demand
for drybulk, container and multipurpose
vessels;
|
·
|
types
and sizes of vessels;
|
·
|
other
modes of transportation;
|
·
|
new
regulatory requirements from governments or self-regulated organizations;
and
|
·
|
prevailing
level of charter rates.
|
As
vessels grow older, they generally decline in value. Due to the cyclical nature
of the drybulk and container shipping industry, if for any reason we sell
vessels at a time when prices have fallen, we could incur a loss and our
business, results of operations, cash flow, financial condition and ability to
pay dividends could be adversely affected.
In
addition, we periodically re-evaluate the carrying amount and period over which
long-lived assets are depreciated to determine if events have occurred which
would require modification to their carrying values or their useful lives. A
determination that a vessel’s estimated remaining useful life or fair value has
declined below its carrying amount could result in an impairment charge against
our earnings and a reduction in our shareholders’ equity. Any change in the
assessed market value of any of our vessels might also cause a violation of the
covenants of each secured credit agreement which in turn might restrict our cash
and affect our liquidity. All of our credit agreements provide for a minimum
security maintenance ratio. If the assessed market value of our vessels declines
below certain thresholds, we will be deemed to have violated these covenants and
may incur penalties for breach of our credit agreements. For example, these
penalties could require us to prepay the shortfall between the assessed market
value of our vessels and the value of such vessels required to be maintained
pursuant to the secured credit agreement, or to provide additional security
acceptable to the lenders in an amount at least equal to the amount of any
shortfall. Furthermore, we may enter into future loans which may include various
other covenants, including but are not limited to, maximum fleet leverage
covenants and minimum fair net worth covenants.
Our
future profitability will be dependent on the level of charter rates in the
international drybulk and container shipping industry.
Charter
rates for the international drybulk and container shipping industry reached
record highs during 2004 and 2005; however, by the beginning of 2006 rates
declined. Drybulk rates recovered since early 2006 and reached new historic
highs in the fall of 2007 and again in May 2008. Although, drybulk
rates have since declined they remain high by historical standards. At the same
time, containership rates, after reaching historic highs in the middle of 2005,
declined by the end of the year and remained flat for most of 2006, further
declined by the end of 2006 and steadily recovered during 2007. Containership
rates remained at about the same level since the end of 2007 and are still below
the high levels achieved in the middle of 2005. Rates in drybulk or
containership markets are influenced by the balance of demand for and supply of
vessels and may decline in the future.
Because
the factors affecting the supply and demand for vessels are outside of our
control and are unpredictable, the nature, timing, direction and degree of
changes in industry conditions are unpredictable. In addition, we may
not be able to successfully charter our vessels in the future or renew existing
charters at rates sufficient to allow us to meet our obligations or to pay
dividends to our shareholders.
Some of
the factors that influence demand for vessel capacity include:
·
|
supply
and demand for drybulk and containership commodities, and separately for
containerized cargo;
|
·
|
global
and regional economic and political
conditions;
|
·
|
the
distance drybulk and containerized commodities are to be moved by
sea;
|
·
|
environmental
and other regulatory developments;
|
·
|
currency
exchange rates;
|
·
|
changes
in global production and manufacturing distribution patterns of finished
goods that utilize drybulk and other containerized commodities;
and
|
·
|
changes
in seaborne and other transportation
patterns.
|
Some of
the factors that influence the supply of vessel capacity include:
·
|
the
number of newbuilding deliveries;
|
·
|
the
scrapping rate of older vessels;
|
·
|
the
price of steel and other materials;
|
·
|
changes
in environmental and other regulations that may limit the useful life of
vessels; and
|
·
|
the
number of vessels that are out of
service.
|
We
anticipate that the future demand for our drybulk, container and multipurpose
vessels and the charter rates of the corresponding markets will be dependent
upon continued economic growth in China, India and the overall world economy,
seasonal and regional changes in demand, and changes to the capacity of the
world fleet. The capacity of the world fleet seems likely to increase and
economic growth may not continue. Adverse economic, political, social or other
developments could also have a material adverse effect on our business and
results of operations. If the number of new ships delivered exceeds the number
of vessels being scrapped and lost, vessel capacity will increase. For instance,
given that as of May 1, 2008 the capacity of the fully cellular worldwide
container vessel fleet was approximately 11.2 million teu, with approximately
6.4 million teu of additional capacity on order, the growing supply of container
vessels may exceed future demand, particularly in the short term. If the supply
of vessel capacity increases but the demand for vessel capacity does not
increase correspondingly, charter rates and vessel values could materially
decline.
An
economic slowdown in the Asia Pacific region could materially reduce the amount
and/or profitability of our business.
A
significant number of the port calls made by our vessels involve the loading or
discharging of raw materials and semi-finished products in ports in the Asia
Pacific region. As a result, a negative change in economic conditions in any
Asia Pacific country, particularly in China, may have an adverse effect on our
business, financial position and results of operations, as well as our future
prospects. In particular, in recent years, China has been one of the world’s
fastest growing economies in terms of gross domestic product. Such growth may
not be sustained and the Chinese economy may experience contraction in the
future. Moreover, any slowdown in the economies of the United States of America,
the European Union or certain Asian countries may adversely effect economic
growth in China and elsewhere. Our business, financial position and results of
operations, as well as our future prospects, will likely be materially and
adversely affected by an economic downturn in any of these
countries.
Changes
in the economic and political environment in China and policies adopted by the
government to regulate its economy may have a material adverse effect on our
business, financial condition and results of operations.
The
Chinese economy differs from the economies of most countries belonging to the
Organization for Economic Cooperation and Development, or OECD, in such respects
as structure, government involvement, level of development, growth rate, capital
reinvestment, allocation of resources, rate of inflation and balance of payments
position. Prior to 1978, the Chinese economy was a planned economy. Since 1978,
increasing emphasis has been placed on the utilization of market forces in the
development of the Chinese economy. Annual and five year State Plans are adopted
by the Chinese government in connection with the development of the economy.
Although state-owned enterprises still account for a substantial portion of the
Chinese industrial output, in general, the Chinese government is reducing the
level of direct control that it exercises over the economy through State Plans
and other measures. There is an increasing level of freedom and autonomy in
areas such as allocation of resources, production, pricing and management and a
gradual shift in emphasis to a “market economy” and enterprise reform. Limited
price reforms were undertaken, with the result that prices for certain
commodities are principally determined by market forces. Many of the reforms are
unprecedented or experimental and may be subject to revision, change or
abolition based upon the outcome of such experiments. The Chinese government may
not continue to pursue a policy of economic reform. The level of imports to and
exports from China could be adversely affected by the nature of the economic
reforms pursued by the Chinese government, as well as by changes in political,
economic and social conditions or other relevant policies of the Chinese
government, such as changes in laws, regulations or export and import
restrictions, all of which could, adversely affect our business, operating
results and financial condition.
We
may become dependent on spot charters in the volatile shipping markets, which
may result in decreased revenues and/or profitability.
Although
most of our vessels are currently under time charters, in the future, we may
have more of these vessels and/or any newly acquired vessels on spot charters.
The spot market is highly competitive and rates within this market are subject
to volatile fluctuations, while time charters provide income at pre-determined
rates over more extended periods of time. If we decide to spot charter our
vessels, we may not be able to keep all our vessels fully employed in these
short-term markets or that future spot rates will be sufficient to enable our
vessels to be operated profitably. A significant decrease in charter rates could
affect the value of our fleet and could adversely affect our profitability and
cash flows with the result that our ability to pay debt service to our lenders
and dividends to our shareholders could be impaired.
An
over-supply of drybulk carrier and containership capacity may lead to reductions
in charter hire rates and profitability.
The
market supply of drybulk carriers and especially containerships has been
increasing, and the number of both the drybulk vessels and containerships on
order have recently reached historic highs. The containership newbuildings are
expected to continue being delivered in significant numbers over the next
several years. The drybulk vessel newbuildings are expected to continue being
delivered in 2008 at the same rates as in 2006 and 2007, but it is anticipated
that in 2009, and particularly in 2010, that their delivery rate will start
increasing. An over-supply of drybulk carrier and containership capacity may
result in a reduction of charter hire rates. If such a reduction occurs upon the
expiration or termination of our drybulk carriers’ and containerships’ current
charters, such as during 2008 or 2009, when the charters under which at least
nine of our containerships are currently deployed expire, we may only be able to
recharter those drybulk carriers and containerships at reduced or unprofitable
rates or we may not be able to charter these vessels at all.
We
are subject to regulation and liability under environmental laws that could
require significant expenditures and affect our cash flows and net
income.
Our
business and the operation of our vessels are materially affected by government
regulation in the form of international conventions, national, state and local
laws and regulations in force in the jurisdictions in which the vessels operate,
as well as in the country or countries of their registration. Because such
conventions, laws, and regulations are often revised, we may not be able to
predict the ultimate cost of complying with such conventions, laws and
regulations or the impact thereof on the resale prices or useful lives of our
vessels. Additional conventions, laws and regulations may be adopted which could
limit our ability to do business or increase the cost of our doing business and
which may materially adversely affect our operations. We are required by various
governmental and quasi-governmental agencies to obtain certain permits,
licenses, certificates and financial assurances with respect to our
operations.
The
operation of our vessels is affected by the requirements set forth in the
International Maritime Organization’s (“IMO’s”) International Management Code
for the Safe Operation of Ships and Pollution Prevention (“ISM Code”). The ISM
Code requires shipowners and bareboat charterers to develop and maintain an
extensive “Safety Management System” that includes the adoption of a safety and
environmental protection policy setting forth instructions and procedures for
safe operation and describing procedures for dealing with emergencies. The
failure of a shipowner or bareboat charterer to comply with the ISM Code may
subject such party to increased liability, may decrease available insurance
coverage for the affected vessels, and/or may result in a denial of access to,
or detention in, certain ports. Currently, each of our vessels and Eurobulk, our
affiliated ship management company, are ISM Code-certified, but we may not be
able to maintain such certification indefinitely.
Although
the United States of America is not a party, many countries have ratified and
follow the liability scheme adopted by the IMO and set out in the International
Convention on Civil Liability for Oil Pollution Damage, 1969, as amended (the
“CLC”), and the Convention for the Establishment of an International Fund for
Oil Pollution of 1971, as amended and the Regulations for the Prevention of Air
Pollution from Ships to the International Convention for the Prevention of
Pollution from Ships (as modified in 1978 and 1997), including Annex VI thereto.
Under these conventions, a vessel’s registered owner is strictly liable for
pollution damage, including air pollution, caused on the territorial waters of a
contracting state by discharge of persistent oil, subject to certain complete
defenses. Many of the countries that have ratified the CLC have increased the
liability limits through a 1992 Protocol to the CLC. The right to limit
liability is also forfeited under the CLC where the spill is caused by the
owner’s actual fault or privity and, under the 1992 Protocol, where the spill is
caused by the owner’s intentional or reckless conduct. Vessels trading to
contracting states must provide evidence of insurance covering the limited
liability of the owner. In jurisdictions where the CLC has not been adopted,
various legislative schemes or common law govern, and liability is imposed
either on the basis of fault or in a manner similar to the CLC.
The
United States Oil Pollution Act of 1990 (“OPA”) established an extensive
regulatory and liability regime for the protection and clean-up of the
environment from oil spills. OPA affects all owners and operators whose vessels
trade in the United States of America or any of its territories and possessions
or whose vessels operate in waters of the United States of America, which
includes the territorial sea of the United States of America and its 200
nautical mile exclusive economic zone. OPA allows for potentially unlimited
liability without regard to fault of vessel owners, operators and bareboat
charterers for all containment and clean-up costs and other damages arising from
discharges or threatened discharges of oil from their vessels, including bunkers
(fuel), in the U.S. waters. OPA also expressly permits individual states to
impose their own liability regimes with regard to hazardous materials and oil
pollution materials occurring within their boundaries.
While we
do not carry oil as cargo, we do carry fuel oil (bunkers) in our drybulk
carriers. We currently maintain, for each of our vessels, pollution liability
coverage insurance of $1 billion per incident. If the damages from a
catastrophic spill exceeded our insurance coverage, that would have a material
adverse affect on our financial condition.
Capital
expenditures and other costs necessary to operate and maintain our vessels may
increase due to changes in governmental regulations, safety or other equipment
standards.
Changes
in governmental regulations, safety or other equipment standards, as well as
compliance with standards imposed by maritime self-regulatory organizations and
customer requirements or competition, may require us to make additional
expenditures. In order to satisfy these requirements, we may, from time to time,
be required to take our vessels out of service for extended periods of time,
with corresponding losses of revenues. In the future, market conditions may not
justify these expenditures or enable us to operate some or all of our vessels
profitably during the remainder of their economic lives.
Increased
inspection procedures and tighter import and export controls could increase
costs and disrupt our business.
International
shipping is subject to various security and customs inspection and related
procedures in countries of origin and destination. Inspection procedures may
result in the seizure of contents of our vessels, delays in the loading,
offloading or delivery and the levying of customs duties, fines or other
penalties against us.
It is
possible that changes to inspection procedures could impose additional financial
and legal obligations on us. Furthermore, changes to inspection procedures could
also impose additional costs and obligations on our customers and may, in
certain cases, render the shipment of certain types of cargo uneconomical or
impractical. Any such changes or developments may have a material adverse effect
on our business, financial condition and results of operations.
Rising
fuel prices may adversely affect our profits.
Fuel
(bunkers) is a significant, if not the largest, operating expense for many of
our shipping operations when our vessels are under voyage charter. When a vessel
is operating under a time charter, these costs are paid by the charterer.
However fuel costs are taken into account by the charterer in determining the
amount of time charter hire and therefore fuel costs also indirectly affect time
charter rates. The price and supply of fuel is unpredictable and fluctuates
based on events outside our control, including geopolitical developments, supply
and demand for oil and gas, actions by OPEC and other oil and gas producers, war
and unrest in oil producing countries and regions, regional production patterns
and environmental concerns. Fuel prices have been at historically high levels
recently, but shipowners have not really felt the effect of these high prices
because the shipping markets have also been at high levels. Any increase in the
price of fuel may adversely affect our profitability, especially if such
increase is combined with lower drybulk and containership rates.
If
our vessels fail to maintain their class certification and/or fail any annual
survey, intermediate survey, dry-docking or special survey, that vessel would be
unable to carry cargo, thereby reducing our revenues and profitability and
violating certain loan covenants of our third-party indebtedness.
The hull
and machinery of every commercial vessel must be classed by a classification
society authorized by its country of registry. The classification society
certifies that a vessel is safe and seaworthy in accordance with the applicable
rules and regulations of the country of registry of the vessel and the Safety of
Life at Sea Convention (“SOLAS”). Our vessels are currently classed with Lloyd’s
Register of Shipping, Bureau Veritas and Nippon Kaiji Kyokai. ISM and
International Ship and Port Facilities Security (“ISPS”) certification have been
awarded by Bureau Veritas and the Panama Maritime Authority to our vessels and
Eurobulk.
A vessel
must undergo annual surveys, intermediate surveys, drydockings and special
surveys. In lieu of a special survey, a vessel’s machinery may be on a
continuous survey cycle, under which the machinery would be surveyed
periodically over a five-year period. Every vessel is also required to be
drydocked every two to three years for inspection of the underwater parts of
such vessel.
If any
vessel does not maintain its class and/or fails any annual survey, intermediate
survey, drydocking or special survey, the vessel will be unable to carry cargo
between ports and will be unemployable and uninsurable which could cause us to
be in violation of certain covenants in our loan agreements. Any such inability
to carry cargo or be employed, or any such violation of covenants, could have a
material adverse impact on our financial condition and results of operations.
That status could cause us to be in violation of certain covenants in our loan
agreements.
Rising
crew costs may adversely affect our profits.
Crew
costs are a significant operating expense for many of our shipping operations.
Crewing costs have reached recent highs and may continue at such rates. The cost
of employing suitable crew is unpredictable and fluctuates based on events
outside our control, including supply and demand and the wages paid by other
shipping companies. Crew costs have been at high levels recently, but shipowners
have not really felt the effect of these high prices because the shipping
markets have also been at high levels. Any increase in crew costs may adversely
affect our profitability, especially if such increase is combined with lower
drybulk and containership rates.
Maritime
claimants could arrest our vessels, which could interrupt our cash
flow.
Crew
members, suppliers of goods and services to a vessel, shippers of cargo and
other parties may be entitled to a maritime lien against that vessel for
unsatisfied debts, claims or damages. In many jurisdictions, a maritime
lienholder may enforce its lien by arresting a vessel through foreclosure
proceedings. The arresting or attachment of one or more of our vessels could
interrupt our cash flow and require us to pay large sums of funds to have the
arrest lifted which would have a material adverse effect on our financial
condition and results of operations.
In
addition, in some jurisdictions, such as South Africa, under the “sister ship”
theory of liability, a claimant may arrest both the vessel which is subject to
the claimant’s maritime lien and any “associated” vessel, which is any vessel
owned or controlled by the same owner. Claimants could try to assert “sister
ship” liability against one of our vessels for claims relating to another of our
vessels.
Governments
could requisition our vessels during a period of war or emergency, resulting in
loss of earnings.
A
government could requisition for title or seize our vessels. Requisition for
title occurs when a government takes control of a vessel and becomes the owner.
Also, a government could requisition our vessels for hire. Requisition for hire
occurs when a government takes control of a vessel and effectively becomes the
charterer at dictated charter rates. Generally, requisitions occur during a
period of war or emergency. Government requisition of one or more of our vessels
could have a material adverse effect on our financial condition and results of
operations.
World
events outside our control may negatively affect our ability to operate, thereby
reducing our revenues and net income or our ability to obtain additional
financing, thereby restricting the implementation of our business
strategy.
Terrorist
attacks such as the attacks on the United States of America on September 11,
2001, on London, England on July 7, 2005, and the response to these attacks, as
well as the threat of future terrorist attacks, continue to cause uncertainty in
the world financial markets and may affect our business, results of operations
and financial condition. The continuing conflict in Iraq may lead to additional
acts of terrorism and armed conflict around the world, which may contribute to
further economic instability in the global financial markets. These
uncertainties could also have a material adverse effect on our ability to obtain
additional financing on terms acceptable to us or at all. Terrorist attacks may
also negatively affect our operations and financial condition and directly
impact our vessels or our customers. Future terrorist attacks could result in
increased volatility of the financial markets in the United States of America
and globally and could result in an economic recession in the United States of
America or the world. Any of these occurrences could have a material adverse
impact on our financial condition and costs.
Company
Risk Factors
If
we do not use the proceeds of this offering to acquire vessels and expand our
fleet, we may use it for general corporate purposes which may result in lower
earnings.
We intend
to use the proceeds of this offering to acquire additional vessels and expand
our fleet when we believe market conditions are favorable for purchasing such
vessels. Our management will have the discretion to identify and acquire
vessels. If our management is unable to identify and acquire vessels on terms
acceptable to us, we may use the proceeds of this offering for
general corporate purposes. It may take a substantial period of time before we
can locate and purchase suitable vessels. During this period, the proceeds of
this offering may be invested on a short-term basis and therefore may not yield
returns at rates comparable to what a vessel might have earned.
We
depend entirely on Eurobulk to manage and charter our fleet, which may adversely
affect our operations if Eurobulk fails to perform its obligations.
We have
no employees and we currently contract the commercial and technical management
of our fleet, including crewing, maintenance and repair, to Eurobulk, our
affiliated ship management company. We may lose Eurobulk’s services or Eurobulk
may fail to perform its obligations to us which could have a material adverse
effect on our financial condition and results of our operations. Although we may
have rights against Eurobulk if it defaults on its obligations to us, you will
have no recourse against Eurobulk. Further, we expect that we will need to seek
approval from our lenders to change Eurobulk as our ship manager.
Because
Eurobulk is a privately held company, there is little or no publicly available
information about it and there may be very little advance warning of operational
or financial problems experienced by Eurobulk that may adversely affect
us.
The
ability of Eurobulk to continue providing services for our benefit will depend
in part on its own financial strength. Circumstances beyond our control could
impair Eurobulk’s financial strength, and because Eurobulk is privately held it
is unlikely that information about its financial strength would become public
unless Eurobulk began to default on its obligations. As a result, there may be
little advance warning of problems affecting Eurobulk, even though these
problems could have a material adverse effect on us.
As
of June 30, 2008, Friends Investment Company Inc. owns approximately 31.3% of
our outstanding shares of common stock, which may limit your ability to
influence our actions.
As of
June 30, 2008 Friends Investment Company Inc., or Friends, our largest
shareholder, owns approximately 31.3% of the outstanding shares of our common
stock. As a result of this share ownership and for so long as Friends owns a
significant percentage of our outstanding common stock, Friends will be able to
influence the outcome of any shareholder vote, including the election of
directors, the adoption or amendment of provisions in our articles of
incorporation or bylaws and possible mergers, corporate control contests and
other significant corporate transactions. This concentration of ownership may
have the effect of delaying, deferring or preventing a change in control,
merger, consolidation, takeover or other business combination involving us. This
concentration of ownership could also discourage a potential acquirer from
making a tender offer or otherwise attempting to obtain control of us, which
could in turn have an adverse effect on the market price of our common stock.
For more information concerning the selling shareholders, see “Selling
Shareholders.”
Our
corporate governance practices are in compliance with, and are not prohibited
by, the laws of the Republic of the Marshall Islands, and as such we are
entitled to exemption from certain NASDAQ corporate governance standards.
Our
Company’s corporate governance practices are in compliance with, and are not
prohibited by, the laws of the Republic of the Marshall Islands. Therefore, we
are exempt from many of NASDAQ’s corporate governance practices other than the
requirements regarding the disclosure of a going concern audit opinion,
submission of a listing agreement, notification of material non-compliance with
NASDAQ corporate governance practices, and the establishment and composition of
an audit committee and a formal written audit committee charter. As a
result, you may not have the same protections afforded to stockholders of
companies that are subject to all of the NASDAQ corporate governance
requirements.
We
and our principal officers have affiliations with Eurobulk that could create
conflicts of interest detrimental to us.
Our
principal officers are also principals, officers and employees of Eurobulk,
which is our ship management company. These responsibilities and relationships
could create conflicts of interest between us and Eurobulk. Conflicts may also
arise in connection with the chartering, purchase, sale and operations of the
vessels in our fleet versus other vessels that are or may be managed in the
future by Eurobulk. Circumstances in any of these instances may make one
decision advantageous to us but detrimental to Eurobulk and vice versa. Eurobulk
currently manages one vessel other than those owned by Euroseas, and to date,
has managed only vessels where the Pittas family was at least a minority
shareholder. However, it is possible that in the future Eurobulk may manage
additional vessels which will not belong to Euroseas and in which the Pittas
family may have controlling, little or even no power or participation and where
conflicts such as those described above may arise. Eurobulk may not be able to
resolve all conflicts of interest in a manner beneficial to us and our
investors.
Companies
affiliated with Eurobulk or our officers and directors may acquire vessels that
compete with our fleet.
Companies
affiliated with Eurobulk or our officers and directors own drybulk carriers and
may acquire additional drybulk carriers, containerships or multipurpose vessels
in the future. These vessels could be in competition with our fleet and other
companies affiliated with Eurobulk might be faced with conflicts of interest
with respect to their own interests and their obligations to us. Eurobulk,
Friends and Aristides J. Pittas, our Chairman and Chief Executive Officer, have
granted us a right of first refusal to acquire any drybulk vessel or
containership which any of them may consider for acquisition in the future. In
addition, Mr. Pittas will use his best efforts to cause any entity with respect
to which he directly or indirectly controls to grant us this right of first
refusal. Were we, however, to decline any such opportunity offered to us or we
do not have the resources or desire to accept any such opportunity, Eurobulk,
Friends and Aristides J. Pittas, and any of their respective Affiliates, could
acquire such vessels.
Our
officers do not devote all of their time to our business.
Our
officers are involved in other business activities that may result in their
spending less time than is appropriate or necessary in order to manage our
business successfully. Our Chief Executive Officer, Chief Financial Officer,
Chief Administrative Officer, Internal Auditor and Secretary are not employed
directly by us, but rather their services are provided pursuant to our master
management agreement with Eurobulk. These officers may spend a material portion
of their time providing services to Eurobulk and its affiliates on matters
unrelated to us.
We
are a holding company, and we depend on the ability of our subsidiaries to
distribute funds to us in order to satisfy our financial obligations or to make
dividend payments.
We are a
holding company and our subsidiaries, which are all wholly-owned by us, conduct
all of our operations and own all of our operating assets. We have no
significant assets other than the equity interests in our wholly-owned
subsidiaries. As a result, our ability to make dividend payments to you depends
on our subsidiaries and their ability to distribute funds to us. If we are
unable to obtain funds from our subsidiaries, we may be unable or our Board of
Directors may exercise its discretion not to pay dividends.
We
may not be able to pay dividends.
We may
not earn sufficient revenues or we may incur expenses or liabilities that would
reduce or eliminate the cash available for distribution as quarterly dividends.
Our loan agreements may also limit the amount of dividends we can pay under some
circumstances based on certain covenants included in the loan
agreements.
If we are
not successful in acquiring additional vessels, any unused net proceeds from
this offering may be used for general corporate purposes or held pending
investment in other vessels. Identifying and acquiring vessels may take a
significant amount time. The result may be that proceeds of this offering are
not invested in additional vessels, or are so invested but only after some
delay. In either case, we will not be able to earn charter hire consistent with
our current anticipations, and our profitability and our ability to pay
dividends will be affected.
In
addition, the declaration and payment of dividends will be subject at all times
to the discretion of our Board of Directors. The timing and amount of dividends
will depend on our earnings, financial condition, cash requirements and
availability, restrictions in our loan agreements, growth strategy, charter
rates in the drybulk and container shipping industry, the provisions of Marshall
Islands law affecting the payment of dividends and other factors. Marshall
Islands law generally prohibits the payment of dividends other than from surplus
(retained earnings and the excess of consideration received for the sale of
shares above the par value of the shares), but if there is no surplus, dividends
may be declared out of the net profits (basically, the excess of our revenue
over our expenses) for the fiscal year in which the dividend is declared or the
preceding fiscal year. Marshall Islands law also prohibits the payment of
dividends while a company is insolvent or if it would be rendered insolvent upon
the payment of a dividend. As a result, we may not be able to pay
dividends.
If
we are unable to fund our capital expenditures, we may not be able to continue
to operate some of our vessels, which would have a material adverse effect on
our business and our ability to pay dividends.
In order
to fund our capital expenditures, we may be required to incur borrowings or
raise capital through the sale of debt or equity securities. Our ability to
access the capital markets through future offerings may be limited by our
financial condition at the time of any such offering as well as by adverse
market conditions resulting from, among other things, general economic
conditions and contingencies and uncertainties that are beyond our control. Our
failure to obtain the funds for necessary future capital expenditures would
limit our ability to continue to operate some of our vessels and could have a
material adverse effect on our business, results of operations and financial
condition and our ability to pay dividends. Even if we are successful in
obtaining such funds through financings, the terms of such financings could
further limit our ability to pay dividends.
If
we fail to manage our planned growth properly, we may not be able to
successfully expand our market share.
We intend
to continue to grow our fleet. Our growth will depend on:
·
|
locating
and acquiring suitable vessels;
|
·
|
identifying
and consummating acquisitions or joint
ventures;
|
·
|
integrating
any acquired business successfully with our existing
operations;
|
·
|
enhancing
our customer base;
|
·
|
managing
our expansion; and
|
·
|
obtaining
required financing on acceptable
terms.
|
During
periods in which charter rates are high, vessel values generally are high as
well, and it may be difficult to consummate vessel acquisitions at favorable
prices. In addition, growing any business by acquisition presents numerous
risks, such as undisclosed liabilities and obligations and difficulty
experienced in (1) obtaining additional qualified personnel, (2) managing
relationships with customers and suppliers, and (3) integrating newly acquired
operations into existing infrastructures. We may not be successful in executing
our growth plans or that we will not incur significant expenses and losses in
connection with the execution of those growth plans.
Our
existing loan agreements contain restrictive covenants that may limit our
liquidity and corporate activities.
Our
existing loan agreements impose operating and financial restrictions on us.
These restrictions may limit our ability to:
·
|
incur
additional indebtedness;
|
·
|
create
liens on our assets;
|
·
|
sell
capital stock of our subsidiaries;
|
·
|
engage
in mergers or acquisitions;
|
·
|
make
capital expenditures;
|
·
|
change
the management of our vessels or terminate or materially amend the
management agreement relating to each vessel;
and
|
Therefore,
we may need to seek permission from our lenders in order to engage in some
corporate actions. The lenders’ interests may be different from our interests,
and we may not be able to obtain the lenders’ permission when needed. This may
prevent us from taking actions that are in our best interest.
Servicing
future debt would limit funds available for other purposes.
To
finance our fleet, we have incurred secured debt under loan agreements for our
vessels. We also currently expect to incur additional secured debt to finance
the acquisition of additional vessels. We must dedicate a portion of our cash
flow from operations to pay the principal and interest on our debt. These
payments limit funds otherwise available for working capital expenditures and
other purposes. As of June 30, 2008, we had total bank debt of approximately
$67.1 million. Our debt repayment schedule as of June 30, 2008 requires us to
repay $28.4 million over the next two years. If we are unable to service our
debt, it could have a material adverse effect on our financial condition,
results of operations and cash flows.
A rise in
interest rates could cause an increase in our costs and have a material adverse
effect on our financial condition and results of operations. To finance vessel
purchases, we have borrowed, and may continue to borrow, under loan agreements
that provide for periodic interest rate adjustments based on indices that
fluctuate with changes in market interest rates. If interest rates increase
significantly, it would increase our costs of financing our acquisition of
vessels, which could have a material adverse effect on our financial condition
and results of operations. Any increase in debt service would also reduce the
funds available to us to purchase other vessels.
Our
ability to obtain additional debt financing may be dependent on the performance
of our then existing charters and the creditworthiness of our
charterers.
The
actual or perceived credit quality of our charterers, and any defaults by them,
may materially affect our ability to obtain the additional debt financing that
we will require purchasing additional vessels or may significantly increase our
costs of obtaining such financing. Our inability to obtain additional financing
at all or at a higher than anticipated cost may materially affect our results of
operations, cash flows and our ability to implement our business
strategy.
As
we expand our business, we may need to upgrade our operations and financial
systems, and add more staff and crew. If we cannot upgrade these systems or
recruit suitable employees, our performance may be adversely
affected.
Our
current operating and financial systems may not be adequate if we expand the
size of our fleet, and our attempts to improve those systems may be ineffective.
In addition, if we expand our fleet, we will have to rely on Eurobulk to recruit
suitable additional seafarers and shoreside administrative and management
personnel. Eurobulk may not be able to continue to hire suitable employees as we
expand our fleet. If Eurobulk’s unaffiliated crewing agent encounters business
or financial difficulties, we may not be able to adequately staff our vessels.
If we are unable to operate our financial and operations systems effectively or
to recruit suitable employees, our performance may be materially adversely
affected.
Because
we obtain some of our insurance through protection and indemnity associations,
we may also be subject to calls in amounts based not only on our own claim
records, but also the claim records of other members of the protection and
indemnity associations.
We may be
subject to calls in amounts based not only on our claim records but also the
claim records of other members of the protection and indemnity associations
through which we receive insurance coverage for tort liability, including
pollution-related liability. Our payment of these calls could result in
significant expense to us, which could have a material adverse effect on our
business, results of operations, cash flows, financial condition and ability to
pay dividends.
Labor
interruptions could disrupt our business.
Our
vessels are manned by masters, officers and crews that are employed by third
parties. If not resolved in a timely and cost-effective manner, industrial
action or other labor unrest could prevent or hinder our operations from being
carried out normally and could have a material adverse effect on our business,
results of operations, cash flows, financial condition and ability to pay
dividends.
In
the highly competitive international drybulk and container shipping industry, we
may not be able to compete for charters with new entrants or established
companies with greater resources.
We employ
our vessels in highly competitive markets that are capital intensive and highly
fragmented. Competition arises primarily from other vessel owners, some of whom
have substantially greater resources than us. Competition for the transportation
of drybulk and container cargoes can be intense and depends on price, location,
size, age, condition and the acceptability of the vessel and its managers to the
charterers. Due in part to the highly fragmented market, competitors with
greater resources could operate larger fleets through consolidations or
acquisitions that may be able to offer better prices and fleets.
We
will not be able to take advantage of favorable opportunities in the current
spot market with respect to vessels employed on time charters.
As of
June 30, 2008, 14 of the 16 vessels in our fleet are employed under time
charters with remaining terms ranging between one month and 44 months. The
percentage of our fleet that is under time charter contracts or short term spot
contracts, or that is otherwise protected from market fluctuations represents
approximately 92% of our vessel capacity in 2008. Although time charters provide
relatively steady streams of revenue, vessels committed to time charters may not
be available for spot charters during periods of increasing charter hire rates,
when spot charters might be more profitable. If we cannot re-charter these
vessels on time charters or trade them in the spot market profitably, our
results of operations and operating cash flow may suffer. We may not be able to
secure charter hire rates in the future that will enable us to operate our
vessels profitably.
We
may be unable to attract and retain key management personnel and other employees
in the shipping industry, which may negatively affect the effectiveness of our
management and our results of operations.
Our
success depends to a significant extent upon the abilities and efforts of our
management team. Our success will depend upon our ability to hire additional
employees and to retain key members of our management team. The loss of any of
these individuals could adversely affect our business prospects and financial
condition. Difficulty in hiring and retaining personnel could adversely affect
our results of operations. We do not currently intend to maintain “key man” life
insurance on any of our officers.
Risks
involved with operating ocean-going vessels could affect our business and
reputation, which may reduce our revenues.
The
operation of an ocean-going vessel carries inherent risks. These risks include,
among others, the possibility of:
·
|
environmental
accidents;
|
·
|
grounding,
fire, explosions and collisions;
|
·
|
cargo
and property losses or damage;
|
·
|
business
interruptions caused by mechanical failure, human error, war, terrorism,
political action in various countries, labor strikes or adverse weather
conditions; and
|
·
|
work
stoppages or other labor problems with crew members serving on our
vessels.
|
Such
occurrences could result in death or injury to persons, loss of property or
environmental damage, delays in the delivery of cargo, loss of revenues from or
termination of charter contracts, governmental fines, penalties or restrictions
on conducting business, higher insurance rates, and damage to our reputation and
customer relationships generally. Any of these circumstances or events could
increase our costs or lower our revenues, which could result in reduction in the
market price of our shares of common stock. The involvement of our vessels in an
environmental disaster may harm our reputation as a safe and reliable vessel
owner and operator.
The
operation of drybulk carriers has certain unique operational risks.
The
operation of certain ship types, such as drybulk carriers, has certain unique
risks. With a drybulk carrier, the cargo itself and its interaction with the
ship can be a risk factor. By their nature, drybulk cargoes are often heavy,
dense, easily shifted, and react badly to water exposure. In addition, drybulk
carriers are often subjected to battering treatment during unloading operations
with grabs, jackhammers (to pry encrusted cargoes out of the hold), and small
bulldozers. This treatment may cause damage to the vessel. Vessels damaged due
to treatment during unloading procedures may be more susceptible to breach to
the sea. Hull breaches in drybulk carriers may lead to the flooding of the
vessels holds. If a drybulk carrier suffers flooding in its forward holds, the
bulk cargo may become so dense and waterlogged that its pressure may buckle the
vessels bulkheads leading to the loss of a vessel. If we are unable to
adequately maintain our vessels we may be unable to prevent these events. Any of
these circumstances or events could negatively impact our business, financial
condition, results of operations and ability to pay dividends. In addition, the
loss of any of our vessels could harm our reputation as a safe and reliable
vessel owner and operator.
The
operation of containerships has certain unique operational risks.
The
operation of containerships has certain unique risks. Containerships operate at
high speeds in order to move cargoes around the world quickly and minimize
delivery delays. These high speeds can result in greater impact in collisions
and groundings resulting in more damage to the vessel when compared to vessels
operating at lower speeds. In addition, due to the placement of the containers
on a containership, there is a greater risk that containers carried on deck will
be lost overboard if an accident does occur. Furthermore, with the highly varied
cargo that can be carried on a single containership, there can be additional
difficulties with any clean-up operation following an accident. Also, we may not
be able to correctly control the contents and condition of cargoes within the
containers which may give rise to events such as customer complaints, accidents
on-board the ships or problems with authorities due to carriage of illegal
cargoes. Any of these circumstances or events could negatively impact our
business, financial condition, results of operations and ability to pay
dividends. In addition, the loss of any of our vessels could harm our reputation
as a safe and reliable vessel owner and operator.
Our
vessels may suffer damage and it may face unexpected drydocking costs, which
could affect our cash flow and financial condition.
If our
vessels suffer damage, they may need to be repaired at a drydocking facility.
The costs of drydock repairs are unpredictable and may be substantial. We may
have to pay drydocking costs that our insurance does not cover. The loss of
earnings while these vessels are being repaired and reconditioned, as well as
the actual cost of these repairs, would decrease our earnings.
Purchasing
and operating previously owned, or secondhand, vessels may result in increased
operating costs and vessels off-hire, which could adversely affect our
earnings.
Although
we inspect the secondhand vessels prior to purchase, this inspection does not
provide us with the same knowledge about their condition and cost of any
required (or anticipated) repairs that it would have had if these vessels had
been built for and operated exclusively by us. Generally, we do not receive the
benefit of warranties on secondhand vessels.
In
general, the cost of maintaining a vessel in good operating condition increases
with the age of the vessel. As of June 30, 2008 the average age of our fleet was
approximately 18 years. As our fleet ages, we will incur increased costs. Older
vessels are typically less fuel efficient and more costly to maintain than more
recently constructed vessels. Cargo insurance rates also increase with the age
of a vessel, making older vessels less desirable to charterers. Governmental
regulations and safety or other equipment standards related to the age of a
vessel may also require expenditures for alterations or the addition of new
equipment to our vessels and may restrict the type of activities in which our
vessels may engage.
Governmental
regulations, safety or other equipment standards related to the age of vessels
may require expenditures for alterations, or the addition of new equipment, to
our vessels and may restrict the type of activities in which the vessels may
engage. As our vessels age, market conditions may not justify those expenditures
or enable us to operate our vessels profitably during the remainder of their
useful lives. If we sell vessels, we are not certain that the price for which we
sell them will equal their carrying amount at that time.
We
may not have adequate insurance to compensate us adequately for damage to, or
loss of, our vessels.
We
procure hull and machinery insurance, protection and indemnity insurance, which
includes environmental damage and pollution insurance and war risk insurance and
freight, demurrage and defense insurance for our fleet. We do not maintain
insurance against loss of hire, which covers business interruptions that result
in the loss of use of a vessel. We may not be adequately insured against all
risks and we may not be able to obtain adequate insurance coverage for our fleet
in the future. The insurers may not pay particular claims. Our insurance
policies contain deductibles for which we will be responsible and limitations
and exclusions which may increase our costs. Moreover, the insurers may default
on any claims they are required to pay. If our insurance is not enough to cover
claims that may arise, it may have a material adverse effect on our financial
condition, results of operations and cash flows.
Our
international operations expose us to risks of terrorism and piracy that may
interfere with the operation of our vessels.
We are an
international company and primarily conduct our operations outside the United
States of America. Changing economic, political and governmental conditions in
the countries where we are engaged in business or where our vessels are
registered affect our operations. In the past, political conflicts, particularly
in the Arabian Gulf, resulted in attacks on vessels, mining of waterways and
other efforts to disrupt shipping in the area. Acts of terrorism and piracy have
also affected vessels trading in regions such as the South China Sea. The
likelihood of future acts of terrorism may increase, and our vessels may face
higher risks of being attacked. We are not fully insured against any of these
risks. In addition, future hostilities or other political instability in regions
where our vessels operate could have a material adverse effect on our trade
patterns and adversely affect our operations and performance.
Obligations
associated with being a public company require significant company resources and
management attention.
We are
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the other rules and regulations of the
Commission, including the Sarbanes-Oxley Act of 2002. Section 404 of the
Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of
our internal control over financial reporting.
We work
with our legal, accounting and financial advisors to identify any areas in which
changes should be made to our financial and management control systems to manage
our growth and our obligations as a public company. We evaluate areas such as
corporate governance, corporate control, internal audit, disclosure controls and
procedures and financial reporting and accounting systems. We will make changes
in any of these and other areas, including our internal control over financial
reporting, which we believe are necessary. However, these and other measures we
may take may not be sufficient to allow us to satisfy our obligations as a
public company on a timely and reliable basis. In addition, compliance with
reporting and other requirements applicable to public companies will create
additional costs for us and will require the time and attention of management.
Our limited management resources may exacerbate the difficulties in complying
with these reporting and other requirements while focusing on executing our
business strategy. We may not be able to predict or estimate the amount of the
additional costs we may incur, the timing of such costs or the degree of impact
that our management’s attention to these matters will have on our
business.
Our
historical financial and operating data may not be representative of our future
results because we are a company with a limited operating history as a
stand-alone entity and as a publicly traded company.
Our
historical financial and operating data may not be representative of our future
results because we are a company with a limited operating history as a
stand-alone entity and as a publicly traded company. Our consolidated financial
statements include the financial position, results of operations and cash flows
of shipowning companies managed by Eurobulk and majority owned by the Pittas
family prior to their contribution to us. Although our results of operations,
cash flows and financial condition reflected in the consolidated financial
statements include all expenses allocable to our business, due to factors such
as the additional administrative and financial obligations associated with
operating as a publicly traded company, they may not be indicative of the
results of operations that we would have achieved had we operated as a public
entity for all periods presented or of future results that we may achieve as a
publicly traded company with our current holding company structure.
Exposure
to currency exchange rate fluctuations will result in fluctuations in our cash
flows and operating results.
We
generate all our revenues in U.S. dollars, but our ship manager, Eurobulk,
incurs approximately 35% of vessel operating expenses and we incur management
fees and some general and administrative expenses in currencies other than the
U.S. dollar. This difference could lead to fluctuations in our operating
expenses, which would affect our financial results. Expenses incurred in foreign
currencies increase when the value of the U.S. dollar falls, which would reduce
our profitability and cash flows.
U.S.
tax authorities could treat us as a “passive foreign investment company,” which
could have adverse U.S. federal income tax consequences to U.S.
holders.
A foreign
corporation will be treated as a “passive foreign investment company,” or PFIC,
for U.S. federal income tax purposes if either (1) at least 75% of its gross
income for any taxable year consists of certain types of “passive income” or (2)
at least 50% of the average value of the corporation’s assets produce or are
held for the production of those types of “passive income.” For purposes of
these tests, “passive income” includes dividends, interest, and gains from the
sale or exchange of investment property and rents and royalties other than rents
and royalties which are received from unrelated parties in connection with the
active conduct of a trade or business. For purposes of these tests, income
derived from the performance of services does not constitute “passive income.”
U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income
tax regime with respect to the income derived by the PFIC, the distributions
they receive from the PFIC and the gain, if any, they derive from the sale or
other disposition of their shares in the PFIC.
Based on
our current method of operation, we do not believe that we have been, are or
will be a PFIC with respect to any taxable year. In this regard, we treat the
gross income we derive or are deemed to derive from our time chartering
activities as services income, rather than rental income. Accordingly, we
believe that our income from our time chartering activities does not constitute
“passive income,” and the assets that we own and operate in connection with the
production of that income do not constitute passive assets.
There is,
however, no direct legal authority under the PFIC rules addressing our method of
operation. Accordingly, the U.S. Internal Revenue Service, or IRS, or a court of
law may not accept our position, and there is a risk that the IRS or a court of
law could determine that we are a PFIC. Moreover, we may constitute a PFIC for
any future taxable year if there were to be changes in the nature and extent of
our operations.
If the
IRS were to find that we are or have been a PFIC for any taxable year, our U.S.
shareholders will face adverse U.S. tax consequences. Under the PFIC rules,
unless those shareholders make an election available under the United States
Internal Revenue Code of 1986 (the “Code”) (which election could itself have
adverse consequences for such shareholders, as discussed below under “Taxation —
United States Federal Income Taxation of U.S. Holders”), such shareholders would
be liable to pay U.S. federal income tax at the then prevailing income tax rates
on ordinary income plus interest upon excess distributions and upon any gain
from the disposition of our shares, as if the excess distribution or gain had
been recognized ratably over the shareholder’s holding period of our shares. See
“Taxation — United States Federal Income Taxation of U.S. Holders” for a more
comprehensive discussion of the U.S. federal income tax consequences to U.S.
shareholders if we are treated as a PFIC.
Legislation
has been proposed in the United States which would prevent dividends on our
shares from qualifying for certain preferential rates for U.S. federal income
tax purposes.
“Qualified
dividend income” derived by noncorporate U.S. shareholders that are subject to
U.S. federal income tax is currently through 2010 subject to U.S. federal income
taxation at reduced rates. We expect that under current law, so long as our
shares are traded on the NASDAQ Capital Market, the NASDAQ Global Select Market
or the NASDAQ Global Market and we do not and have not qualified as a “passive
foreign investment company” for U.S. federal income tax purposes, distributions
treated as dividends for U.S. tax purposes on our shares will potentially be
eligible (that is, eligible if certain conditions relating to the shareholder
are satisfied) for treatment as qualified dividend income. Proposed legislation
which has been introduced in the U.S. Congress would, however, if enacted, make
it unlikely that such distributions on our shares would be eligible for such
treatment.
Dividends
paid on the common stock to U.S. individuals, trusts and estates may be taxed as
ordinary income.
Our
common stock is listed on the NASDAQ Global Select Market and dividends on our
common stock are potentially eligible to be treated as “qualified dividend
income” which is taxed to U.S. individuals, trusts and estates at preferential
tax rates. If our common stock fails to maintain the requirements of the NASDAQ
Global Select Market or another established securities market in the United
States, our shares will trade over the counter and any dividends paid on the
shares will be treated for U.S. tax purposes as ordinary income rather than
“qualified dividend income” and lose eligibility for the preferential tax
treatment.
We
may have to pay tax on United States source income, which would reduce our
earnings.
Under the
Code, 50% of the gross shipping income of a vessel owning or chartering
corporation, such as ourselves and our subsidiaries, that is attributable to
transportation that begins or ends, but that does not both begin and end, in the
United States may be subject to a 4% United States federal income tax without
allowance for deduction, unless that corporation qualifies for exemption from
tax under section 883 of the Code and the applicable Treasury Regulations
promulgated thereunder.
We
believe that we and each of our subsidiaries qualify for this statutory tax
exemption and we have taken this position for United States federal income tax
return reporting purposes. However, there are factual circumstances beyond our
control that could cause us to lose the benefit of this tax exemption and
thereby become subject to United States federal income tax on our United States
source income. Due to the factual nature of the issues involved, we may not be
able to maintain our tax-exempt status or that of any of our
subsidiaries.
If we or
our subsidiaries are not entitled to exemption under Section 883 for any taxable
year, we or our subsidiaries could be subject for those years to an effective 2%
United States federal income tax on the shipping income these companies derive
during the year that are attributable to the transport or cargoes to or from the
United States. The imposition of this taxation would have a negative effect on
our business and would result in decreased earnings available for distribution
to our shareholders.
It
may be difficult to enforce service of process and enforcement of judgments
against us and our officers and directors.
We are a
Marshall Islands corporation, and our executive offices are located outside of
the United States in Maroussi, Greece. A majority of our directors and officers
reside outside of the United States, and a substantial portion of our assets and
the assets of our officers and directors are located outside of the United
States. As a result, you may have difficulty serving legal process within the
United States upon us or any of these persons. You may also have difficulty
enforcing, both in and outside of the United States, judgments you may obtain in
the U.S. courts against us or these persons in any action, including actions
based upon the civil liability provisions of U.S. federal or state securities
laws.
There is
also substantial doubt that the courts of the Marshall Islands or Greece would
enter judgments in original actions brought in those courts predicated on U.S.
federal or state securities laws.
Risk
Factors Relating To Our Common Stock
The
trading volume for our common stock has at times been low, which may cause our
common stock to trade at lower prices and make it difficult to sell your common
stock.
Although
our shares of common stock have traded on the NASDAQ Global Market since January
31, 2007 and on the NASDAQ Global Select Market since January 1, 2008, at times
the trading volume has been low. Our shares may not actively trade in the public
market and any such limited liquidity may cause our common stock to trade at
lower prices and make it difficult to sell your common stock.
The
market price of our common stock has been and may in the future be subject to
significant fluctuations.
The
market price of our common stock has been and may in the future be subject to
significant fluctuations as a result of many factors, some of which are beyond
our control. Among the factors that have in the past and could in the future
affect our stock price are:
·
|
actual
or anticipated fluctuations in quarterly and annual
results;
|
·
|
changes
in sales or earnings estimates or publication of research reports by
analysts;
|
·
|
shortfalls
in our operating results from levels forecasted by securities
analysts;
|
·
|
speculation
in the press or investment community about our business or the shipping
industry;
|
·
|
changes
in market valuations of similar companies and stock market price and
volume fluctuations generally;
|
·
|
strategic
actions by us or our competitors such as mergers, acquisitions, strategic
alliances or restructurings;
|
·
|
changes
in government regulation and other regulatory
developments;
|
·
|
additions
or departures of key personnel;
|
·
|
general
market conditions and the state of the securities markets;
and
|
·
|
domestic
and international economic, market and currency factors unrelated to our
performance.
|
The
international drybulk and container shipping industry has been highly
unpredictable. In addition, the stock markets in general, and the market for
drybulk and container shipping and shipping stocks in particular, have
experienced extreme volatility that has sometimes been unrelated to the
operating performance of particular companies. These broad market fluctuations
may adversely affect the trading price of our common stock.
Our
Articles of Incorporation and Bylaws contain anti-takeover provisions that may
discourage, delay or prevent (1) our merger or acquisition and/or (2) the
removal of incumbent directors and officers.
Our
current Articles of Incorporation and Bylaws contain certain anti-takeover
provisions. These provisions include blank check preferred stock, the
prohibition of cumulative voting in the election of directors, a classified
board of directors, advance written notice for shareholder nominations for
directors, removal of directors only for cause, advance written notice of
shareholder proposals for the removal of directors and limitations on action by
shareholders. These provisions, either individually or in the aggregate, may
discourage, delay or prevent (1) our merger or acquisition by means of a tender
offer, a proxy contest or otherwise, that a shareholder may consider in its best
interest and (2) the removal of incumbent directors and officers.
Future
sales of our stock could cause the market price of our common stock to
decline.
Sales of
a substantial number of shares of our common stock in the public market, or the
perception that these sales could occur, may depress the market price for our
common stock. These sales could also impair our ability to raise additional
capital through the sale of our equity securities in the future.
In 2007,
we issued a total of 17,325,000 new shares as part of our three common stock
offerings. Additionally, 248,463 and 169,123 shares were issued upon the
exercise of our warrants in 2007, and, in 2008, respectively. In
addition, we have another 163,892 warrants which remain
outstanding. Each of Friends, our largest shareholder, and Eurobulk
Marine Holdings, Inc., our affiliate, is registering all of its shares for
re-sale under this registration statement, which will result in these shares
becoming freely tradable without restriction under the Securities
Act.
We may
issue additional shares of our stock in the future and our stockholders may
elect to sell large numbers of shares held by them from time to time. Our
amended and restated articles of incorporation authorize us to issue up to
100,000,000 shares of common stock and 20,000,000 shares of preferred
stock.
Sales of
a substantial number of any of the shares of common stock mentioned above may
cause the market price of our common stock to decline.
Because
the Republic of the Marshall Islands, where we are incorporated, does not have a
well-developed body of corporate law, shareholders may have fewer rights and
protections than under typical United States law, such as Delaware, and
shareholders may have difficulty in protecting their interest with regard to
actions taken by our Board of Directors.
Our
corporate affairs are governed by our Articles of Incorporation and Bylaws and
by the Marshall Islands Business Corporations Act (the “BCA”). The provisions of
the BCA resemble provisions of the corporation laws of a number of states in the
United States. However, there have been few judicial cases in the Republic of
the Marshall Islands interpreting the BCA. The rights and fiduciary
responsibilities of directors under the law of the Republic of the Marshall
Islands are not as clearly established as the rights and fiduciary
responsibilities of directors under statutes or judicial precedent in existence
in certain U.S. jurisdictions. Stockholder rights may differ as well. For
example, under Marshall Islands law, a copy of the notice of any meeting of the
shareholders must be given not less than 15 days before the meeting, whereas in
Delaware such notice must be given not less than 10 days before the meeting.
Therefore, if immediate shareholder action is required, a meeting may not be
able to be convened as quickly as it can be convened under Delaware law. Also,
under Marshall Islands law, any action required to be taken by a meeting of
shareholders may only be taken without a meeting if consent is in writing and is
signed by all of the shareholders entitled to vote, whereas under Delaware law
action may be taken by consent if approved by the number of shareholders that
would be required to approve such action at a meeting. Therefore, under Marshall
Islands law, it may be more difficult for a company to take certain actions
without a meeting even if a majority of the shareholders approve of such action.
While the BCA does specifically incorporate the non-statutory law, or judicial
case law, of the State of Delaware and other states with substantially similar
legislative provisions, public shareholders may have more difficulty in
protecting their interests in the face of actions by the management, directors
or controlling shareholders than would shareholders of a corporation
incorporated in a U.S. jurisdiction.
PRICE
RANGE OF COMMON STOCK
The
trading market for shares of our common stock is the NASDAQ Global Select
Market, on which our shares trade under the symbol “ESEA.” The following table
sets forth the high and low closing prices for shares of our common stock since
our listing originally in the OTCBB (under symbols ESEAF.OB and EUSEF.OB), since
January 31, 2007 on the NASDAQ Global Market and since January 1, 2008 on the
NASDAQ Global Select Market. The prices below have been adjusted for the reverse
1-for-3 common stock split that was effected on October 6, 2006.
Period
|
|
Low
|
|
|
High
|
|
|
Dividends
Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
6.70
|
|
|
$
|
18.93
|
|
|
|
—
|
|
2
nd
quarter 2006
|
|
|
8.82
|
|
|
|
18.93
|
|
|
$
|
0.18
|
|
3
rd
quarter 2006
|
|
|
8.55
|
|
|
|
9.15
|
|
|
|
0.18
|
|
4
th
quarter 2006
|
|
|
6.70
|
|
|
|
9.00
|
|
|
|
0.21
|
|
2007
|
|
$
|
7.00
|
|
|
$
|
20.79
|
|
|
|
—
|
|
1
st
quarter 2007
|
|
|
7.00
|
|
|
|
10.00
|
|
|
$
|
0.22
|
|
2
nd
quarter 2007
|
|
|
10.35
|
|
|
|
15.75
|
|
|
|
0.24
|
|
3
rd
quarter 2007
|
|
|
11.80
|
|
|
|
16.91
|
|
|
|
0.25
|
|
4
th
quarter 2007
|
|
|
11.75
|
|
|
|
20.79
|
|
|
|
0.29
|
|
2008
|
|
$
|
9.60
|
|
|
$
|
14.79
|
|
|
|
—
|
|
1
st
quarter 2008
|
|
|
9.60
|
|
|
|
14.08
|
|
|
$
|
0.30
|
|
2
nd
quarter 2008
|
|
|
11.12
|
|
|
|
16.80
|
|
|
|
0.31
|
|
January
2008
|
|
|
9.60
|
|
|
|
12.37
|
|
|
|
—
|
|
February
2008
|
|
|
10.98
|
|
|
|
14.02
|
|
|
|
—
|
|
March
2008
|
|
|
11.12
|
|
|
|
14.08
|
|
|
|
0.30
|
|
April
2008
|
|
|
12.32
|
|
|
|
15.36
|
|
|
|
—
|
|
May
2008
|
|
|
13.83
|
|
|
|
16.80
|
|
|
|
—
|
|
June
2008
|
|
|
12.90
|
|
|
|
15.70
|
|
|
|
0.31
|
|
July
2008*
|
|
$
|
12.51
|
|
|
$
|
12.51
|
|
|
|
—
|
|
|
|
USE
OF PROCEEDS
Unless we
specify otherwise in any prospectus supplement, we intend to use the net
proceeds from the sale of securities by us offered by this prospectus to make
vessel acquisitions and for capital expenditures, repayment of indebtedness,
working capital, and general corporate purposes. We will not receive
any of the proceeds from the sale of our common shares by the Selling
Shareholders.
RATIO
OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
The
following table sets forth our unaudited ratio of earnings to fixed charges and
preferred dividends for each of the preceding five fiscal years.
(1)
For the
purpose of calculating such ratios, “earnings” consist of net income before
fixed charges. “Fixed charges” consist of interest expense and amortization of
debt discount or premiums and expenses, including amounts
capitalized.
|
|
Year
Ended December 31, 2003
|
|
|
Year
Ended December 31, 2004
|
|
|
Year
Ended December 31, 2005
|
|
|
Year
Ended December 31, 2006
|
|
|
Year
Ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
8,426,612
|
|
|
|
30,611,765
|
|
|
|
25,178,454
|
|
|
|
20,069,407
|
|
|
|
40,664,064
|
|
Interest
Expense
|
|
|
725,855
|
|
|
|
657,603
|
|
|
|
1,412,127
|
|
|
|
3,324,257
|
|
|
|
4,777,524
|
|
Amortization
of finance cost
|
|
|
67,402
|
|
|
|
50,681
|
|
|
|
83,744
|
|
|
|
74,601
|
|
|
|
72,715
|
|
Equity
in net loss (gain) of an associate
|
|
|
167,433
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
Earnings
|
|
|
9,387,302
|
|
|
|
31,320,049
|
|
|
|
26,674,325
|
|
|
|
23,468,265
|
|
|
|
45,514,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIXED
CHARGES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
725,855
|
|
|
|
657,603
|
|
|
|
1,412,127
|
|
|
|
3,324,257
|
|
|
|
4,777,524
|
|
Amortization
of finance cost
|
|
|
67,402
|
|
|
|
50,681
|
|
|
|
83,744
|
|
|
|
74,601
|
|
|
|
72,715
|
|
Total
Fixed Charges
|
|
|
793,257
|
|
|
|
708,284
|
|
|
|
1,495,871
|
|
|
|
3,398,858
|
|
|
|
4,850,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
dividend requirements
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
Fixed Charges and Preferred Dividends
|
|
|
793,257
|
|
|
|
708,284
|
|
|
|
1,495,871
|
|
|
|
3,398,858
|
|
|
|
4,850,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of Earnings to Fixed Charges and Preferred Dividends
|
|
|
11.8
|
x
|
|
|
44.2
|
x
|
|
|
17.8
|
x
|
|
|
6.9
|
x
|
|
|
9.4
|
x
|
____________
(1) We
have not issued any preferred stock as of the date of this
prospectus.
SELLING
SHAREHOLDERS
The
selling shareholders are offering an aggregate of 9,955,879 of our common shares
which were issued to them in private placements prior to our initial public
offering.
Set forth
below is information regarding the names and number of shares of common stock
owned and offered by each selling shareholder.
Name
of Selling Shareholder
|
|
Common
Stock Owned Before Offering
1
|
|
|
Percentage
of Class Prior to the Offering
|
|
|
Total
Common Stock Offered Hereby
|
|
|
Percentage
of Class Following the Offering
|
|
Friends
Investment Company Inc.
2
|
|
|
9,539,211
|
|
|
|
31.3
|
%
|
|
|
9,539,211
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eurobulk
Marine Holdings, Inc.
3
|
|
|
416,668
|
|
|
|
1.4
|
%
|
|
|
416,668
|
|
|
|
0.0
|
%
|
Total
|
|
|
9,955,879
|
|
|
|
32.7
|
%
|
|
|
9,955,879
|
|
|
|
0.0
|
%
|
__________________________
(1) Beneficial
ownership is determined in accordance with the Rule 13d-3(a) of the Securities
Exchange Act of 1934, as amended, and generally includes voting or investment
power with respect to securities. Except as subject to community property laws,
where applicable, the person named above has sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by
him/her.
(2) Includes
9,539,211 shares of common stock held of record by Friends. A majority of the
shareholders of Friends are members of the Pittas family. Investment power and
voting control by Friends resides in its Board of Directors which consists of
five directors, a majority of whom are members of the Pittas family. Actions by
Friends may be taken by a majority of the members on its Board of
Directors. The business address for Friends is Aethrion Center, 40
Ag. Konstantinou Street, 151 24 Maroussi Greece.
(3) Includes416,668
shares of common stock held of record by Eurobulk Marine Holdings,
Inc. A majority of the shareholders of Eurobulk Marine Holdings, Inc.
are members of the Pittas family. Investment power and voting control by
Eurobulk Marine Holdings, Inc. resides in its Board of Directors which consists
of five directors, a majority of whom are members of the Pittas family. Actions
by Eurobulk Marine Holdings, Inc. may be taken by a majority of the members on
its Board of Directors. The business address for Eurobulk Marine
Holdings, Inc. is Aethrion Center, 40 Ag. Konstantinou Street, 151 24 Maroussi
Greece.
CAPITALIZATION
A
prospectus supplement will include information on the Company's consolidated
capitalization.
PLAN
OF DISTRIBUTION
We may
sell or distribute the securities included in this prospectus and the Selling
Shareholders, including their transferees, pledgees or donees or their
successors, may sell our common shares through underwriters, through agents, to
dealers, in private transactions, at market prices prevailing at the time of
sale, at prices related to the prevailing market prices, or at negotiated
prices.
In
addition, we or the Selling Shareholders may sell some or all of our common
shares included in this prospectus through:
·
|
a
block trade in which a broker-dealer may resell a portion of the block, as
principal, in order to facilitate the
transaction;
|
·
|
purchases
by a broker-dealer, as principal, and resale by the broker-dealer for its
account; or
|
·
|
ordinary
brokerage transactions and transactions in which a broker solicits
purchasers.
|
In
addition, we or the Selling Shareholders may enter into option or other types of
transactions that require us or them to deliver common shares to a
broker-dealer, who will then resell or transfer the common shares under this
prospectus. We may enter into hedging transactions with respect to
our securities. For example, we may:
·
|
enter
into transactions involving short sales of the common shares by
broker-dealers;
|
·
|
sell
common shares short themselves and deliver the shares to close out short
positions;
|
·
|
enter
into option or other types of transactions that require us to deliver
common shares to a broker-dealer, who will then resell or transfer the
common shares under this prospectus;
or
|
·
|
loan
or pledge the common shares to a broker-dealer, who may sell the loaned
shares or, in the event of default, sell the pledged
shares.
|
We may
enter into derivative transactions with third parties, or sell securities not
covered by this prospectus to third parties in privately negotiated
transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell securities covered
by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged
by us or borrowed from us or others to settle those sales or to close out any
related open borrowings of stock, and may use securities received from us in
settlement of those derivatives to close out any related open borrowings of
stock. The third party (or affiliates of such parties) in such sale
transactions will be an underwriter and, if not identified in this prospectus,
will be identified in the applicable prospectus supplement (or a post-effective
amendment). In addition, we may otherwise loan or pledge securities
to a financial institution or other third party that in turn may sell the
securities short using this prospectus. Such financial institution or
other third party may transfer its economic short position to investors in our
securities or in connection with a concurrent offering of other
securities.
Any
broker-dealers or other persons acting on our behalf or the behalf of the
Selling Shareholders that participates with us or the Selling Shareholders in
the distribution of the securities may be deemed to be underwriters and any
commissions received or profit realized by them on the resale of the securities
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933, as amended, or the Securities Act. As of the date of
this prospectus, we are not a party to any agreement, arrangement or
understanding between any broker or dealer and us with respect to the offer or
sale of the securities pursuant to this prospectus.
At the
time that any particular offering of securities is made, to the extent required
by the Securities Act, a prospectus supplement will be distributed, setting
forth the terms of the offering, including the aggregate number of securities
being offered, the purchase price of the securities, the initial offering price
of the securities, the names of any underwriters, dealers or agents, any
discounts, commissions and other items constituting compensation from us and any
discounts, commissions or concessions allowed or reallowed or paid to
dealers.
Underwriters
or agents may assist us in distributions contemplated hereby, including but not
limited to at-the-market offerings, controlled offerings and overnight
offerings. Underwriters or agents could make sales in privately
negotiated transactions or at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at varying prices determined at
the time of sale and/or any other method permitted by law, including sales
deemed to be an at-the-market offering as defined in Rule 415 promulgated under
the Securities Act, which includes sales made directly on or through the Nasdaq
Global Market, the existing trading market for our common shares, or sales made
to or through a market maker other than on an exchange or
otherwise.
Certain
persons participating in any offering of securities may engage in transactions
that stabilize, maintain or otherwise affect the price of the securities
offered. In connection with any such offering, the underwriters or agents, as
the case may be, may purchase and sell securities in the open market. These
transactions may include overallotment and stabilizing transactions, purchases
to cover syndicate short positions created in connection with the offering and
passive market making. Stabilizing transactions consist of certain bids or
purchases for the purpose of preventing or retarding a decline in the market
price of the securities and syndicate short positions involve the sale by the
underwriters or agents, as the case may be, of a greater number of securities
than they are required to purchase from us in the offering. The underwriters may
also impose a penalty bid, whereby selling concessions allowed to syndicate
members or other broker-dealers for the securities sold for their account may be
reclaimed by the syndicate if such securities are repurchased by the syndicate
in stabilizing or covering transactions. In passive market making, market makers
in the shares of common shares who are underwriters or prospective
underwriters may, subject to certain limitations, make bids for or purchases of
the shares of common shares until the time, if any, at which a
stabilizing bid is made. These activities may stabilize, maintain or otherwise
affect the market price of the securities, which may be higher than the price
that might otherwise prevail in the open market, and if commenced, may be
discontinued at any time.
We will
bear costs relating to all of the securities being registered under this
Registration Statement.
Pursuant
to a requirement by the National Association of Securities Dealers, Inc., or
NASD, the maximum commission or discount to be received by any NASD member or
independent broker/dealer may not be greater than eight percent (8%) of the
gross proceeds received by the offeror for the sale of any securities being
registered pursuant to SEC Rule 415 under the Securities Act of 1933, as
amended.
ENFORCEMENT
OF CIVIL LIABILITIES
Euroseas
Ltd. is a Marshall Islands corporation and our principal executive offices are
located outside the United States in Maroussi, Greece. A majority of our
directors, officers and the experts named in the prospectus reside outside the
United States. In addition, a substantial portion of our assets and the assets
of our directors, officers and experts are located outside the United States. As
a result, you may have difficulty serving legal process within the United States
upon us or any of these persons. You may also have difficulty enforcing, both in
and outside the United States, judgments you may obtain in United States courts
against us or these persons in any action, including actions based upon the
civil liability provisions of United States federal or state securities laws.
Furthermore, there is substantial doubt that the courts of the Marshall Islands
or Greece would enter judgments in original actions brought in those courts
predicated on United States federal or state securities laws.
DESCRIPTION
OF CAPITAL STOCK
The
following is a description of the material terms of our articles of
incorporation, as amended, and bylaws. We refer you to our articles
of incorporation, as amended, and bylaws, copies of which have been filed as
exhibits to our registration statement filed in connection with our initial
public offering and incorporated by reference herein.
Purpose
Our
purpose, as stated in our articles of incorporation, is to engage in any lawful
act or activity for which corporations may now or hereafter be organized under
the Business Corporations Act of the Marshall Islands, or the BCA.
Authorized
Capitalization
Under our
articles of incorporation, as of June 30, 2008, our authorized capital stock
consists of 100,000,000 shares of common stock, par value $.03 per share, of
which 30,430,236 shares were issued and outstanding, and 20,000,000 shares of
preferred stock, par value $.01 per share, of which no shares were issued and
outstanding. All of our shares of stock are in registered form.
Common
Stock
As of the
date of this prospectus, we are authorized to issue up to 100,000,000 shares of
common stock, par value $.03 per share, of which 30,430,236 shares are currently
issued and outstanding. Of these shares, 2,342,331 shares were issued in our
private placement in August 2005 (the “Private Placement”), 272,868 shares were
issued in connection with the merger of one of our subsidiaries with Cove
Apparel, Inc., 5,750,000 shares were issued in our follow on offering which was
completed on February 5, 2007, 5,750,000 shares were issued in our follow-on
offering which was completed on July 5, 2007, 5,825,000 shares were issued in
our follow-on offering which was completed on November 9, 2007 and 285,000
shares have been issued in connection with our stock incentive plan. In
addition, 421,697 of our warrants have been exercised and converted into 417,586
shares of common stock and 163,892 of our warrants remain outstanding. Each
outstanding share of common stock is entitled to one vote, either in person or
by proxy, on all matters that may be voted upon by their holders at meetings of
the shareholders. Holders of our common stock (i) have equal ratable rights to
dividends from funds legally available therefore, if declared by the Board of
Directors; (ii) are entitled to share ratably in all of our assets available for
distribution upon liquidation, dissolution or winding up; and (iii) do not have
preemptive, subscription or conversion rights or redemption or sinking fund
provisions. All issued shares of our common stock when issued will be fully paid
for and non-assessable.
Preferred
Stock
As of the
date of this prospectus, we are authorized to issue up to 20,000,000 shares of
preferred stock, par value $0.01 per share, of which no shares are currently
issued and outstanding. The preferred stock may be issued in one or more series
and our Board of Directors, without further approval from our shareholders, is
authorized to fix the dividend rights and terms, conversion rights, voting
rights, redemption rights, liquidation preferences and other rights and
restrictions relating to any series. Issuances of preferred stock, while
providing flexibility in connection with possible financings, acquisitions and
other corporate purposes, could, among other things, adversely affect the voting
power of the holders of our common stock.
Warrants
On August
25, 2005, we issued warrants to a number of institutional and accredited
investors to purchase 585,589 shares of common stock as part of a Private
Placement in which we raised approximately $21 million in gross proceeds.
Currently, 421,697 of our warrants have been exercised and converted into
417,586 shares of common stock and 163,892 of our warrants remain outstanding.
The warrants have a five year term and an exercise price of $10.80 per share.
The warrants provide for adjustment to the exercise price and the number of
shares issuable upon exercise of the warrants in certain situations including if
we (a) pay a stock dividend or otherwise make a distribution or distributions on
shares of our common stock or any other equity or equity equivalent securities
payable in shares of common stock, (b) subdivide outstanding shares of common
stock into a larger number of shares, (c) combine (including by way of reverse
stock split) outstanding shares of common stock into a smaller number of shares,
or (d) issue by reclassification of shares of the common stock any shares of our
capital stock. The warrants (i) are exercisable apart from the shares of common
stock sold in the Private Placement (they are legally detachable), and (ii) may
be exercised through a cashless exercise under certain
circumstances.
Directors
Our
directors are elected by a plurality of the votes cast at a meeting of the
shareholders by the holders of shares entitled to vote in the election.
Cumulative voting may not be used to elect directors.
Our Board
of Directors must consist of at least three directors, such number to be
determined by the Board of Directors by a majority vote of the entire Board from
time to time. Shareholders may change the number of our directors only by an
affirmative vote of the holders of the majority of the outstanding shares of
capital stock entitled to vote generally in the election of
directors.
Our Board
of Directors is divided into three classes as set out below in “Classified Board
of Directors.” Each director is elected to serve until the third succeeding
annual meeting after his election and until his successor shall have been
elected and qualified, except in the event of his death, resignation or
removal.
Shareholder
Meetings
Under our
bylaws, annual shareholder meetings will be held at a time and place selected by
our Board of Directors. The meetings may be held in or outside of the Marshall
Islands. Special meetings may be called at any time by the Board of Directors,
the Chairman of the Board or by the President. Notice of every annual and
special meeting of shareholders must be given to each shareholder of record
entitled to vote at least 15 but no more than 60 days before such
meeting.
Dissenters’
Rights of Appraisal and Payment
Under the
BCA, our shareholders have the right to dissent from various corporate actions,
including any merger or consolidation or sale of all or substantially all of our
assets not made in the usual course of our business, and receive payment of the
fair value of their shares. In the event of any further amendment of our
articles of incorporation, a shareholder also has the right to dissent and
receive payment for his or her shares if the amendment alters certain rights in
respect of those shares. The dissenting shareholder must follow the procedures
set forth in the BCA to receive payment. In the event that we and any dissenting
shareholder fail to agree on a price for the shares, the BCA procedures involve,
among other things, the institution of proceedings in the high court of the
Republic of the Marshall Islands or in any appropriate court in any jurisdiction
in which the Company’s shares are primarily traded on a local or national
securities exchange.
Shareholders’
Derivative Actions
Under the
BCA, any of our shareholders may bring an action in our name to procure a
judgment in our favor, also known as a derivative action, provided that the
shareholder bringing the action is a holder of common stock both at the time the
derivative action is commenced and at the time of the transaction to which the
action relates.
Limitations
on Liability and Indemnification of Officers and Directors
The BCA
authorizes corporations to limit or eliminate the personal liability of
directors and officers to corporations and their shareholders for monetary
damages for breaches of directors’ fiduciary duties. Our bylaws include a
provision that eliminates the personal liability of directors for monetary
damages for actions taken as a director to the fullest extent permitted by
law.
Our
bylaws provide that we must indemnify our directors and officers to the fullest
extent authorized by law. We are also expressly authorized to carry directors’
and officers’ insurance providing indemnification for our directors, officers
and certain employees for some liabilities. We believe that these
indemnification provisions and insurance are useful to attract and retain
qualified directors and executive offices.
The
limitation of liability and indemnification provisions in our bylaws may
discourage shareholders from bringing a lawsuit against directors for breach of
their fiduciary duty. These provisions may also have the effect of reducing the
likelihood of derivative litigation against directors and officers, even though
such an action, if successful, might otherwise benefit us and our shareholders.
In addition, your investment may be adversely affected to the extent we pay the
costs of settlement and damage awards against directors and officers pursuant to
these indemnification provisions.
There is
currently no pending material litigation or proceeding involving any of our
directors, officers or employees for which indemnification is
sought.
Anti-takeover
Effect of Certain Provisions of our Articles of Incorporation and
Bylaws
Several
provisions of our articles of incorporation and bylaws, which are summarized
below, may have anti-takeover effects. These provisions are intended to avoid
costly takeover battles, lessen our vulnerability to a hostile change in control
and enhance the ability of our Board of Directors to maximize shareholder value
in connection with any unsolicited offer to acquire us. However, these
anti-takeover provisions, which are summarized below, could also discourage,
delay or prevent (1) the merger or acquisition of our company by means of a
tender offer, a proxy contest or otherwise that a shareholder may consider in
its best interest and (2) the removal of incumbent officers and
directors.
Blank
Check Preferred Stock
Under the
terms of our articles of incorporation, our Board of Directors has authority,
without any further vote or action by our shareholders, to issue up to
20,000,000 shares of blank check preferred stock. Our Board of Directors may
issue shares of preferred stock on terms calculated to discourage, delay or
prevent a change in control of our company or the removal of our
management.
Classified
Board of Directors
Our
articles of incorporation provide for the division of our Board of Directors
into three classes of directors, with each class as nearly equal in number as
possible, serving staggered, three year terms. Approximately one-third of our
Board of Directors will be elected each year. This classified board provision
could discourage a third party from making a tender offer for our shares or
attempting to obtain control of us. It could also delay shareholders who do not
agree with the policies of our Board of Directors from removing a majority of
our Board of Directors for two years.
Election
and Removal of Directors
Our
articles of incorporation prohibit cumulative voting in the election of
directors. Our bylaws require parties other than the Board of Directors to give
advance written notice of nominations for the election of directors. Our
articles of incorporation also provide that our directors may be removed only
for cause and only upon the affirmative vote of a majority of the outstanding
shares of our capital stock entitled to vote for those directors. These
provisions may discourage, delay or prevent the removal of incumbent officers
and directors.
Limited
Actions by Shareholders
Our
articles of incorporation and our bylaws provide that any action required or
permitted to be taken by our shareholders must be effected at an annual or
special meeting of shareholders or by the unanimous written consent of our
shareholders. Our articles of incorporation and our bylaws provide that, subject
to certain exceptions, our Board of Directors, our Chairman of the Board or by
the President and the business transacted at the special meeting is limited to
the purposes stated in the notice. Accordingly, a shareholder may not call a
special meeting and shareholder consideration of a proposal may be delayed until
the next annual meeting.
Advance
Notice Requirements for Shareholder Proposals and Director
Nominations
Our
bylaws provide that shareholders seeking to nominate candidates for election as
directors or to bring business before an annual meeting of shareholders must
provide timely notice of their proposal in writing to the corporate secretary.
Generally, to be timely, a shareholder’s notice must be received at our
principal executive offices not less than 150 days nor more than 180 days prior
to the one year anniversary of the immediately preceding annual meeting of
shareholders. Our bylaws also specify requirements as to the form and content of
a shareholder’s notice. These provisions may impede shareholders’ ability to
bring matters before an annual meeting of shareholders or make nominations for
directors at an annual meeting of shareholders.
Certain
Business Combinations
Our
articles of incorporation also prohibit us from engaging in any “business
combination” with any Interested Shareholder for a period of three years
following the date the shareholder became an interested shareholder,
unless:
·
|
prior
to such time, the Board of Directors approved either the Business
Combination or the transaction which resulted in the shareholder becoming
an Interested Shareholder; or
|
·
|
upon
consummation of the transaction which resulted in the shareholder becoming
an Interested Shareholder, the Interested Shareholder owned at least 85%
of the voting stock of Euroseas outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are directors and also
officers and (ii) employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer;
or
|
·
|
at
or subsequent to such time, the Business Combination is approved by the
Board of Directors and authorized at an annual or special meeting of
shareholders, and not by written consent, by the affirmative vote of at
least 51% of the outstanding voting stock that is not owned by the
Interested Shareholder; or
|
·
|
the
shareholder became an Interested Shareholder prior to the consummation of
the initial public offering of Euroseas’ common stock under the Securities
Act.
|
These
restrictions shall not apply if:
·
|
A
shareholder becomes an Interested Shareholder inadvertently and (i) as
soon as practicable divests itself of ownership of sufficient shares so
that the shareholder ceases to be an Interested Shareholder; and (ii)
would not, at any time within the three-year period immediately prior to a
Business Combination between Euroseas and such shareholder, have been an
Interested Shareholder but for the inadvertent acquisition of ownership;
or
|
·
|
The
Business Combination is proposed prior to the consummation or abandonment
of and subsequent to the earlier of the public announcement or the notice
required hereunder of a proposed transaction which (i) constitutes one of
the transactions described in the following sentence; (ii) is with or by a
person who either was not an Interested Shareholder during the previous
three years or who became an Interested Shareholder with the approval of
the Board; and (iii) is approved or not opposed by a majority of the
members of the Board then in office (but not less than one) who were
Directors prior to any person becoming an Interested Shareholder during
the previous three years or were recommended for election or elected to
succeed such Directors by a majority of such Directors. The proposed
transactions referred to in the preceding sentence are limited
to:
|
(a) a
merger or consolidation of Euroseas (except for a merger in respect of which,
pursuant to the BCA, no vote of the shareholders of Euroseas is required);(b) a
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions), whether as part of a dissolution or
otherwise, of assets of Euroseas or of any direct or indirect majority-owned
subsidiary of Euroseas (other than to any direct or indirect wholly-owned
subsidiary or to Euroseas) having an aggregate market value equal to 50% or more
of either that aggregate market value of all of the assets of Euroseas
determined on a consolidated basis or the aggregate market value of all the
outstanding shares; or(c) a proposed tender or exchange offer for 50% or more of
the outstanding voting shares of Euroseas.
Our
articles of incorporation defines a “business combination” to
include:
·
|
Any
merger or consolidation of Euroseas or any direct or indirect majority
-owned subsidiary of Euroseas with (i) the Interested Shareholder or any
of its affiliates, or (ii) with any other corporation, partnership,
unincorporated association or other entity if the merger or consolidation
is caused by the Interested
Shareholder;
|
·
|
Any
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in
one transaction or a series of transactions), except proportionately as a
shareholder of Euroseas, to or with the Interested Shareholder, whether as
part of a dissolution or otherwise, of assets of Euroseas or of any direct
or indirect majority-owned subsidiary of Euroseas which assets have an
aggregate market value equal to 10% or more of either the aggregate market
value of all the assets of Euroseas determined on a consolidated basis or
the aggregate market value of all the outstanding
shares;
|
·
|
Any
transaction which results in the issuance or transfer by Euroseas or by
any direct or indirect majority-owned subsidiary of Euroseas of any
shares, or any share of such subsidiary, to the Interested Shareholder,
except: (i) pursuant to the exercise, exchange or conversion of securities
exercisable for, exchangeable for or convertible into shares, or shares of
any subsidiary, which securities were outstanding prior to the time that
the Interested Shareholder become such; (ii) pursuant to a merger with a
direct or indirect wholly-owned subsidiary of Euroseas solely for purposes
of forming a holding company; (iii) pursuant to a dividend or distribution
paid or made, or the exercise, exchange or conversion of securities
exercisable for, exchangeable for or convertible into shares, or shares of
any such subsidiary, which security is distributed, pro rata to all
holders of a class or series of shares subsequent to the time the
Interested Shareholder became such; (iv) pursuant to an exchange offer by
Euroseas to purchase shares made on the same terms to all holders of said
shares; or (v) any issuance or transfer of shares by Euroseas; provided
however, that in no case under items (iii)-(v) of this subparagraph shall
there be an increase in the Interested Shareholder’s proportionate share
of the any class or series of
shares;
|
·
|
Any
transaction involving Euroseas or any direct or indirect majority-owned
subsidiary of Euroseas which has the effect, directly or indirectly, of
increasing the proportionate share of any class or series of shares, or
securities convertible into any class or series of shares, or shares of
any such subsidiary, or securities convertible into such shares, which is
owned by the Interested Shareholder, except as a result of immaterial
changes due to fractional share adjustments or as a result of any purchase
or redemption of any shares not caused, directly or indirectly, by the
Interested Shareholder; or
|
·
|
Any
receipt by the Interested Shareholder of the benefit, directly or
indirectly (except proportionately as a shareholder of Euroseas), of any
loans, advances, guarantees, pledges or other financial benefits (other
that those expressly permitted above) provided by or through Euroseas or
any direct or indirect majority-owned
subsidiary.
|
Other
articles of incorporation defines an “Interested Shareholder” as any person
(other than Euroseas and any direct or indirect majority-owned subsidiary of
Euroseas) that:
·
|
is
the owner of 15% or more of the outstanding voting shares of Euroseas;
or
|
·
|
is
an affiliate of Euroseas and was the owner of 15% or more of the
outstanding voting shares of Euroseas at any time within the three-year
period immediately prior to the date on which it is sought to be
determined whether such person is an Interested Shareholder; and the
affiliates and associates of such person; provided, however, that the term
“Interested Shareholder” shall not include any person whose ownership of
shares in excess of the 15% limitation set forth herein is the result of
action taken solely by Euroseas; provided that such person shall be an
Interested Shareholder if thereafter such person acquires additional
shares of voting shares of Euroseas, except as a result of further Company
action not caused, directly or indirectly, by such
person.
|
Transfer
Agent
The
registrar and transfer agent for the common stock is American Stock Transfer
& Trust Company.
Listing
Shares of
our common stock are listed on the Nasdaq Global Select Market under the symbol
"ESEA."
DESCRIPTION
OF PREFERRED SHARES
Under the
terms of our articles of incorporation, our board of directors has authority,
without any further vote or action by our shareholders, to issue up to
20,000,000 shares of blank check preferred stock. Our board of
directors may issue shares of preferred stock on terms calculated to discourage,
delay or prevent a change of control of our company or the removal of our
management. The material terms of any series of preferred shares that
we offer through a prospectus supplement will be described in that prospectus
supplement. Our board of directors is authorized to provide for the
issuance of preferred shares in one or more series with designations as may be
stated in the resolution or resolutions providing for the issue of such
preferred shares. At the time that any series of our preferred shares are
authorized, our board of directors will fix the dividend rights, any conversion
rights, any voting rights, redemption provisions, liquidation preferences and
any other rights, preferences, privileges and restrictions of that series, as
well as the number of shares constituting that series and their
designation. Our board of directors could, without shareholder
approval, cause us to issue preferred stock which has voting, conversion and
other rights that could adversely affect the holders of our common shares or
make it more difficult to effect a change in control. Our preferred
shares could be used to dilute the share ownership of persons seeking to obtain
control of us and thereby hinder a possible takeover attempt which, if our
shareholders were offered a premium over the market value of their shares, might
be viewed as being beneficial to our shareholders. In addition, our
preferred shares could be issued with voting, conversion and other rights and
preferences which would adversely affect the voting power and other rights of
holders of our common shares. The material terms of any series of
preferred shares that we offer through a prospectus supplement will be described
in that prospectus supplement.
DESCRIPTION
OF WARRANTS
We may
issue warrants to purchase our debt or equity securities or securities of third
parties or other rights, including rights to receive payment in cash or
securities based on the value, rate or price of one or more specified
commodities, currencies, securities or indices, or any combination of the
foregoing. Warrants may be issued independently or together with any
other securities and may be attached to, or separate from, such
securities. Each series of warrants will be issued under a separate
warrant agreement to be entered into between us and a warrant
agent. The terms of any warrants to be issued and a description of
the material provisions of the applicable warrant agreement will be set forth in
the applicable prospectus supplement.
The
applicable prospectus supplement will describe the following terms of any
warrants in respect of which this prospectus is being delivered:
·
|
the
title of such warrants;
|
·
|
the
aggregate number of such warrants;
|
·
|
the
price or prices at which such warrants will be
issued;
|
·
|
the
currency or currencies, in which the price of such warrants will be
payable;
|
·
|
the
securities or other rights, including rights to receive payment in cash or
securities based on the value, rate or price of one or more specified
commodities, currencies, securities or indices, or any combination of the
foregoing, purchasable upon exercise of such
warrants;
|
·
|
the
price at which and the currency or currencies, in which the securities or
other rights purchasable upon exercise of such warrants may be
purchased;
|
·
|
the
date on which the right to exercise such warrants shall commence and the
date on which such right shall
expire;
|
·
|
if
applicable, the minimum or maximum amount of such warrants which may be
exercised at any one time;
|
·
|
if
applicable, the designation and terms of the securities with which such
warrants are issued and the number of such warrants issued with each such
security;
|
·
|
if
applicable, the date on and after which such warrants and the related
securities will be separately
transferable;
|
·
|
information
with respect to book-entry procedures, if
any;
|
·
|
if
applicable, a discussion of any material United States Federal income tax
considerations; and
|
·
|
any
other terms of such warrants, including terms, procedures and limitations
relating to the exchange and exercise of such
warrants.
|
DESCRIPTION
OF DEBT SECURITIES
We may
issue debt securities from time to time in one or more series, under one or more
indentures, each dated as of a date on or prior to the issuance of the debt
securities to which it relates. We may issue senior debt securities
and subordinated debt securities pursuant to separate indentures, a senior
indenture and a subordinated indenture, respectively, in each case between us
and the trustee named in the indenture. These indentures will be
filed either as exhibits to an amendment to this Registration Statement or a
prospectus supplement, or as an exhibit to a Securities Exchange Act of 1934, or
Exchange Act, report that will be incorporated by reference to the Registration
Statement or a prospectus supplement. We will refer to any or all of
these reports as “subsequent filings”. The senior indenture and the
subordinated indenture, as amended or supplemented from time to time, are
sometimes referred to individually as an “indenture” and collectively as the
“indentures”. Each indenture will be subject to and governed by the
Trust Indenture Act. The aggregate principal amount of debt
securities which may be issued under each indenture will be unlimited and each
indenture will contain the specific terms of any series of debt securities or
provide that those terms must be set forth in or determined pursuant to, an
authorizing resolution, as defined in the applicable prospectus supplement,
and/or a supplemental indenture, if any, relating to such series.
Certain
of our subsidiaries may guarantee the debt securities we offer. Those
guarantees may or may not be secured by liens, mortgages, and security interests
in the assets of those subsidiaries. The terms and conditions of any
such subsidiary guarantees, and a description of any such liens, mortgages or
security interests, will be set forth in the prospectus supplement that will
accompany this prospectus and/or a supplemental indenture.
Our
statements below relating to the debt securities and the indentures are
summaries of their anticipated provisions, are not complete and are subject to,
and are qualified in their entirety by reference to, all of the provisions of
the applicable indenture and any applicable United States federal income tax
considerations as well as any applicable modifications of or additions to the
general terms described below in the applicable prospectus supplement or
supplemental indenture.
General
Neither
indenture limits the amount of debt securities which may be issued, and each
indenture provides that debt securities may be issued up to the aggregate
principal amount from time to time. The debt securities may be issued
in one or more series. The senior debt securities will be unsecured
and will rank on a parity with all of our other unsecured and unsubordinated
indebtedness. Each series of subordinated debt securities will be
unsecured and subordinated to all present and future senior indebtedness of debt
securities will be described in an accompanying prospectus
supplement.
You
should read the subsequent filings relating to the particular series of debt
securities for the following terms of the offered debt securities:
·
|
the
designation, aggregate principal amount and authorized
denominations;
|
·
|
the
issue price, expressed as a percentage of the aggregate principal
amount;
|
·
|
the
interest rate per annum, if any;
|
·
|
if
the offered debt securities provide for interest payments, the date from
which interest will accrue, the dates on which interest will be payable,
the date on which payment of interest will commence and the regular record
dates for interest payment dates;
|
·
|
any
optional or mandatory sinking fund provisions or conversion or
exchangeability provisions;
|
·
|
the
date, if any, after which and the price or prices at which the offered
debt securities may be optionally redeemed or must be mandatorily redeemed
and any other terms and provisions of optional or mandatory
redemptions;
|
·
|
if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which offered debt securities of the series will be
issuable;
|
·
|
if
other than the full principal amount, the portion of the principal amount
of offered debt securities of the series which will be payable upon
acceleration or provable in
bankruptcy;
|
·
|
any
events of default not set forth in this
prospectus;
|
·
|
the
currency or currencies, including composite currencies, in which
principal, premium and interest will be payable, if other than the
currency of the United States of
America;
|
·
|
if
principal, premium or interest is payable, at our election or at the
election of any holder, in a currency other than that in which the offered
debt securities of the series are stated to be payable, the period or
periods within which, and the terms and conditions upon which, the
election may be made;
|
·
|
whether
interest will be payable in cash or additional securities at our or the
holder’s option and the terms and conditions upon which the election may
be made;
|
·
|
if
denominated in a currency or currencies other than the currency of the
United States of America, the equivalent price in the currency of the
United States of America for purposes of determining the voting rights of
holders of those debt securities under the applicable
indenture;
|
·
|
if
the amount of payments of principal, premium or interest may be determined
with reference to an index, formula or other method based on a coin or
currency other than that in which the offered debt securities of the
series are stated to be payable, the manner in which the amounts will be
determined;
|
·
|
any
restrictive covenants or other material terms relating to the offered debt
securities, which may not be inconsistent with the applicable
indenture;
|
·
|
whether
the offered debt securities will be issued in the form of global
securities or certificates in registered or bearer
form;
|
·
|
any
terms with respect to
subordination;
|
·
|
any
listing on any securities exchange or quotation
system;
|
·
|
additional
provisions, if any, related to defeasance and discharge of the offered
debt securities; and
|
·
|
the
applicability of any guarantees.
|
Unless
otherwise indicated in subsequent filings with the Commission relating to the
indenture, principal, premium and interest will be payable and the debt
securities will be transferable at the corporate trust office of the applicable
trustee. Unless other arrangements are made or set forth in
subsequent filings or a supplemental indenture, principal, premium and interest
will be paid by checks mailed to the holders at their registered
addresses.
Unless
otherwise indicated in subsequent filings with the Commission, the debt
securities will be issued only in fully registered form without coupons, in
denominations of $1,000 or any integral multiple thereof. No service
charge will be made for any transfer or exchange of the debt securities, but we
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection with these debt securities.
Some or
all of the debt securities may be issued as discounted debt securities, bearing
no interest or interest at a rate which at the time of issuance is below market
rates, to be sold at a substantial discount below the stated principal
amount. United States federal income tax consequences and other
special considerations applicable to any discounted securities will be described
in subsequent filings with the Commission relating to those
securities.
We refer
you to applicable subsequent filings with respect to any deletions or additions
or modifications from the description contained in this prospectus.
Senior
Debt
We will
issue senior debt securities under the senior debt indenture. These
senior debt securities will rank on an equal basis with all our other unsecured
debt except subordinated debt.
Subordinated
Debt
We will
issue subordinated debt securities under the subordinated debt
indenture. Subordinated debt will rank subordinate and junior in
right of payment, to the extent set forth in the subordinated debt indenture, to
all our senior debt (both secured and unsecured).
In
general, the holders of all senior debt are first entitled to receive payment of
the full amount unpaid on senior debt before the holders of any of the
subordinated debt securities are entitled to receive a payment on account of the
principal or interest on the indebtedness evidenced by the subordinated debt
securities in certain events.
If we
default in the payment of any principal of, or premium, if any, or interest on
any senior debt when it becomes due and payable after any applicable grace
period, then, unless and until the default is cured or waived or ceases to
exist, we cannot make a payment on account of or redeem or otherwise acquire the
subordinated debt securities.
If there
is any insolvency, bankruptcy, liquidation or other similar proceeding relating
to us or our property, then all senior debt must be paid in full before any
payment may be made to any holders of subordinated debt securities.
Furthermore,
if we default in the payment of the principal of and accrued interest on any
subordinated debt securities that is declared due and payable upon an event of
default under the subordinated debt indenture, holders of all our senior debt
will first be entitled to receive payment in full in cash before holders of such
subordinated debt can receive any payments.
Senior
debt means:
·
|
the
principal, premium, if any, interest and any other amounts owing in
respect of our indebtedness for money borrowed and indebtedness evidenced
by securities, notes, debentures, bonds or other similar instruments
issued by us, including the senior debt securities or letters of
credit;
|
·
|
all
capitalized lease obligations;
|
·
|
all
hedging obligations;
|
·
|
all
obligations representing the deferred purchase price of property;
and
|
·
|
all
deferrals, renewals, extensions and refundings of obligations of the type
referred to above;
|
·
|
but
senior debt does not include:
|
·
|
subordinated
debt securities; and
|
·
|
any
indebtedness that by its terms is subordinated to, or ranks on an equal
basis with, our subordinated debt
securities.
|
Covenants
Any
series of offered debt securities may have covenants in addition to or differing
from those included in the applicable indenture which will be described in
subsequent filings prepared in connection with the offering of such securities,
limiting or restricting, among other things:
·
|
the
ability of us or our subsidiaries to incur either secured or unsecured
debt, or both;
|
·
|
the
ability to make certain payments, dividends, redemptions or
repurchases;
|
·
|
our
ability to create dividend and other payment restrictions affecting our
subsidiaries;
|
·
|
our
ability to make investments;
|
·
|
mergers
and consolidations by us or our
subsidiaries;
|
·
|
our
ability to enter into transactions with
affiliates;
|
·
|
our
ability to incur liens; and
|
·
|
sale
and leaseback transactions.
|
Modification
of the Indentures
Each
indenture and the rights of the respective holders may be modified by us only
with the consent of holders of not less than a majority in aggregate principal
amount of the outstanding debt securities of all series under the respective
indenture affected by the modification, taken together as a
class. But no modification that:
(1)
|
changes
the amount of securities whose holders must consent to an amendment,
supplement or waiver;
|
(2)
|
reduces
the rate of or changes the interest payment time on any security or alters
its redemption provisions (other than any alteration to any such section
which would not materially adversely affect the legal rights of any holder
under the indenture) or the price at which we are required to offer to
purchase the securities;
|
(3)
|
reduces
the principal or changes the maturity of any security or reduce the amount
of, or postpone the date fixed for, the payment of any sinking fund or
analogous obligation;
|
(4)
|
waives
a default or event of default in the payment of the principal of or
interest, if any, on any security (except a rescission of acceleration of
the securities of any series by the holders of at least a majority in
principal amount of the outstanding securities of that series and a waiver
of the payment default that resulted from such
acceleration);
|
(5)
|
makes
the principal of or interest, if any, on any security payable in any
currency other than that stated in the
Security;
|
(6)
|
makes
any change with respect to holders’ rights to receive principal and
interest, the terms pursuant to which defaults can be waived, certain
modifications affecting shareholders or certain currency-related issues;
or
|
(7)
|
waives
a redemption payment with respect to any Security or change any of the
provisions with respect to the redemption of any
securities
|
will be
effective against any holder without his consent. Other terms as
specified in subsequent filings may be modified without the consent of the
holders.
Events
of Default
Each
indenture defines an event of default for the debt securities of any series as
being any one of the following events:
·
|
default
in any payment of interest when due which continues for 30
days;
|
·
|
default
in any payment of principal or premium when
due;
|
·
|
default
in the deposit of any sinking fund payment when
due;
|
·
|
default
in the performance of any covenant in the debt securities or the
applicable indenture which continues for 60 days after we receive notice
of the default;
|
·
|
default
under a bond, debenture, note or other evidence of indebtedness for
borrowed money by us or our subsidiaries (to the extent we are directly
responsible or liable therefor) having a principal amount in excess of a
minimum amount set forth in the applicable subsequent filing, whether such
indebtedness now exists or is hereafter created, which default shall have
resulted in such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable,
without such acceleration having been rescinded or annulled or cured
within 30 days after we receive notice of the default;
and
|
·
|
events
of bankruptcy, insolvency or
reorganization.
|
An event
of default of one series of debt securities does not necessarily constitute an
event of default with respect to any other series of debt
securities.
There may
be such other or different events of default as described in an applicable
subsequent filing with respect to any class or series of offered debt
securities.
In case
an event of default occurs and continues for the debt securities of any series,
the applicable trustee or the holders of not less than 25% in aggregate
principal amount of the debt securities then outstanding of that series may
declare the principal and accrued but unpaid interest of the debt securities of
that series to be due and payable. Any event of default for the debt
securities of any series which has been cured may be waived by the holders of a
majority in aggregate principal amount of the debt securities of that series
then outstanding.
Each
indenture requires us to file annually after debt securities are issued under
that indenture with the applicable trustee a written statement signed by two of
our officers as to the absence of material defaults under the terms of that
indenture. Each indenture provides that the applicable trustee may
withhold notice to the holders of any default if it considers it in the interest
of the holders to do so, except notice of a default in payment of principal,
premium or interest.
Subject
to the duties of the trustee in case an event of default occurs and continues,
each indenture provides that the trustee is under no obligation to exercise any
of its rights or powers under that indenture at the request, order or direction
of holders unless the holders have offered to the trustee reasonable
indemnity. Subject to these provisions for indemnification and the
rights of the trustee, each indenture provides that the holders of a majority in
principal amount of the debt securities of any series then outstanding have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee as long as the exercise of that right does not conflict with any law
or the indenture.
Defeasance
and Discharge
The terms
of each indenture provide us with the option to be discharged from any and all
obligations in respect of the debt securities issued thereunder upon the deposit
with the trustee, in trust, of money or U.S. government obligations, or both,
which through the payment of interest and principal in accordance with their
terms will provide money in an amount sufficient to pay any installment of
principal, premium and interest on, and any mandatory sinking fund payments in
respect of, the debt securities on the stated maturity of the payments in
accordance with the terms of the debt securities and the indenture governing the
debt securities. This right may only be exercised if, among other
things, we have received from, or there has been published by, the United States
Internal Revenue Service a ruling to the effect that such a discharge will not
be deemed, or result in, a taxable event with respect to
holders. This discharge would not apply to our obligations to
register the transfer or exchange of debt securities, to replace stolen, lost or
mutilated debt securities, to maintain paying agencies and hold moneys for
payment in trust.
Defeasance
of Certain Covenants
The terms
of the debt securities provide us with the right to omit complying with
specified covenants and that specified events of default described in a
subsequent filing will not apply. In order to exercise this right, we will be
required to deposit with the trustee money or U.S. government obligations, or
both, which through the payment of interest and principal will provide money in
an amount sufficient to pay principal, premium, if any, and interest on, and any
mandatory sinking fund payments in respect of, the debt securities on the stated
maturity of such payments in accordance with the terms of the debt securities
and the indenture governing such debt securities. We will also be required to
deliver to the trustee an opinion of counsel to the effect that we have received
from, or there has been published by, the IRS a ruling to the effect that the
deposit and related covenant defeasance will not cause the holders of such
series to recognize income, gain or loss for United States federal income tax
purposes.
A
subsequent filing may further describe the provisions, if any, of any particular
series of offered debt securities permitting a discharge
defeasance.
Subsidiary
Guarantees
Certain
of our subsidiaries may guarantee the debt securities we offer. In
that case, the terms and conditions of the subsidiary guarantees will be set
forth in the applicable prospectus supplement. Unless we indicate
differently in the applicable prospectus supplement, if any of our subsidiaries
guarantee any of our debt securities that are subordinated to any of our senior
indebtedness, then the subsidiary guarantees will be subordinated to the senior
indebtedness of such subsidiary to the same extent as our debt securities are
subordinated to our senior indebtedness.
Global
Securities
The debt
securities of a series may be issued in whole or in part in the form of one or
more global securities that will be deposited with, or on behalf of, a
depository identified in an applicable subsequent filing and registered in the
name of the depository or a nominee for the depository. In such a case, one or
more global securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding debt securities of the series to be represented by the global
security or securities. Unless and until it is exchanged in whole or in part for
debt securities in definitive certificated form, a global security may not be
transferred except as a whole by the depository for the global security to a
nominee of the depository or by a nominee of the depository to the depository or
another nominee of the depository or by the depository or any nominee to a
successor depository for that series or a nominee of the successor depository
and except in the circumstances described in an applicable subsequent
filing.
We expect
that the following provisions will apply to depository arrangements for any
portion of a series of debt securities to be represented by a global
security. Any additional or different terms of the depository
arrangement will be described in an applicable subsequent filing.
Upon the
issuance of any global security, and the deposit of that global security with or
on behalf of the depository for the global security, the depository will credit,
on its book-entry registration and transfer system, the principal amounts of the
debt securities represented by that global security to the accounts of
institutions that have accounts with the depository or its nominee. The accounts
to be credited will be designated by the underwriters or agents engaging in the
distribution of the debt securities or by us, if the debt securities are offered
and sold directly by us. Ownership of beneficial interests in a global security
will be limited to participating institutions or persons that may hold interest
through such participating institutions. Ownership of beneficial
interests by participating institutions in the global security will be shown on,
and the transfer of the beneficial interests will be effected only through,
records maintained by the depository for the global security or by its
nominee. Ownership of beneficial interests in the global security by
persons that hold through participating institutions will be shown on, and the
transfer of the beneficial interests within the participating institutions will
be effected only through, records maintained by those participating
institutions. The laws of some jurisdictions may require that purchasers of
securities take physical delivery of the securities in certificated
form. The foregoing limitations and such laws may impair the ability
to transfer beneficial interests in the global securities.
So long
as the depository for a global security, or its nominee, is the registered owner
of that global security, the depository or its nominee, as the case may be, will
be considered the sole owner or holder of the debt securities represented by the
global security for all purposes under the applicable
indenture. Unless otherwise specified in an applicable subsequent
filing and except as specified below, owners of beneficial interests in the
global security will not be entitled to have debt securities of the series
represented by the global security registered in their names, will not receive
or be entitled to receive physical delivery of debt securities of the series in
certificated form and will not be considered the holders thereof for any
purposes under the indenture. Accordingly, each person owning a beneficial
interest in the global security must rely on the procedures of the depository
and, if such person is not a participating institution, on the procedures of the
participating institution through which the person owns its interest, to
exercise any rights of a holder under the indenture.
The
depository may grant proxies and otherwise authorize participating institutions
to give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a holder is entitled to give or take under the
applicable indenture. We understand that, under existing industry practices, if
we request any action of holders or any owner of a beneficial interest in the
global security desires to give any notice or take any action a holder is
entitled to give or take under the applicable indenture, the depository would
authorize the participating institutions to give the notice or take the action,
and participating institutions would authorize beneficial owners owning through
such participating institutions to give the notice or take the action or would
otherwise act upon the instructions of beneficial owners owning through
them.
Unless
otherwise specified in an applicable subsequent filings, payments of principal,
premium and interest on debt securities represented by global security
registered in the name of a depository or its nominee will be made by us to the
depository or its nominee, as the case may be, as the registered owner of the
global security.
We expect
that the depository for any debt securities represented by a global security,
upon receipt of any payment of principal, premium or interest, will credit
participating institutions’ accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the global
security as shown on the records of the depository. We also expect
that payments by participating institutions to owners of beneficial interests in
the global security held through those participating institutions will be
governed by standing instructions and customary practices, as is now the case
with the securities held for the accounts of customers registered in street
names, and will be the responsibility of those participating institutions. None
of us, the trustees or any agent of ours or the trustees will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in a global security, or for
maintaining, supervising or reviewing any records relating to those beneficial
interests.
Unless
otherwise specified in the applicable subsequent filings, a global security of
any series will be exchangeable for certificated debt securities of the same
series only if:
·
|
the
depository for such global securities notifies us that it is unwilling or
unable to continue as depository or such depository ceases to be a
clearing agency registered under the Exchange Act and, in either case, a
successor depository is not appointed by us within 90 days after we
receive the notice or become aware of the
ineligibility;
|
·
|
we
in our sole discretion determine that the global securities shall be
exchangeable for certificated debt securities;
or
|
·
|
there
shall have occurred and be continuing an event of default under the
applicable indenture with respect to the debt securities of that
series.
|
Upon any
exchange, owners of beneficial interests in the global security or securities
will be entitled to physical delivery of individual debt securities in
certificated form of like tenor and terms equal in principal amount to their
beneficial interests, and to have the debt securities in certificated form
registered in the names of the beneficial owners, which names are expected to be
provided by the depository’s relevant participating institutions to the
applicable trustee.
In the
event that the Depository Trust Company, or DTC, acts as depository for the
global securities of any series, the global securities will be issued as fully
registered securities registered in the name of Cede & Co., DTC’s
partnership nominee.
DTC is a
limited purpose trust company organized under the New York Banking Law, a
“banking organization” within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a “clearing corporation” within the meaning of
the New York Uniform Commercial Code, and a “clearing agency” registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participating institutions deposit with
DTC. DTC also facilitates the settlement among participating
institutions of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participating institutions’ accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participating
institutions include securities brokers and dealers, banks, trust companies,
clearing corporations and other organizations. DTC is owned by a number of its
direct participating institutions and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers and banks and trust companies that clear through
or maintain a custodial relationship with a direct participating institution,
either directly or indirectly. The rules applicable to DTC and its participating
institutions are on file with the Commission.
To
facilitate subsequent transfers, the debt securities may be registered in the
name of DTC’s nominee, Cede & Co. The deposit of the debt
securities with DTC and their registration in the name of Cede & Co. will
effect no change in beneficial ownership. DTC has no knowledge of the
actual beneficial owners of the debt securities. DTC’s records
reflect only the identity of the direct participating institutions to whose
accounts debt securities are credited, which may or may not be the beneficial
owners. The participating institutions remain responsible for keeping
account of their holdings on behalf of their customers.
Delivery
of notices and other communications by DTC to direct participating institutions,
by direct participating institutions to indirect participating institutions, and
by direct participating institutions and indirect participating institutions to
beneficial owners of debt securities are governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect.
Neither
DTC nor Cede & Co. consents or votes with respect to the debt
securities. Under its usual procedures, DTC mails a proxy to the
issuer as soon as possible after the record date. The proxy assigns
Cede & Co.’s consenting or voting rights to those direct participating
institution to whose accounts the debt securities are credited on the record
date.
If
applicable, redemption notices shall be sent to Cede & Co. If
less than all of the debt securities of a series represented by global
securities are being redeemed, DTC’s practice is to determine by lot the amount
of the interest of each direct participating institutions in that issue to be
redeemed.
To the
extent that any debt securities provide for repayment or repurchase at the
option of the holders thereof, a beneficial owner shall give notice of any
option to elect to have its interest in the global security repaid by us,
through its participating institution, to the applicable trustee, and shall
effect delivery of the interest in a global security by causing the direct
participating institution to transfer the direct participating institution’s
interest in the global security or securities representing the interest, on
DTC’s records, to the applicable trustee. The requirement for physical delivery
of debt securities in connection with a demand for repayment or repurchase will
be deemed satisfied when the ownership rights in the global security or
securities representing the debt securities are transferred by direct
participating institutions on DTC’s records.
DTC may
discontinue providing its services as securities depository for the debt
securities at any time. Under such circumstances, in the event that a
successor securities depository is not appointed, debt security certificates are
required to be printed and delivered as described above.
We may
decide to discontinue use of the system of book-entry transfers through the
securities depository. In that event, debt security certificates will
be printed and delivered as described above.
The
information in this section concerning DTC and DTC’s book-entry system has been
obtained from sources that we believe to be reliable, but we take no
responsibility for its accuracy.
DESCRIPTION
OF PURCHASE CONTRACTS
We may
issue purchase contracts for the purchase or sale of:
·
|
debt
or equity securities issued by us or securities of third parties, a basket
of such securities, an index or indices of such securities or any
combination of the above as specified in the applicable prospectus
supplement;
|
Each
purchase contract will entitle the holder thereof to purchase or sell, and
obligate us to sell or purchase, on specified dates, such securities, currencies
or commodities at a specified purchase price, which may be based on a formula,
all as set forth in the applicable prospectus supplement. We may,
however, satisfy our obligations, if any, with respect to any purchase contract
by delivering the cash value of such purchase contract or the cash value of the
property otherwise deliverable or, in the case of purchase contracts on
underlying currencies, by delivering the underlying currencies, as set forth in
the applicable prospectus supplement. The applicable prospectus
supplement will also specify the methods by which the holders may purchase or
sell such securities, currencies or commodities and any acceleration,
cancellation or termination provisions or other provisions relating to the
settlement of a purchase contract.
The
purchase contracts may require us to make periodic payments to the holders
thereof or vice versa, which payments may be deferred to the extent set forth in
the applicable prospectus supplement, and those payments may be unsecured or
prefunded on some basis. The purchase contracts may require the
holders thereof to secure their obligations in a specified manner to be
described in the applicable prospectus supplement. Alternatively,
purchase contracts may require holders to satisfy their obligations thereunder
when the purchase contracts are issued. Our obligation to settle such
pre-paid purchase contracts on the relevant settlement date may constitute
indebtedness. Accordingly, pre-paid purchase contracts will be issued
under either the senior indenture or the subordinated indenture.
DESCRIPTION
OF UNITS
As
specified in the applicable prospectus supplement, we may issue units consisting
of one or more purchase contracts, warrants, debt securities, preferred shares,
common shares or any combination of such securities. The applicable
prospectus supplement will describe:
·
|
the
terms of the units and of the purchase contracts, warrants, debt
securities, preferred shares and common shares comprising the units,
including whether and under what circumstances the securities comprising
the units may be traded separately;
|
·
|
a
description of the terms of any unit agreement governing the units;
and
|
·
|
a
description of the provisions for the payment, settlement, transfer or
exchange or the units.
|
EXPENSES
The
following are the estimated expenses of the issuance and distribution of the
securities being registered under the registration statement of which this
prospectus forms a part, all of which will be paid by us.
|
SEC
registration fee
|
|
$20,615
|
|
|
FINRA
fee
|
|
$55,000
|
*
|
|
Legal
fees and expenses
|
|
$35,000
|
*
|
|
Accounting fees and expenses
|
|
$20,000
|
*
|
|
Miscellaneous
|
|
$19,385
|
*
|
|
Total
|
|
$150,000
|
*
|
*
|
To
be updated, if necessary, by amendment, supplement or as an exhibit to
Report on Form 6-K that is incorporated by reference into this
prospectus.
|
TAXATION
The
following is a discussion of the material Marshall Islands and United States
federal income tax considerations applicable to us and U.S. Holders and Non-U.S.
Holders, each as defined below, of our common stock. The following
discussion is based upon the provisions of the United States Internal Revenue
Code of 1986, as amended, or the Code, existing and proposed United States
Treasury Department regulations, administrative rulings, pronouncements and
judicial decisions, all as of the date of this prospectus.
Marshall
Islands Tax Considerations
We are
incorporated in the Marshall Islands. Under current Marshall Islands law, we are
not subject to tax on income or capital gains, and no Marshall Islands
withholding tax will be imposed upon payments of dividends by us to our
stockholders.
United
States Federal Income Tax
The
following are the material United States federal income tax consequences to us
of our activities and to U.S. Holders and Non-U.S. Holders, each as defined
below, of our common stock. The following discussion of United States federal
income tax matters is based on the United States Internal Revenue Code of 1986,
or the Code, judicial decisions, administrative pronouncements, and existing and
proposed regulations issued by the United States Department of the Treasury, all
of which are subject to change, possibly with retroactive effect. This
discussion is based in part upon Treasury Regulations promulgated under Section
883 of the Code. The discussion below is based, in part, on the description of
our business as described in “Business” above and assumes that we conduct our
business as described in that section. References in the following discussion to
“we” and “us” are to Euroseas and its subsidiaries on a consolidated
basis.
United
States Federal Income Taxation of Our Company
Taxation
of Operating Income: In General
Unless
exempt from United States federal income taxation under the rules discussed
below, a foreign corporation is subject to United States federal income taxation
in respect of any income that is derived from the use of vessels, from the
hiring or leasing of vessels for use on a time, voyage or bareboat charter
basis, from the participation in a pool, partnership, strategic alliance, joint
operating agreement, code sharing arrangements or other joint venture it
directly or indirectly owns or participates in that generates such income, or
from the performance of services directly related to those uses, which we refer
to as “shipping income,” to the extent that the shipping income is derived from
sources within the United States. For these purposes, 50% of shipping income
that is attributable to transportation that begins or ends, but that does not
both begin and end, in the United States constitutes income from sources within
the United States, which we refer to as “U.S.-source shipping
income.”
Shipping
income attributable to transportation that both begins and ends in the United
States is considered to be 100% from sources within the United States. We are
not permitted by law to engage in transportation that produces income which is
considered to be 100% from sources within the United States.
Shipping
income attributable to transportation exclusively between non-U.S. ports will be
considered to be 100% derived from sources outside the United States. Shipping
income derived from sources outside the United States will not be subject to any
United States federal income tax.
In the
absence of exemption from tax under Section 883, our gross U.S.-source shipping
income would be subject to a 4% tax imposed without allowance for deductions as
described below.
Exemption
of Operating Income from United States Federal Income Taxation
Under
Section 883 of the Code, we will be exempt from United States federal income
taxation on our U.S.-source shipping income if:
·
|
we
are organized in a foreign country (our “country of organization”) that
grants an “equivalent exemption” to corporations organized in the United
States; and
|
either
·
|
more
than 50% of the value of our stock is owned, directly or indirectly, by
“qualified stockholders,” individuals who are “residents” of our country
of organization or of another foreign country that grants an “equivalent
exemption” to corporations organized in the United States, which we refer
to as the “50% Ownership Test,” or
|
·
|
our
stock is “primarily and regularly traded on an established securities
market” in our country of organization, in another country that grants an
“equivalent exemption” to United States corporations, or in the United
States, which we refer to as the “Publicly-Traded
Test.”
|
The
Marshall Islands, the jurisdiction where we and our ship-owning subsidiaries are
incorporated, grants an “equivalent exemption” to United States corporations.
Therefore, we will be exempt from United States federal income taxation with
respect to our U.S.-source shipping income if we satisfy either the 50%
Ownership Test or the Publicly-Traded Test.
We
believe that we satisfied the 50% Ownership Test for our 2007 taxable year and
we intend to take this position on our United States federal income tax return.
For the 2008 taxable year and each taxable year thereafter, we anticipate that
we will satisfy the Publicly-Traded Test.
Taxation
in Absence of Exemption
To the
extent the benefits of Section 883 are unavailable, our U.S. source shipping
income, to the extent not considered to be “effectively connected” with the
conduct of a U.S. trade or business, as described below, would be subject to a
4% tax imposed by Section 887 of the Code on a gross basis, without the benefit
of deductions. Since under the sourcing rules described above, no more than 50%
of our shipping income would be treated as being derived from U.S. sources, the
maximum effective rate of U.S. federal income tax on our shipping income would
never exceed 2% under the 4% gross basis tax regime.
To the
extent the benefits of the Section 883 exemption are unavailable and our
U.S.-source shipping income is considered to be “effectively connected” with the
conduct of a U.S. trade or business, as described below, any such “effectively
connected” U.S.-source shipping income, net of applicable deductions, would be
subject to the U.S. federal corporate income tax currently imposed at rates of
up to 35%. In addition, we may be subject to the 30% “branch profits” taxes on
earnings effectively connected with the conduct of such trade or business, as
determined after allowance for certain adjustments, and on certain interest paid
or deemed paid attributable to the conduct of its U.S. trade or
business.
Our
U.S.-source shipping income would be considered “effectively connected” with the
conduct of a U.S. trade or business only if:
·
|
We
have, or are considered to have, a fixed place of business in the United
States involved in the earning of shipping income;
and
|
·
|
substantially
all of our U.S.-source shipping income is attributable to regularly
scheduled transportation, such as the operation of a vessel that follows a
published schedule with repeated sailings at regular intervals between the
same points for voyages that begin or end in the United
States.
|
We do not
intend to have, or permit circumstances that would result in having any vessel
operating to the United States on a regularly scheduled basis. Based on the
foregoing and on the expected mode of our shipping operations and other
activities, we believe that none of our U.S.-source shipping income are or will
be “effectively connected” with the conduct of a U.S. trade or
business.
United
States Taxation of Gain on Sale of Vessels
Regardless
of whether we qualify for exemption under Section 883, we will not be subject to
United States federal income taxation with respect to gain realized on a sale of
a vessel, provided the sale is considered to occur outside of the United States
under United States federal income tax principles. In general, a sale of a
vessel will be considered to occur outside of the United States for this purpose
if title to the vessel, and risk of loss with respect to the vessel, pass to the
buyer outside of the United States. It is expected that any sale of a vessel by
us will be considered to occur outside of the United States.
United
States Federal Income Taxation of U.S. Holders
As used
herein, the term “U.S. Holder” means a beneficial owner of common stock that is
a United States citizen or resident, United States corporation or other United
States entity taxable as a corporation, an estate the income of which is subject
to United States federal income taxation regardless of its source, or a trust if
a court within the United States is able to exercise primary jurisdiction over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
This
discussion does not purport to deal with the tax consequences of owning common
stock to all categories of investors, some of which, such as dealers in
securities, investors whose functional currency is not the United States dollar
and investors that own, actually or under applicable constructive ownership
rules, 10% or more of our common stock, may be subject to special rules. This
discussion deals only with holders who hold the common stock as a capital asset.
You are encouraged to consult your own tax advisors concerning the overall tax
consequences arising in your own particular situation under United States
federal, state, local or foreign law of the ownership of common
stock.
If a
partnership holds our common stock, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. If you are a partner in a partnership holding our common stock, you
are encouraged to consult your tax advisor.
Distributions
Subject
to the discussion of passive foreign investment companies below, any
distributions made by us with respect to our common stock to a U.S. Holder will
generally constitute dividends, which may be taxable as ordinary income or
“qualified dividend income” as described in more detail below, to the extent of
our current or accumulated earnings and profits, as determined under United
States federal income tax principles. Distributions in excess of our earnings
and profits will be treated first as a nontaxable return of capital to the
extent of the U.S. Holder’s tax basis in his common stock on a dollar-for-dollar
basis and thereafter as capital gain. Because we are not a United States
corporation, U.S. Holders that are corporations will not be entitled to claim a
dividends received deduction with respect to any distributions they receive from
us. Dividends paid with respect to our common stock will generally be treated as
“passive category income” or, in the case of certain types of U.S. Holders,
“general category income” for purposes of computing allowable foreign tax
credits for United States foreign tax credit purposes.
Dividends
paid on our common stock to a U.S. Holder who is an individual, trust or estate
(a “U.S. Individual Holder”) will generally be treated as “qualified dividend
income” that is taxable to such U.S. Individual Holders at preferential tax
rates (through 2010) provided that (1) we are not a passive foreign investment
company for the taxable year during which the dividend is paid or the
immediately preceding taxable year (which we do not believe we are, have been or
will be), (2) our common stock is readily tradable on an established securities
market in the United States (such as the NASDAQ Global Select Market, on which
our common stock is listed), and (3) the U.S. Individual Holder has owned the
common stock for more than 60 days in the 121-day period beginning 60 days
before the date on which the common stock becomes ex-dividend. There is no
assurance that any dividends paid on our common stock will be eligible for these
preferential rates in the hands of a U.S. Individual Holder. Dividends paid on
our stock prior to the date on which our stock became listed on the NASDAQ
Global Select Market were not eligible for these preferential
rates. Legislation has been recently introduced in the U.S. Congress
which, if enacted in its present form, would preclude our dividends from
qualifying for such preferential rates prospectively from the date of the
enactment. Any dividends paid by us which are not eligible for these
preferential rates will be taxed as ordinary income to a U.S. Individual
Holder.
Special
rules may apply to any “extraordinary dividend” generally, a dividend in an
amount which is equal to or in excess of ten percent of a stockholder’s adjusted
basis (or fair market value in certain circumstances) in a share of common stock
paid by us. If we pay an “extraordinary dividend” on our common stock that is
treated as “qualified dividend income,” then any loss derived by a U.S.
Individual Holder from the sale or exchange of such common stock will be treated
as long-term capital loss to the extent of such dividend.
Sale,
Exchange or other Disposition of Common Stock
Assuming
we do not constitute a passive foreign investment company for any taxable year,
a U.S. Holder generally will recognize taxable gain or loss upon a sale,
exchange or other disposition of our common stock in an amount equal to the
difference between the amount realized by the U.S. Holder from such sale,
exchange or other disposition and the U.S. Holder’s tax basis in such stock.
Such gain or loss will be treated as long-term capital gain or loss if the U.S.
Holder’s holding period is greater than one year at the time of the sale,
exchange or other disposition. Such capital gain or loss will generally be
treated as U.S.- source income or loss, as applicable, for U.S. foreign tax
credit purposes. A U.S. Holder’s ability to deduct capital losses is subject to
certain limitations.
Passive
Foreign Investment Company Status and Significant Tax Consequences
Special
United States federal income tax rules apply to a U.S. Holder that holds stock
in a foreign corporation classified as a passive foreign investment company for
United States federal income tax purposes. In general, we will be treated as a
passive foreign investment company with respect to a U.S. Holder if, for any
taxable year in which such holder held our common stock, either:
·
|
at
least 75% of our gross income for such taxable year consists of passive
income (e.g., dividends, interest, capital gains and rents derived other
than in the active conduct of a rental business);
or
|
·
|
at
least 50% of the average value of the assets held by the corporation
during such taxable year produce, or are held for the production of,
passive income.
|
For
purposes of determining whether we are a passive foreign investment company, we
will be treated as earning and owning our proportionate share of the income and
assets, respectively, of any of our subsidiary corporations in which we own at
least 25 percent of the value of the subsidiary’s stock. Income earned, or
deemed earned, by us in connection with the performance of services would not
constitute passive income. By contrast, rental income would generally constitute
“passive income” unless we were treated under specific rules as deriving our
rental income in the active conduct of a trade or business.
Based on
our current operations and future projections, we do not believe that we are,
nor do we expect to become, a passive foreign investment company with respect to
any taxable year. Although there is no legal authority directly on point, and we
are not relying upon an opinion of counsel on this issue, our belief is based
principally on the position that, for purposes of determining whether we are a
passive foreign investment company, the gross income we derive or are deemed to
derive from the time chartering and voyage chartering activities of our
wholly-owned subsidiaries should constitute services income, rather than rental
income. Correspondingly, such income should not constitute passive income, and
the assets that we or our wholly-owned subsidiaries own and operate in
connection with the production of such income, in particular, the vessels,
should not constitute passive assets for purposes of determining whether we are
a passive foreign investment company. We believe there is substantial legal
authority supporting our position consisting of case law and Internal Revenue
Service pronouncements concerning the characterization of income derived from
time charters and voyage charters as services income for other tax purposes.
However, in the absence of any legal authority specifically relating to the
statutory provisions governing passive foreign investment companies, the
Internal Revenue Service or a court could disagree with our position. In
addition, although we intend to conduct our affairs in a manner to avoid being
classified as a passive foreign investment company with respect to any taxable
year, we cannot assure you that the nature of our operations will not change in
the future.
As
discussed more fully below, if we were to be treated as a passive foreign
investment company for any taxable year, a U.S. Holder would be subject to
different taxation rules depending on whether the U.S. Holder makes an election
to treat us as a “Qualified Electing Fund,” which election we refer to as a “QEF
election.” As an alternative to making a QEF election, a U.S. Holder should be
able to make a “mark-to-market” election with respect to our common stock, as
discussed below.
Taxation
of U.S. Holders Making a Timely QEF Election
If a U.S.
Holder makes a timely QEF election, which U.S. Holder we refer to as an
“Electing Holder,” the Electing Holder must report each year for United States
federal income tax purposes his pro rata share of our ordinary earnings and our
net capital gain, if any, for our taxable year that ends with or within the
taxable year of the Electing Holder, regardless of whether or not distributions
were received from us by the Electing Holder. The Electing Holder’s adjusted tax
basis in the common stock will be increased to reflect taxed but undistributed
earnings and profits. Distributions of earnings and profits that had been
previously taxed will result in a corresponding reduction in the adjusted tax
basis in the common stock and will not be taxed again once distributed. An
Electing Holder would generally recognize capital gain or loss on the sale,
exchange or other disposition of our common stock. A U.S. Holder would make a
QEF election with respect to any year that our company is a passive foreign
investment company by filing IRS Form 8621 with his United States federal income
tax return. If we were aware that we were to be treated as a passive foreign
investment company for any taxable year, we would provide each U.S. Holder with
all necessary information in order to make the QEF election described
above.
Taxation
of U.S. Holders Making a “Mark-to-Market” Election
Alternatively,
if we were to be treated as a passive foreign investment company for any taxable
year and our stock is treated as “marketable stock,” a U.S. Holder would be
allowed to make a “mark-to-market” election with respect to our common stock,
provided the U.S. Holder completes and files IRS Form 8621 in accordance with
the relevant instructions and related Treasury Regulations. Since our stock is
traded on the NASDAQ Global Select Market, we believe that our stock can be
treated as “marketable stock” for the 2007 taxable year and each taxable year
thereafter. For taxable years prior to the 2007 taxable year, our
stock was not “marketable stock” since it was traded on the OTC Bulletin Board.
If that election is made, the U.S. Holder generally would include as ordinary
income in each taxable year the excess, if any, of the fair market value of the
common stock at the end of the taxable year over such holder’s adjusted tax
basis in the common stock. The U.S. Holder would also be permitted an ordinary
loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis
in the common stock over its fair market value at the end of the taxable year,
but only to the extent of the net amount previously included in income as a
result of the mark-to-market election. A U.S. Holder’s tax basis in his common
stock would be adjusted to reflect any such income or loss amount. Gain realized
on the sale, exchange or other disposition of our common stock would be treated
as ordinary income, and any loss realized on the sale, exchange or other
disposition of the common stock would be treated as ordinary loss to the extent
that such loss does not exceed the net mark-to-market gains previously included
by the U.S. Holder.
Taxation
of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election
Finally,
if we were to be treated as a passive foreign investment company for any taxable
year, a U.S. Holder who does not make either a QEF election or a
“mark-to-market” election for that year, whom we refer to as a “Non-Electing
Holder,” would be subject to special rules with respect to (1) any excess
distribution (i.e., the portion of any distributions received by the
Non-Electing Holder on our common stock in a taxable year in excess of 125
percent of the average annual distributions received by the Non-Electing Holder
in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s
holding period for the common stock), and (2) any gain realized on the sale,
exchange or other disposition of our common stock. Under these special
rules:
·
|
the
excess distribution or gain would be allocated ratably over the
Non-Electing Holders’ aggregate holding period for the common
stock;
|
·
|
the
amount allocated to the current taxable year and any taxable year before
we became a passive foreign investment company would be taxed as ordinary
income; and
|
·
|
the
amount allocated to each of the other taxable years would be subject to
tax at the highest rate of tax in effect for the applicable class of
taxpayer for that year, and an interest charge for the deemed deferral
benefit would be imposed with respect to the resulting tax attributable to
each such other taxable year.
|
These
penalties would not apply to a pension or profit sharing trust or other
tax-exempt organization that did not borrow funds or otherwise utilize leverage
in connection with its acquisition of our common stock. If a Non-Electing Holder
who is an individual dies while owning our common stock, such holder’s successor
generally would not receive a step-up in tax basis with respect to such
stock.
United
States Federal Income Taxation of “Non-U.S. Holders”
A
beneficial owner of common stock that is not a U.S. Holder is referred to herein
as a “Non-U.S. Holder.”
Dividends
on Common Stock
Non-U.S.
Holders generally will not be subject to United States federal income tax or
withholding tax on dividends received from us with respect to our common stock,
unless that income is effectively connected with the Non-U.S. Holder’s conduct
of a trade or business in the United States. If the Non-U.S. Holder is entitled
to the benefits of a United States income tax treaty with respect to those
dividends, that income is taxable only if it is attributable to a permanent
establishment maintained by the Non-U.S. Holder in the United
States.
Sale,
Exchange or Other Disposition of Common Stock
Non-U.S.
Holders generally will not be subject to United States federal income tax or
withholding tax on any gain realized upon the sale, exchange or other
disposition of our common stock, unless:
·
|
the
gain is effectively connected with the Non-U.S. Holder’s conduct of a
trade or business in the United States. If the Non-U.S. Holder is entitled
to the benefits of an income tax treaty with respect to that gain, that
gain is taxable only if it is attributable to a permanent establishment
maintained by the Non-U.S. Holder in the United States;
or
|
·
|
the
Non-U.S. Holder is an individual who is present in the United States for
183 days or more during the taxable year of disposition and other
conditions are met.
|
If the
Non-U.S. Holder is engaged in a United States trade or business for United
States federal income tax purposes, the income from the common stock, including
dividends and the gain from the sale, exchange or other disposition of the stock
that is effectively connected with the conduct of that trade or business will
generally be subject to regular United States federal income tax in the same
manner as discussed in the previous section relating to the taxation of U.S.
Holders. In addition, if you are a corporate Non-U.S. Holder, your earnings and
profits that are attributable to the effectively connected income, which are
subject to certain adjustments, may be subject to an additional branch profits
tax at a rate of 30%, or at a lower rate as may be specified by an applicable
income tax treaty.
Backup
Withholding and Information Reporting
In
general, dividend payments, or other taxable distributions, made within the
United States to you will be subject to information reporting requirements. Such
payments will also be subject to backup withholding tax if you are a
non-corporate U.S. Holder and you:
·
|
fail
to provide an accurate taxpayer identification
number;
|
·
|
are
notified by the Internal Revenue Service that you have failed to report
all interest or dividends required to be shown on your federal income tax
returns; or
|
·
|
in
certain circumstances, fail to comply with applicable certification
requirements.
|
Non-U.S.
Holders may be required to establish their exemption from information reporting
and backup withholding by certifying their status on IRS Form W-8BEN, W-8ECI or
W-8IMY, as applicable.
If you
sell your common stock to or through a United States office or broker, the
payment of the proceeds is subject to both United States backup withholding and
information reporting unless you certify that you are a non-U.S. person, under
penalties of perjury, or you otherwise establish an exemption. If you sell your
common stock through a non-United States office of a non-United States broker
and the sales proceeds are paid to you outside the United States then
information reporting and backup withholding generally will not apply to that
payment. However, United States information reporting requirements, but not
backup withholding, will apply to a payment of sales proceeds, even if that
payment is made to you outside the United States, if you sell your common stock
through a non-United States office of a broker that is a United States person or
has some other contacts with the United States.
Backup
withholding tax is not an additional tax. Rather, you generally may obtain a
refund of any amounts withheld under backup withholding rules that exceed your
income tax liability by filing a refund claim with the Internal Revenue
Service.
We
encourage each stockholder to consult with his, her or its own tax advisor as to
particular tax consequences to it of holding and disposing of Euroseas shares,
including the applicability of any state, local or foreign tax laws and any
proposed changes in applicable law.
EXPERTS
The
consolidated financial statements of Euroseas Ltd. and Subsidiaries appearing in
Euroseas Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2007,
have been audited by Deloitte, Hadjipavlou, Sofianos &
Cambanis S.A., independent registered public accounting firm, as set
forth in their report thereon, included therein, and incorporated herein by
reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
LEGAL
MATTERS
The
validity of the securities offering by this prospectus will be passed upon for
us by Seward & Kissel LLP, New York, New York with respect to matters of
U.S. and Marshall Islands law.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
As
required by the Securities Act of 1933, as amended, we filed a registration
statement relating to the securities offered by this prospectus with the
Commission. This prospectus is a part of that registration statement,
which includes additional information.
Government
Filings
We file
annual and special reports within the Commission. You may read and
copy any document that we file, including documents referenced in this
prospectus, at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the public reference room by calling 1 (800)
SEC-0330, and you may obtain copies at prescribed rates from the Public
Reference Section of the Commission at its principal office in Washington, D.C.
20549. The Commission maintains a website (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the
Commission. In addition, you can obtain information about us at the
offices of the Nasdaq Global Market.
Information
Incorporated by Reference
The
Commission allows us to “incorporate by reference” information that we file with
it. This means that we can disclose important information to you by
referring you to those filed documents. The information incorporated
by reference is considered to be a part of this prospectus, and information that
we file later with the Commission prior to the termination of this offering will
also be considered to be part of this prospectus and will automatically update
and supersede previously filed information, including information contained in
this document.
We
incorporate by reference the documents listed below and any future filings made
with the Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934:
·
|
Annual
Report on Form 20-F for the year ended December 31, 2007, filed with the
Commission on May 13, 2008, which contains audited consolidated financial
statements for the most recent fiscal year for which those statements have
been filed.
|
·
|
Quarterly
Report on Form 6-K, filed with the Commission on July 2, 2008, which
contains unaudited condensed consolidated financial statements for the
three months ended March 31, 2007 and March 31,
2008.
|
We are
also incorporating by reference all subsequent annual reports on Form 20-F that
we file with the Commission and certain Reports on Form 6-K that we furnish to
the Commission after the date of this prospectus (if they state that they are
incorporated by reference into this prospectus) until we file a post-effective
amendment indicating that the offering of the securities made by this prospectus
has been terminated. In all cases, you should rely on the later
information over different information included in this prospectus or any
prospectus supplement.
You
should rely only on the information contained or incorporated by reference in
this prospectus and any accompanying prospectus supplement. We have
not, and any underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and
the underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should
assume that the information appearing in this prospectus and any accompanying
prospectus supplement as well as the information we previously filed with the
Commission and incorporated by reference, is accurate as of the dates on the
front cover of those documents only. Our business, financial
condition and results of operations and prospects may have changed since those
dates.
You may
request a free copy of the above mentioned filings or any subsequent filing we
incorporated by reference to this prospectus by writing or telephoning us at the
following address:
Euroseas
Ltd.
Aethrion
Center
40
Ag. Konstantinou Street
151
24 Maroussi, Greece
011
30 211 1804005
Information
provided by the Company
We will
furnish holders of our common shares with annual reports containing audited
financial statements and a report by our independent registered public
accounting firm, and intend to furnish quarterly reports containing selected
unaudited financial data for each quarter of each fiscal year. The audited
financial statements will be prepared in accordance with accounting principles
generally accepted in the United States of America and those reports will
include a “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” section for the relevant periods. As a
“foreign private issuer”, we are exempt from the rules under the Securities
Exchange Act prescribing the furnishing and content of proxy statements to
shareholders. While we intend to furnish proxy statements to any
shareholder in accordance with the rules of the Nasdaq Global Select Market,
those proxy statements are not expected to conform to Schedule 14A of the proxy
rules promulgated under the Exchange Act. In addition, as a “foreign
private issuer”, we are exempt from the rules under the Exchange Act relating to
short swing profit reporting and liability.
DISCLOSURE
OF COMMISSION POSITION ON
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our
bylaws provide that any person who is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director or
officer of another, partnership, joint venture, trust or other enterprise, shall
be entitled to be indemnified by the Company upon the same terms, under the same
conditions, and to the same extent as authorized by Section 60 of the Business
Corporations Act (Part I of the Associations Law) of the Republic of the
Marshall Islands, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. We are also expressly authorized to advance
certain expenses (including attorneys’ fees and disbursements and court costs)
to our directors and offices and carry directors’ and officers’ insurance
providing indemnification for our directors, officers and certain employees for
some liabilities. We believe that these indemnification provisions and insurance
are useful to attract and retain qualified directors and executive
offices.
There is
currently no pending material litigation or proceeding involving any of our
directors, officers or employees for which indemnification is
sought.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, that Company will, unless in
the opinion of its counsel the claim has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
GLOSSARY
OF SHIPPING TERMS
The
following are definitions of certain terms that are commonly used in the
shipping industry and in this prospectus.
Annual survey
. The inspection
of a vessel pursuant to international conventions, by a classification society
surveyor, on behalf of the flag state, that takes place every year.
Ballast
. A voyage during
which the ship is not laden with cargo vessel.
Bareboat charter
. A charter
of a vessel under which the shipowner is usually paid a fixed daily or monthly
rate for a certain period of time during which the charterer is responsible for
the vessel operating expenses and voyage expenses of the vessel and for the
management of the vessel. In this case, all voyage related costs, including
vessel fuel, or bunker, and port dues as well as all vessel operating expenses,
such as day-to-day operations, maintenance, crewing and insurance are paid by
the charterer. A bareboat charter is also known as a “demise charter” or a “time
charter by demise” and involves the use of a vessel usually over longer periods
of time ranging over several years. The owner of the vessel receives monthly
charterhire payments on a per day basis and is responsible only for the payment
of capital costs related to the vessel.
Bunkers
. Fuel oil used to
operate a vessel’s engines, generators and boilers.
Capesize
. A drybulk carrier
with a cargo-carrying capacity exceeding 80,000 dwt. These vessels generally
operate along long haul iron ore and coal trade routes. Only the largest ports
around the world possess the infrastructure to accommodate vessels of this
size.
Charter
. The hire of a vessel
for a specified period of time or to carry a cargo for a fixed fee from a
loading port to a discharging port. The contract for a charter is called a
charterparty.
Charterer
. The company that
hires a vessel pursuant to a charter.
Charterhire
. Money paid to
the shipowner by a charterer for the use of a vessel under charter. Such
payments are usually made during the course of the charter every 15 or 30 days
in advance or in arrears by multiplying the daily charter rate times the number
of days and, under a time charter only, subtracting any time the vessel was
deemed to be off-hire. Under a bareboat charter such payments are usually made
monthly and are calculated on a 360 or 365 calendar year basis.
Charter rate
. The amount of
money agreed between the charterer and the shipowner accrued on a daily or
monthly basis that is used to calculate the vessel’s charterhire.
Classification society
. An
independent society that certifies that a vessel has been built and maintained
according to the society’s rules for that type of vessel and complies with the
applicable rules and regulations of the country in which the vessel is
registered, as well as the international conventions which that country has
ratified. A vessel that receives its certification is referred to as being “in
class” as of the date of issuance.
Containerships
. Vessels which
are specially designed and built to carry large numbers of
containers.
Contract of affreightment
. A
contract of affreightment, or COA, relates to the carriage of specific
quantities of cargo with multiple voyages over the same route and over a
specific period of time which usually spans a number of years. A COA does not
designate the specific vessels or voyage schedules that will transport the
cargo, thereby providing both the charterer and shipowner greater operating
flexibility than with voyage charters alone. The charterer has the flexibility
to determine the individual voyage scheduling at a future date while the
shipowner may use different ships to perform these individual voyages. As a
result COAs are mostly entered into by large fleet operators such as pools or
shipowners with large fleets of the same vessel type. All of the ship’s
operating, voyage and capital costs are borne by the shipowner while the freight
rate normally is agreed on a per cargo ton basis.
Deadweight ton or “dwt”
A
unit of a vessel’s capacity for cargo, fuel oil, stores and crew, measured in
metric tons of 1,000 kilograms. A vessel’s dwt or total deadweight is the total
weight the vessel can carry when loaded to a particular load line.
Deep sea containership
. A
Deep Sea containership has a cargo carrying capacity of more than 3,000 teu and
mostly serves the mainlane East-West container trade routes.
Drybulk
. Non-liquid cargoes
of commodities shipped in an unpackaged state.
Drybulk carriers
. Vessels
which are specially designed and built to carry large volumes of
drybulk.
Drydocking
. The removal of a
vessel from the water for inspection and/or repair of those parts of a vessel
which are below the water line. During drydockings, which are required to be
carried out periodically, certain mandatory classification society inspections
are carried out and relevant certifications issued. Dry-dockings are generally
required once every 30 to 60 months.
Feeder
. A short-sea
containership having a cargo carrying capacity of less than 1,300 teu that
transfers cargo between a central “hub” port and smaller “spoke”
ports.
Fully cellular containership
.
A containership equipped throughout with fixed cell guides for
containers.
Freight
. Money paid to the
shipowner by a charterer for the use of a vessel under a voyage charter. Such
payment is usually made on a lump-sum basis upon loading or discharging the
cargo and is derived by multiplying the tons of cargo loaded on board by the
cost per cargo ton, as agreed to transport that cargo between the specific
ports.
Gross ton
. A unit of
measurement for the total enclosed space within a ship equal to 100 cubic feet
or 2.831 cubic meters used in arriving at the calculation of gross
tonnage.
Handymax
. Handymax vessels
are drybulk vessels that have a cargo carrying capacity of approximately 40,000
to 59,999 dwt. These vessels operate on a large number of geographically
dispersed global trade routes, carrying primarily grains and minor bulks.
Vessels below 60,000 dwt are usually built with on-board cranes enabling them to
load and discharge cargo in countries and ports with limited
infrastructure.
Handysize
. Handysize vessels
have a cargo carrying capacity of approximately 10,000 to 39,999 dwt and 1,300
to 1,999 teu. These vessels carry exclusively minor bulk cargo. Increasingly,
these vessels are operating on regional trading routes. Handysize vessels are
well suited for small ports with length and draft restrictions that may lack the
infrastructure for cargo loading and unloading.
Hull
. Shell or body of a
ship.
IMO
. International Maritime
Organization, a United Nations agency that issues international regulations and
standards for seaborne transportation.
Intermediate containership
.
An Intermediate containership has a cargo carrying capacity between 2,000 and
2,999 teu and mostly serves the North-South and Intermediate container trade
routes.
Intermediate survey
. The
inspection of a vessel by a classification society surveyor which takes place
between two and three years before and after each Special Survey for such vessel
pursuant to the rules of international conventions and classification
societies.
Metric ton
. A unit of weight
equal to 1,000 kilograms.
Newbuilding
. A new vessel
under construction or just completed.
Off-Hire
. The period a vessel
is unable to perform the services for which it is required under a charter.
Off-hire periods typically include days spent undergoing repairs and
dry-docking, whether or not scheduled.
OPA
. Oil Pollution Act of
1990 of the United States (as amended).
Panamax
. Panamax vessels have
a cargo carrying capacity of approximately 60,000 to 79,999 dwt. The ability of
Panamax vessels to pass through the Panama Canal makes them more versatile than
larger vessels. Panamax drybulk carriers carry coal, grains, and, to a lesser
extent, minor bulks, including steel products, forest products and
fertilizers.
Period charter
. A period
charter is an industry term referring to both time and bareboat charters that
last for more than a single voyage.
Pools
. Pooling arrangements
that enable participating vessels to combine their revenues. Vessels may be
employed either exclusively in spot charters or a combination of spot and period
charters and contacts of affreightment. Pools are administered by the pool
manager who secures employment for the participating vessels. The contract
between a vessel in a shipping pool and the pool manager is a period charter
where the charter hire is based on the vessel’s corresponding share of the
income generated by all the vessels that participate in the pool. The
corresponding share of every vessel in the pool is based on a pre-determined
formula rating the technical specifications of each vessel. Pools have the size
and scope to combine spot market voyages, time charters and contracts of
affreightment with freight forward agreements for hedging purposes to perform
more efficient vessel scheduling thereby increasing fleet
utilization.
Protection and indemnity (or
P&I) insurance
. Insurance obtained through mutual associations
(called “Clubs”) formed by shipowners to provide liability insurance protection
against a large financial loss by one member by contribution towards that loss
by all members. To a great extent, the risks are reinsured.
Scrapping
. The disposal of
old or damaged vessel tonnage by way of sale as scrap metal.
Short fund
. A contract of
affreightment to carry cargo.
SOLAS
. The International
Convention for the Safety of Life at Sea 1974, as amended, adopted under the
auspices of the IMO.
Special survey
. An extensive
inspection of a vessel by classification society surveyors that must be
completed within five years. Special Surveys require a vessel to be
dry-docked.
Spot charter.
A spot charter
is an industry term referring to both voyage and trip time charters. These
charters are referred to as spot charters or spot market charters due to their
short term duration, constituting mostly of a single voyage between one load
port and one discharge port.
Spot market
. The market for
immediate chartering of a vessel usually for single voyages.
TEU
. Twenty-foot equivalent
unit, the international standard measure for containers and containership
capacity.
TCE
. Time charter equivalent,
a standard industry measure of the average daily revenue performance of a
vessel. The TCE rate achieved on a given voyage is expressed in $ per day and is
generally calculated by subtracting voyage expenses, including bunkers and port
charges, from voyage revenues and dividing the net amount (time charter
equivalent revenues) by the voyage days, including the trip to the loading port.
TCE is a standard seaborne transportation industry performance measure used
primarily to compare period-to-period changes in a seaborne transportation
company’s performance despite changes in the mix of charter types (i.e., voyage
charters, time charters and bareboat charters) under which the vessels may be
employed during specific periods.
Time charter
. A time charter
is a contract under which a charterer pays a fixed daily hire rate usually on a
semi-monthly basis for use of the vessel for an agreed period. This is either a
specific fixed period of time or a specific number of loaded voyages. Subject to
any restrictions in the charter, the charterer decides the type and quantity of
cargo to be carried and the ports of loading and unloading. The charterer pays
the voyage related expenses such as fuel, canal tolls, and port charges. The
shipowner pays all vessel operating expenses such as the management expenses and
crew costs as well as for the capital costs of the vessel. Any delays at port or
during the voyages are the responsibility of the charterer, save for certain
specific exceptions such as loss of time arising from vessel breakdown and
routine maintenance.
Trip time charter
. A trip
time charter is a short term time charter where the vessel performs a single
voyage between load port(s) and discharge port(s) and the charterer pays a fixed
daily hire rate usually on a semi-monthly basis for use of the vessel. The
difference between a trip time charter and a voyage charter is only in the form
of payment for use of the vessel and the respective financial responsibilities
of the charterer and shipowner as described under Time Charter and Voyage
Charter.
Ton
. See “Metric
ton.”
Vessel operating expenses
.
The costs of operating a vessel that is incurred during a charter, primarily
consisting of crew wages and associated costs, insurance premiums, lubricants
and spare parts, and repair and maintenance costs. Vessel operating expenses
exclude fuel and port charges, which are known as “voyage expenses.” For a time
charter, the shipowner pays vessel operating expenses. For a bareboat charter,
the charterer pays vessel operating expenses.
Voyage charter
. A voyage
charter involves the carriage of a specific amount and type of cargo from
specific load port(s) to specific discharge port(s), subject to various cargo
handling terms. Most of these charters are of a single voyage nature between two
specific ports, as trading patterns do not encourage round voyage trading. The
owner of the vessel receives one payment derived by multiplying the tons of
cargo loaded on board by the cost per cargo ton, as agreed to transport that
cargo between the specific ports. The owner is responsible for the payment of
all expenses including voyage, operating and capital costs of the vessel.. The
charterer is typically responsible for any delay at the loading or discharging
ports.
Voyage expenses
. Expenses
incurred due to a vessel’s traveling from a loading port to a discharging port,
such as fuel (bunker) cost, port expenses, agent’s fees, canal dues and extra
war risk insurance, as well as commissions.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
8. Indemnification of Directors and Officers.
The
bylaws of the Registrant provide that any person who is or was a director or
officer of the Registrant, or is or was serving at the request of the Registrant
as a director or officer of another, partnership, joint venture, trust or other
enterprise, shall be entitled to be indemnified by the Registrant upon the same
terms, under the same conditions, and to the same extent as authorized by
Section 60 of the Business Corporations Act (Part I of the Associations Law) of
the Republic of the Marshall Islands, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section
60 of the Business Corporations Act (Part I of the Associations Law) of the
Republic of the Marshall Islands provides as follows:
Indemnification
of directors and officers.
(1)
Actions not by or in right of the corporation. A corporation shall have power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a director
or officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of no contest, or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(2)
Actions by or in right of the corporation. A corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure judgment in its favor by reason of the fact that he is or
was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys’ fees) actually and reasonably incurred by him or in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
(3) When
director or officer is successful. To the extent that director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (1) or (2) of this
section, or in the defense of a claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys’ fees) actually and reasonably
incurred by him in connection therewith.
(4)
Payment of expenses in advance. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid in advance of the final
disposition of such action, suit or proceeding as authorized by the board of
directors in the specific case upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this section.
(5)
Indemnification pursuant to other rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other subsections of this
section shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
(6)
Continuation of indemnification. The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(7)
Insurance. A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation or
is or was serving at the request of the corporation as a director or officer
against any liability asserted against him and incurred by him in such capacity
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
Item
9. Exhibits
A list of
exhibits included as part of this registration statement is set forth in the
Exhibit Index which immediately precedes such exhibits and is incorporated
herein by reference.
Item
10. Undertakings.
|
The
undersigned registrant hereby
undertakes:
|
|
(1)
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement,
|
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
|
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration
statement.
|
|
(iii)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
|
|
Paragraphs
1(i), 1(ii) and 1(iii) above, do not apply if the information required to
be included in a post effective amendment is contained in reports filed
with or furnished to the Securities Exchange Commission that are
incorporated by reference in this Registration Statement or is contained
in a form of prospectus filed pursuant to Rule 424(b) under the Securities
Act that is part of this Registration
Statement,
|
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act of
1933, as amended, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial
bona fide
offering thereof.
|
|
(3)
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
|
(4)
|
To
file a post-effective amendment to the registration statement to include
any financial statements required by Item 8.A. of Form 20-F at the start
of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished,
provided
, that the
registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (a)(4)
and other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not
be filed to include financial statements and information required by
Section 10(a)(3) of the Securities Act of 1933 or Rule 3-19 of this
chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Securities Exchange
Commission by the registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
the Form F-3.
|
(5)
|
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of this Registration Statement as of the date the filed
prospectus was deemed part of and included in this Registration
Statement.
|
(6)
|
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of this Registration Statement for the purpose of providing
the information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in this Registration Statement
as of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that
date an underwriter, such date shall be deemed to be a new effective date
of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective
date.
|
(7)
|
The
undersigned registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this Registration Statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
|
(i)
|
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
|
(iv)
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
|
(8)
|
The
undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
registrant’s annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide
offering
thereof.
|
|
(9)
|
The
undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report, to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to
be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
|
(10)
|
The
undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules an regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture
Act.
|
(11)
|
Insofar
as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities Exchange
Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
|
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form F-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Maroussi, country of
Greece on July 2, 2008.
|
By:
|
/s/
Aristides J. Pittas
|
|
Name:
|
Aristides
J. Pittas
|
|
Title:
|
President
and Chief Executive Officer
|
KNOW ALL PERSONS BY THESE PRESENTS,
that each person whose signature appears below constitutes and appoints
Aristides J. Pittas and Dr. Anastasios Aslidis his or her true and lawful
attorney-in-fact and agent, with full powers of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the
Securities Act of 1933, this Registration Statement has been signed by the
following persons on July 2, 2008 in the capacities indicated.
Signature
|
Title
|
Date
|
|
|
|
/s/ Aristides J.
Pittas
Aristides
J. Pittas
|
Chairman
of the Board of Directors,
President
and Chief Executive Officer
(Principal
Executive Officer)
|
July
2, 2008
|
/s/ Dr. Anastasios
Aslidis
Dr.
Anastasios Aslidis
|
Chief
Financial Officer, Treasurer and Director (Principal Financial and
Accounting Officer) and Authorized Representative in the United
States
|
July
2, 2008
|
/s/ Aristides P.
Pittas
Aristides
P. Pittas
|
Vice
Chairman and Director
|
July
2, 2008
|
|
|
|
/s/ Stephania
Kamiri
Stephania
Kamiri
|
Secretary
|
July
2, 2008
|
|
|
|
/s/ George
Skarvelis
George
Skarvelis
|
Director
|
July
2, 2008
|
|
|
|
/s/ Gerald
Turner
Gerald
Turner
|
Director
|
July
2, 2008
|
|
|
|
/s/ Panagiotis
Kyriakopoulos
Panagiotis
Kyriakopoulos
|
Director
|
July
2, 2008
|
Exhibits
|
Description of
Exhibits
|
|
|
1.1
|
Form
of Underwriting Agreement *
|
|
|
3.1
|
Articles
of Incorporation of Euroseas Ltd.
|
|
|
3.2
|
Bylaws
of Euroseas Ltd.
|
|
|
3.3
|
Amendment
to Articles of Incorporation of Euroseas Ltd.
|
|
|
4.1
|
Specimen
common share certificate
|
|
|
4.2
|
Specimen
preferred shares certificate *
|
|
|
4.3
|
Form
of warrant agreement *
|
|
|
4.4
|
Form
of purchase contract *
|
|
|
4.5
|
Form
of unit agreement *
|
|
|
4.6
|
Form
of senior debt security indenture
|
|
|
4.7
|
Form
of subordinated debt security indenture
|
|
|
5.1
|
Opinion
of Seward & Kissel LLP, United States and Marshall Islands counsel to
Euroseas Ltd.
|
|
|
8.1
|
Opinion
of Seward & Kissel LLP, as to certain tax matters
|
|
|
11.1
|
Computation
of ratio of earnings to fixed charges (included herein under the heading
“Ratio of Earnings to Fixed Charges”)
|
|
|
21.1
|
Subsidiaries
of the Company
|
|
|
23.1
|
Consent
of Seward & Kissel LLP (included in Exhibit 5.1)
|
|
|
23.2
|
Consent
of Deloitte; Hadjipavlou, Sofianos & Cambanis S.A.
|
|
|
24.1
|
Power
of Attorney (contained on signature page)
|
|
|
25.1
|
Form
of T-1 Statement of Eligibility (senior indenture) *
|
|
|
25.2
|
Form
of T-1 Statement of Eligibility (subordinated indenture)
*
|
*
|
To
be filed as an amendment or as an exhibit to a report filed pursuant to
the Securities Exchange Act of 1934, as amended and incorporated by
reference herein.
|
EXHIBIT
3.1
ARTICLES
OF INCORPORATION
OF
EUROSEAS
LTD. (THE “CORPORATION”)
PURSUANT
TO THE MARSHALL ISLANDS BUSINESS CORPORATIONS ACT
A.
|
The
name of the Corporation shall be:
|
EUROSEAS
LTD.
B.
|
The
purpose of the Corporation is to engage in any lawful act or activity for
which corporations may now or hereafter be organized under the Marshall
Islands Business Corporations Act (the “BCA”) and without in any way
limiting the generality of the foregoing, the corporation shall have the
power:
|
|
(1)
|
To
engage in ocean, coastwise and inland commerce, and generally in the
carriage of freight, goods, cargo in bulk, passengers, mail and personal
effects by water between the various ports of the world and to engage
generally in waterborne commerce.
|
|
(2)
|
To
act as ship’s husband, ship brokers, custom house brokers, ship’s agents,
manager of shipping property, freight contractors, forwarding agents,
warehousemen, wharfingers, ship chandlers, and general
traders.
|
C.
|
The
registered address of the Corporation in the Marshall Islands is Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
MH96960. The name of the Corporation’s registered agent at such
address is The Trust Company of the Marshall Islands,
Inc. However, the Board of Directors may establish branches,
offices or agencies in any place in the world and may appoint legal
representatives anywhere in the
world.
|
D.
|
(a)
|
The
aggregate number of shares of stock that the Corporation is authorized to
issue is one hundred twenty million (120,000,000) registered shares (of
which twenty million (20,000,000) shall be registered preferred shares);
all of the registered shares shall have a par value of one cent (US$0.01)
per share
|
|
(b)
|
The
Corporation is authorized, without further vote or action by the
shareholders, to issue the said twenty million (20,000,000) registered
preferred shares with a par value of one cent (US$0.01) per
share. The Board of Directors shall have the authority to
establish such series of preferred shares and with such designations,
preferences and relative, participating, optional or special rights and
qualifications, limitations or restrictions as shall be stated in the
resolutions providing for the issue of such preferred
shares.
|
E.
|
No
holder of shares of the Corporation shall, by reason thereof, have any
preemptive or other preferential right to acquire, by subscription or
otherwise, any unissued or treasury stock of the Corporation, or any other
share of any class or series of the Corporation’s shares to be issued
because of an increase in the authorized capital stock of the Corporation,
or any bonds, certificates of indebtedness, debentures or other securities
convertible into shares of the Corporation. However, the Board
of Directors may issue or dispose of any such unissued or treasury stock,
or any such additional authorized issue of new shares or securities
convertible into shares upon such terms as the Board of Directors may, in
its discretion, determine, without offering to shareholders then of
record, or any class of shareholders, any thereof, on the same terms or
any terms.
|
F.
|
The
Corporation shall have every power which a corporation now or hereafter
organized under the BCA may have.
|
G.
|
The
name and address of the incorporator
is:
|
|
Name
|
Post Office
Address
|
|
|
Majuro
Nominees Ltd.
|
P.O.
Box 1405
Majuro
Marshall
Islands
|
|
|
|
H.
|
Corporate
existence shall begin upon the filing this Articles of Incorporation with
the Registrar of Corporations.
|
I.
|
The
Board of Directors of the Corporation shall consist of such number of
Directors, not less than three, as shall be determined from time to time
by the Board of Directors as provided in the by-laws. The Board
shall be divided into three classes, each nearly equal in number as
possible. Directors shall be elected by a plurality of the
votes cast at a meeting of the shareholders by the holders of shares
entitled to vote in the election. Cumulative voting, as defined
in Division 7, Section 71(2) of the BCA, shall not be used to elect
directors. Notwithstanding any other provisions of these Articles of
Incorporation or the by-laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, these Articles
of Incorporation or the by-laws of the Corporation), the affirmative vote
of the holders of 51% or more of the outstanding shares of capital stock
of the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter, change or repeal this Article
I.
|
J.
|
The
Board of Directors of the Corporation is expressly authorized to make,
alter, amend or repeal by-laws of the Corporation by a vote of not less
than 51% of the entire Board of Directors, and the shareholders may make
additional by-laws and may alter, amend or repeal any by-law by a vote of
not less than 51% of the outstanding shares of capital stock of the
Corporation entitled to vote. Notwithstanding any other
provisions of these Articles of Incorporation or the by-laws of the
Corporation (and notwithstanding the fact that some lesser percentage may
be specified by law, these Articles of Incorporation or the by-laws of the
Corporation), the affirmative vote of the holders of 51% or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) shall be required to amend, alter, change or repeal this Article
J.
|
K.
|
(a)
|
The
Corporation may not engage in any Business Combination with any Interested
Shareholder for a period of three years following the time of the
transaction in which the person became an Interested Shareholder,
unless:
|
|
(1)
|
prior
to such time, the Board of Directors of the Corporation approved either
the Business Combination or the transaction which resulted in the
shareholder becoming an Interested
Shareholder;
|
|
(2)
|
upon
consummation of the transaction which resulted in the shareholder becoming
an Interested Shareholder, the Interested Shareholder owned at least 85%
of the voting stock of the Corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (i) by persons who are directors and
also officers and (ii) employee stock plans in which employee participants
do not have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer;
or
|
|
(3)
|
at
or subsequent to such time, the Business Combination is approved by the
Board of Directors and authorized at an annual or special meeting of
shareholders, and not by written consent, by the affirmative vote of at
least 51% of the outstanding voting stock that is not owned by the
interested shareholder; or
|
|
(4)
|
the
shareholder became an Interested Shareholder prior to the consummation of
the initial public offering of the Corporation's common stock under the
United States Securities Act of 1933, as
amended.
|
|
(b)
|
The
restrictions contained in this section shall not apply
if:
|
|
(1)
|
A
shareholder becomes an Interested Shareholder inadvertently and (i) as
soon as practicable divests itself of ownership of sufficient shares so
that the shareholder ceases to be an Interested Shareholder; and (ii)
would not, at any time within the three-year period immediately prior to a
Business Combination between the Corporation and such shareholder, have
been an Interested Shareholder but for the inadvertent acquisition of
ownership; or
|
|
(2)
|
The
Business Combination is proposed prior to the consummation or abandonment
of and subsequent to the earlier of the public announcement or the notice
required hereunder of a proposed transaction which (i) constitutes one of
the transactions described in the following sentence; (ii) is with or by a
person who either was not an Interested Shareholder during the previous
three years or who became an Interested Shareholder with the approval of
the Board; and (iii) is approved or not opposed by a majority of the
members of the Board then in office (but not less than one) who were
Directors prior to any person becoming an Interested Shareholder during
the previous three years or were recommended for election or elected to
succeed such Directors by a majority of such Directors. The proposed
transactions referred to in the preceding sentence are limited
to:
|
|
(i)
|
a
merger or consolidation of the Corporation (except for a merger in respect
of which, pursuant to the BCA, no vote of the shareholders of the
Corporation is required);
|
|
(ii)
|
a
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in
one transaction or a series of transactions), whether as part of a
dissolution or otherwise, of assets of the Corporation or of any direct or
indirect majority-owned subsidiary of the Corporation (other than to any
direct or indirect wholly-owned subsidiary or to the Corporation) having
an aggregate market value equal to 50% or more of either that aggregate
market value of all of the assets of the Corporation determined on a
consolidated basis or the aggregate market value of all the outstanding
shares; or
|
|
(iii)
|
a
proposed tender or exchange offer for 50% or more of the outstanding
voting shares of the Corporation.
|
The
Corporation shall give not less than 20 days notice to all Interested
Shareholders prior to the consummation of any of the transactions described in
clause (i) or (ii) of section (b)(2) of this Article K.
|
(c)
|
For
the purpose of this Article K only, the
term:
|
|
(1)
|
"Affiliate"
means a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, another person.
|
|
(2)
|
"Associate,"
when used to indicate a relationship with any person, means: (i) Any
corporation, partnership, unincorporated association or other entity of
which such person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting shares; (ii)
any trust or other estate in which such person has at least a 20%
beneficial interest or as to which such person serves as trustee or in a
similar fiduciary capacity; and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same residence as such
person.
|
|
(3)
|
"Business
Combination," when used in reference to the Corporation and any Interested
Shareholder of the Corporation,
means:
|
|
(i)
|
Any
merger or consolidation of the Corporation or any direct or indirect
majority-owned subsidiary of the Corporation with (A) the Interested
Shareholder or any of its affiliates, or (B) with any other corporation,
partnership, unincorporated association or other entity if the merger or
consolidation is caused by the Interested
Shareholder.
|
|
(ii)
|
Any
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in
one transaction or a series of transactions), except proportionately as a
shareholder of the Corporation, to or with the Interested Shareholder,
whether as part of a dissolution or otherwise, of assets of the
Corporation or of any direct or indirect majority-owned subsidiary of the
Corporation which assets have an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of the
Corporation determined on a consolidated basis or the aggregate market
value of all the outstanding
shares;
|
|
(iii)
|
Any
transaction which results in the issuance or transfer by the Corporation
or by any direct or indirect majority-owned subsidiary of the Corporation
of any shares, or any share of such subsidiary, to the Interested
Shareholder, except: (A) pursuant to the exercise, exchange or conversion
of securities exercisable for, exchangeable for or convertible into
shares, or shares of any such subsidiary, which securities were
outstanding prior to the time that the Interested Shareholder became such;
(B) pursuant to a merger with a direct or indirect wholly-owned subsidiary
of the Corporation solely for purposes of forming a holding company; (C)
pursuant to a dividend or distribution paid or made, or the exercise,
exchange or conversion of securities exercisable for, exchangeable for or
convertible into shares, or shares of any such subsidiary, which security
is distributed, pro rata to all holders of a class or series of shares
subsequent to the time the Interested Shareholder became such; (D)
pursuant to an exchange offer by the Corporation to purchase shares made
on the same terms to all holders of said shares; or (E) any issuance or
transfer of shares by the Corporation; provided however, that in no case
under items (C)-(E) of this subparagraph shall there be an increase in the
Interested Shareholder's proportionate share of the any class or series of
shares;
|
|
(iv)
|
Any
transaction involving the Corporation or any direct or indirect
majority-owned subsidiary of the Corporation which has the effect,
directly or indirectly, of increasing the proportionate share of any class
or series of shares, or securities convertible into any class or series of
shares, or shares of any such subsidiary, or securities convertible into
such shares, which is owned by the Interested Shareholder, except as a
result of immaterial changes due to fractional share adjustments or as a
result of any purchase or redemption of any shares not caused, directly or
indirectly, by the Interested Shareholder;
or
|
|
(v)
|
Any
receipt by the Interested Shareholder of the benefit, directly or
indirectly (except proportionately as a shareholder of the Corporation),
of any loans, advances, guarantees, pledges or other financial benefits
(other than those expressly permitted in subparagraphs (i)-(iv) of this
paragraph) provided by or through the Corporation or any direct or
indirect majority-owned subsidiary.
|
|
(4)
|
"Control,"
including the terms "controlling," "controlled by" and "under common
control with," means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting shares, by contract or
otherwise. A person who is the owner of 20 percent or more of the
outstanding voting shares of any corporation, partnership, unincorporated
association or other entity shall be presumed to have control of such
entity, in the absence of proof by a preponderance of the evidence to the
contrary. Notwithstanding the foregoing, a presumption of control shall
not apply where such person holds voting shares, in good faith and not for
the purpose of circumventing this provision, as an agent, bank, broker,
nominee, custodian or trustee for one or more owners who do not
individually or as a group have control of such
entity.
|
|
(5)
|
"Interested
Shareholder" means any person (other than the Corporation and any direct
or indirect majority-owned subsidiary of the Corporation) that (i) is the
owner of 15% or more of the outstanding voting shares of the Corporation,
or (ii) is an affiliate or associate of the Corporation and was the owner
of 15% or more of the outstanding voting shares of the Corporation at any
time within the three-year period immediately prior to the date on which
it is sought to be determined whether such person is an Interested
Shareholder; and the affiliates and associates of such person; provided,
however, that the term "Interested Shareholder" shall not include any
person whose ownership of shares in excess of the 15% limitation set forth
herein is the result of action taken solely by the Corporation; provided
that such person shall be an Interested Shareholder if thereafter such
person acquires additional shares of voting shares of the Corporation,
except as a result of further Company action not caused, directly or
indirectly, by such person. For the purpose of determining whether a
person is an Interested Shareholder, the voting shares of the Corporation
deemed to be outstanding shall include voting shares deemed to be owned by
the person through application of paragraph (8) below, but shall not
include any other unissued shares which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or
otherwise.
|
|
(6)
|
"Person"
means any individual, corporation, partnership, unincorporated association
or other entity.
|
|
(7)
|
"Voting
stock" means, with respect to any corporation, shares of any class or
series entitled to vote generally in the election of directors and, with
respect to any entity that is not a corporation, any equity interest
entitled to vote generally in the election of the governing body of such
entity.
|
|
(8)
|
"Owner,"
including the terms "own" and "owned," when used with respect to any
shares, means a person that individually or with or through any of its
affiliates or associates:
|
|
(i)
|
Beneficially
owns such shares, directly or indirectly;
or
|
|
(ii)
|
Has
(A) the right to acquire such shares (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; provided, however,
that a person shall not be deemed the owner of shares tendered pursuant to
a tender or exchange offer made by such person or any of such person's
affiliates or associates until such tendered shares is accepted for
purchase or exchange; or (B) the right to vote such shares pursuant to any
agreement, arrangement or understanding; provided, however, that a person
shall not be deemed the owner of any shares because of such person's right
to vote such shares if the agreement, arrangement or understanding to vote
such shares arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made to 10 or more persons;
or
|
|
(iii)
|
Has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting (except voting pursuant to a revocable proxy or consent as
described in item (B) of subparagraph (ii) of this paragraph), or
disposing of such shares with any other person that beneficially owns, or
whose affiliates or associates beneficially own, directly or indirectly,
such shares.
|
|
(d)
|
Any
amendment of this Article K shall not be effective until 12 months after
the approval of such amendment at a meeting of the shareholders of the
Corporation and shall not apply to any Business Combination between the
Corporation and any person who became an Interested Shareholder of the
Corporation at or prior to the time of such
approval.
|
|
(e)
|
Notwithstanding
any other provisions of these Articles of Incorporation or the by-laws of
the Corporation (and notwithstanding the fact that some lesser percentage
may be specified by law, these Articles of Incorporation or the by-laws of
the Corporation), the affirmative vote of the holders of [51]% or more of
the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose
as one class) shall be required to amend, alter, change or repeal this
Article K.
|
L.
|
The
Corporation may transfer its corporate domicile from the Marshall Islands
to any other place in the world.
|
EXHIBIT
3.2
EUROSEAS
LTD. (THE "CORPORATION")
BYLAWS
As
Adopted May 5, 2005
ARTICLE
I
OFFICES
The
principal place of business of the Corporation shall be at such place or places
as the directors shall from time to time determine. The Corporation may also
have an office or offices at such other places within or without the Marshall
Islands as the Board of Directors may from time to time appoint or
the
business
of the Corporation may require.
ARTICLE
II
SHAREHOLDERS
Section
1.
ANNUAL
MEETING:
The annual meeting of shareholders of the Corporation shall be
held on such day and at such time and place within or without the Marshall
Islands as the Board of Directors (the "Board") may determine for the purpose of
electing directors and or transacting such other business as may properly be
brought before the meeting. The Chairman of the Board or, in the Chairman's
absence, another person designated by the Board shall act as the Chairman of all
annual meetings of shareholders.
Section
2.
NATURE OF
BUSINESS AT ANNUAL MEETINGS OF SHAREHOLDERS:
No business may be
transacted at an annual meeting of shareholders, other than business that is
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board (or any duly authorized committee thereof);
(b) otherwise properly brought before the annual meeting by or at the direction
of the Board (or any duly authorized committee thereof); or (c) otherwise
properly brought before the annual meeting by any shareholder of the Corporation
(i) who is a shareholder of record of at least ten percent (10%) of the
outstanding shares of the Corporation on the date of the giving of the notice
provided for in Section 2 of this Article II and has remained a shareholder of
record of at least ten percent (10%) of the outstanding shares of the
Corporation through the record date for the determination of shareholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in Section 2 of this Article II.
In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a shareholder, such shareholder must have
given timely notice thereof in proper written form to the Secretary of the
Corporation (the "Secretary").
To be
timely a shareholder's notice to the Secretary of the Corporation must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than one-hundred fifty (150) days nor more than one-hundred
eighty (180) days prior to the one year anniversary of the immediately preceding
annual meeting of shareholders.
In no
event shall the public disclosure of any adjournment of an annual meeting of the
shareholders commence a new time period for the giving of the shareholder's
notice described herein. To be in proper written form, a shareholder's notice to
the Secretary must set forth as to each matter such shareholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of such
shareholder, (iii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such shareholder,
(iv) a description of all arrangements or understandings between such
shareholder and any other person or persons (including their names) in
connection with the proposal of such business by such shareholder and any
material interest of such shareholder in such business and (v) a representation
that such shareholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting. In addition, notwithstanding
anything in Section 2 of this Article II to the contrary, a shareholder
intending to nominate one or more persons for election as a Director at an
annual meeting must comply with Article III Section 3 of these By Laws for such
nomination or nominations to be properly brought before such
meeting.
No
business shall be conducted at the annual meeting of shareholders except
business brought before the annual meeting in accordance with the procedures set
forth in Section 2 of this Article II; provided, however, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in Section 2 of this Article II shall be deemed to preclude
discussion by any shareholder of any such business. If the Chairman of an annual
meeting determines that business was not properly brought before the annual
meeting in accordance with the foregoing procedures, the Chairman of the meeting
shall declare to the meeting that the business was not properly brought before
the meeting and such business shall not be transacted.
Section
3.
SPECIAL
MEETING:
A special meeting of the shareholders may be called at any time
by the Board of Directors, or by the Chairman of the Board, or by the President.
No other person or persons are permitted to call a special meeting. No business
may be conducted at the special meeting other than business brought before the
meeting by the Board of Directors, the Chairman of the Board or the President.
The Chairman of the Board or, in the Chairman's absence, another person
designated by the Board shall act as the Chairman of all meetings of
shareholders. If the Chairman of the special meeting determines that business
was not properly brought before the special meeting in accordance with
the
foregoing
procedures, the Chairman shall declare to the meeting that the business was not
properly brought before the meeting and such business shall not be
transacted.
Section
4.
NOTICE OF
MEETINGS:
Notice of every annual and special meeting of shareholders,
other than any meeting the giving of notice of which is otherwise prescribed by
law, stating the date, time, place and purpose thereof, and in the case of
special meetings, the name of the person or persons at whose direction the
notice is being issued, shall be given personally or sent by mail, telegraph,
cablegram, telex or teleprinter at least fifteen (15) but not more than sixty
(60) days before such meeting, to each shareholder of record entitled to vote
thereat and to each shareholder of record who, by reason of any action proposed
at such meeting would be entitled to have his shares appraised if such action
were taken, and the notice shall include a statement of that purpose and to that
effect. If mailed, notice shall be deemed to have been given when deposited in
the mail, directed to the shareholder at his address as the same appears on the
record of shareholders of the Corporation or at such address as to which the
shareholder has given notice to the Secretary. Notice of a meeting need not be
given to any shareholder who submits a signed waiver of notice, whether before
or after the meeting, or who attends the meeting without protesting prior to the
conclusion thereof the lack of notice to him.
Section
5.
ADJOURNMENTS:
Any meeting of shareholders, annual or special, may adjourn from time to time to
reconvene at the same or some other place, and notice need not be given of any
such adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the meeting is-adjourned for lack of quorum, notice of the
new meeting shall be given to each shareholder of record entitled to vote at the
meeting. If after an adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record on the new record date entitled to notice in Section 4 of this Article
II.
Section
6.
QUORUM:
At all meetings of shareholders, except as otherwise expressly provided by law,
there must be present either in person or by proxy shareholders of record
holding at least a majority of the shares issued and outstanding and entitled to
vote at such meetings in order to constitute a quorum, but if less than a quorum
is present, a majority of those shares present either in person or by proxy
shall have power to adjourn any meeting until a quorum shall be present.
Notwithstanding the foregoing, at all meetings of shareholders for the election
of directors, a plurality of the votes cast by the holders of shares entitled to
vote in the election shall be sufficient to elect directors.
Section
7.
VOTING:
If a quorum is present, and except as otherwise expressly provided by law, the
affirmative vote of a majority of the shares of stock represented at the meeting
shall be the act of the shareholders. At any meeting of shareholders, with
respect to matter for which a shareholder is entitled to vote, each such
shareholder shall be entitled to one vote for each share it holds. Each
shareholder may exercise such voting right either in person or by proxy
provided, however, that no proxy shall be valid after the expiration of eleven
months from the date such proxy was authorized unless otherwise provided in the
proxy. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in the law of the Marshall Islands to support an irrevocable power. A
shareholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary of
the Corporation. Shareholders may act by way of written consent in accordance
with the provisions of Section 67 of the BCA.
Section
8.
FIXING OF
RECORD DATE:
The Board of Directors may fix a time not more than sixty
(60) nor less than fifteen (15) days prior to the date of any meeting of
shareholders as the time as of which shareholders entitled to notice of and to
vote at such a meeting shall be determined, and all persons who were holders of
record of voting shares at such time and no other shall be entitled to notice of
and to vote at such meeting. The Board of Directors may fix a time not exceeding
sixty (60) days preceding the date fixed for the payment of any dividend, the
making of any distribution, the allotment of any rights or the taking of any
other action, as a record time for the determination of the shareholders
entitled to receive any such dividend, distribution, or allotment or for the
purpose of such other action.
ARTICLE
III
DIRECTORS
Section
1.
NUMBER:
The affairs, business and property of the Corporation shall be managed by a
Board of Directors to consist of such number of directors, not less than three,
as shall be fixed by a vote of not less than 51% of the entire Board from time
to time. The directors, other than those who may be elected by the holders of
one or more series of preferred stock voting separately as a class pursuant to
the provisions of a resolution of the Board providing for the establishment of
any series of preferred stock, shall be divided into three classes: Class A,
Class B and Class C, which shall be as nearly equal in number as possible. The
shareholders, acting at a duly constituted meeting thereof, or by unanimous
written consent of all shareholders, shall initially designate directors as
Class A, Class B or Class C directors. Should the number of directors be
increased, there shall be no classification of the additional directors until
the next annual meeting of shareholders or the shareholders have classified such
additional directors by unanimous written consent of all shareholders. The
initial term of office of each class of directors shall be as follows: the
directors first designated as Class A directors shall serve for a term expiring
at the 2005 annual meeting of the shareholders, the directors first designated
as Class B directors shall serve for a term expiring at the 2006 annual meeting,
and the directors first designated as Class C directors shall
serve for
a term expiring at the 2007 annual meeting. At each annual meeting after such
initial term, directors to replace those whose terms expire at such annual
meeting shall be elected to hold office until the third succeeding annual
meeting. Each director shall serve his respective term of office until his
successor shall have been elected and qualified, except in the event of his
death, resignation or removal. No decrease in the number of directors shall
shorten the term of any incumbent director. The directors need not be residents
of the Marshall Islands or shareholders of the Corporation. Corporations may, to
the extent permitted by law, be elected or appointed directors.
Section
2.
HOW
ELECTED:
Except as otherwise provided by law or in Section 5 of this
Article III, the directors of the Corporation (other than the first Board of
Directors if named in the Articles of Incorporation or designated by the
incorporators) shall be elected at the annual meeting of shareholders. Except as
otherwise provided in Section 1 of this Article III, each Director shall be
elected to serve until the third succeeding annual meeting of shareholders and
until his successor shall have been duly elected and qualified, except in the
event of his death, resignation, removal or the earlier termination of his term
of office.
Section
3.
NOMINATION
OF DIRECTORS:
Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
Corporation, except as may be otherwise provided in the Articles of
Incorporation with respect to the right of holders of preferred stock of the
Corporation to nominate and elect a specified number of directors in certain
circumstances. Nominations of persons for election to the Board of Directors may
be made at any annual meeting of shareholders (a) by or at the direction of the
Board of Directors (or any duly authorized committee thereof) or (b) by any
shareholders of the Corporation (i) who is a shareholder of record on the date
of the giving of the notice provided for in Section 3 of this Article III and on
the record date for the determination of shareholder entitled to vote at such
meeting and (ii) who complies with the notice procedures set forth in Section 3
of this Article III.
In
addition to any other applicable requirements, for a nomination to be made by a
shareholder, such shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.
To be
timely, a shareholder's notice to the Secretary must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
one-hundred fifty (150) days nor more than one-hundred eighty (180) days prior
to the anniversary date of the immediately preceding annual meeting of
shareholders.
To be in
proper written form, a shareholder's notice to the Secretary must set forth; (a)
as to each person whom the shareholder proposes to nominate for election as a
director (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person and (iv) any other information
relating to the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder applicable to issuers that are not foreign
private issuers and (b) as to the shareholder giving the notice (i) the name and
record address of such shareholder, (ii) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially and of
record by such shareholder, (iii) a description of all arrangements or
understandings between such shareholder and each proposed nominee and any other
person and persons (including their names) pursuant to which the nomination(s)
are to be made by such shareholder, (iv) a representation that such shareholder
intends to appear in person or by proxy at the meeting to nominate the person or
persons named in its notice and (v) any other information relating to such
shareholder that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person
shall be eligible for election as a director of the Corporation unless nominated
in accordance with the procedures set forth in Section 3 of this Article III. If
the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
Section
4.
REMOVAL:
Any or all of the directors may be removed, with cause by the affirmative vote
of holders of 51% of the issued and outstanding voting shares of the
Corporation. Any director may be removed for cause by action of the Board of
Directors. No director may be removed without cause by either the shareholders
or the Board of Directors. Except as otherwise provided by applicable law, cause
for the removal of a director shall be deemed to exist only if the director
whose removal is proposed: (i) has been convicted, or has been granted immunity
to testify in any proceeding in which another has been convicted, of a felony by
a court of competent jurisdiction and that conviction is no longer subject to
direct appeal; (ii) has been found to have been negligent or guilty of
misconduct in the performance of his duties to the Corporation in any matter of
substantial importance to the Corporation by (A) the affirmative vote of at
least 80% of the directors then in office at any meeting of the Board of
Directors called for that purpose or (B) a court of competent jurisdiction; or
(iii) has been adjudicated by a court of competent jurisdiction to be mentally
incompetent, which mental incompetence directly affects his ability to serve as
a director of the Corporation.
No
proposal by a shareholder to remove a director shall be voted upon at a meeting
of the shareholders unless such shareholder has given timely notice thereof in
proper written form to the Secretary. To be timely, a shareholder's notice to
the Secretary must be delivered to or mailed and received at the principal
executive offices of the Corporation not less than one hundred and twenty (120)
days nor more than one hundred eighty (180) days prior to the anniversary date
of the immediately preceding annual meeting of the shareholders. To be in proper
written form, a shareholder's notice must set forth: (a) a statement of the
grounds, if any, on which such director is proposed to be removed, (b) evidence
reasonably satisfactory to the Secretary, of such shareholder's status as such
and of the number of shares of each class of capital stock of the Corporation
beneficially owned by such shareholder, and (c) a list of the names and
addresses of other shareholders of the Corporation, if any, with whom such
shareholder is acting in concert, and the number of shares of each class of
capital stock of the Corporation beneficially owned by each such
shareholder.
No
shareholder proposal to remove a director shall be voted upon at an annual
meeting of the shareholders unless proposed in accordance with the procedures
set forth in Section 4 of this Article III. If the Chairman of the meeting
determines, based on the facts, that a shareholder proposal to remove a director
was not made in accordance with the foregoing procedures, the Chairman shall
declare to the meeting that a proposal to remove a director of the Corporation
was not made in accordance with the procedures prescribed by these Bylaws, and
such defective proposal shall be disregarded.
All of
the foregoing provisions of Section 4 of this Article III are subject to the
terms of any preferred stock with respect to the directors to be elected solely
by the holders of such preferred stock.
Section
5.
VACANCIES:
Vacancies in the Board of Directors occurring by death, resignation, creation of
new directorship, failure of the shareholders to elect the whole class of
directors required to be elected at any annual election of directors or for any
other reason, including removal of directors for cause, may be filled by the
affirmative vote of a majority of the remaining directors then in office,
although less than a quorum, at any special meeting called for that purpose or
at any regular meeting of the Board.
Section
6.
REGULAR
MEETINGS:
Regular meetings of the Board of Directors may be held at such
time and place as may be determined by resolution of the Board of Directors and
no notice shall be required for any regular meeting. Except as otherwise
provided by law, any business may be transacted at any regular
meeting.
Section
7.
SPECIAL
MEETING:
Special meetings of the Board of Directors may, unless otherwise
prescribed by law, be called from time to time by the Chairman, the President,
or any officer of the Corporation who is also a director. The President or the
Secretary shall call a special meeting of the Board upon written request
directed to either of them by any two directors stating the time, place and
purpose of such special meeting. Special meetings of the Board shall be held on
a date and at such time and at such place as may be designated in the notice
thereof by the officer calling the meeting.
Section
8.
NOTICE OF
SPECIAL MEETING:
Notice of the special date, time and place of each
special meeting of the Board of Directors shall be given to each Director at
least forty eight (48) hours prior to such meeting, unless the notice is given
orally or delivered in person, in which case it shall be given at least
twenty-four (24) hours prior to such meeting. For the purpose of this section,
notice shall be deemed to be duly given to a Director if given to him personally
(including by telephone) or if such notice be delivered to such Director by
mail, telegraph, cablegram, telex or teleprinter to his last known address
Notice of a meeting need not be given to any Director who submits a signed
waiver of notice, whether before of after the meeting, or who attends the
meeting without protesting, prior to the conclusion thereof, the lack of notice
to him.
Section
9.
QUORUM:
A majority of the directors at the time in office, present in person or by proxy
or conference telephone, shall constitute a quorum for the transaction of
business.
Section
10.
INTERESTED
DIRECTORS.
No contract or transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in which one or more
of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his or her or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the Board or
the committee and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, or, if the votes of the disinterested directors are insufficient to
constitute an act of the Board of Directors as defined in Section 55 of the BCA,
by unanimous vote of the disinterested directors; or (ii) the material facts as
to his relationship or interest and as to the shareholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the shareholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board, a committee thereof or the shareholders. Common or interested directors
may be counted in determining the presence of a quorum at a meeting of the Board
or of a committee which authorizes the contract or transaction.
Section
11.
VOTING:
The vote of the majority of the directors, present in person or by proxy or
conference telephone, at a meeting at which a quorum is present shall be the act
of the directors. Any action required or permitted to be taken at a meeting may
be taken without a meeting if all members of the Board consent hereto in
writing.
Section
12.
COMPENSATION
OF DIRECTORS AND MEMBERS OF COMMITTEES:
The Board may from time to time,
in its discretion, fix the amounts which shall be payable to members of the
Board of Directors and to members of any committee, for attendance at the
meetings of the Board or of such committee and for services rendered to the
Corporation.
ARTICLE
IV
COMMITTEES
EXECUTIVE
COMMITTEE AND OTHER COMMITTEES:
The Board of Directors may, by resolution
or resolutions passed by a majority of the entire Board, designate from among
its members an executive committee to consist of two or more of the directors of
the Corporation, which, to the extent provided in said resolution or
resolutions, or in these By Laws, shall have and may exercise, to the extent
permitted by law, the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and may have power to authorize the
seal of the Corporation to be affixed to all papers which may require it
provided, however, that no committee shall have the power or authority to
(i)
fill a
vacancy in the Board of Directors or in a committee thereof, (ii) amend or
repeal any By-law or adopt any new By-law, (iii) amend or repeal any resolution
of the entire Board, (iv) or increase the number of directors on the Board of
Directors, or (v) remove any Director. In addition, the Board may designate from
among its members other committees to consist of two or more of the directors of
the Corporation, each of which shall perform such functions and have such
authority and powers as shall be delegated to such committee by said resolution
or resolutions or as provided for in these By Laws, except that only the
executive committee may have and exercise the powers of the Board of Directors.
Members of the executive committee and any other committee shall hold office for
such period as may be prescribed by the vote of the entire Board of Directors,
subject, however, to removal at any time by the vote of the Board of Directors.
Vacancies in membership of such committees shall be filled by vote
of
the Board
of Directors. Committees may adopt their own rules of procedures and may meet at
stated times or on such notice as they may determine. Each committee shall keep
a record of its proceedings and report the same to the Board when
required.
ARTICLE
V
OFFICERS
Section
1.
NUMBER
AND DESIGNATION:
The Board of Directors shall elect a President,
Secretary and Treasurer and such other officers as it may deem necessary.
Officers may be of any nationality and need not be residents of the Marshall
Islands. The Officers shall be elected annually by the Board of Directors at its
first meeting following the annual election of directors, except that the
initial officers may be named by the Board at its first meeting following such
Board's appointment in the Articles of Incorporation or as designated by the
incorporators) but in the event of the failure of the Board to so elect any
officer, such officer may be elected at any subsequent meeting of the Board of
Directors. The salaries of officers and any other compensation paid to them
shall be fixed from time to time by the Board of Directors. The Board of
Directors may at any meeting elect additional officers. Each officer shall hold
office until the first meeting of the Board of Directors following the next
annual election of directors and until his successor shall have been duly
elected and qualified except in the event of the earlier termination of his term
of office, through death, resignation, removal or otherwise. Any officer may be
removed by the Board at any time with or without cause. Any vacancy in an office
may be filled for the unexpired position of the term of such office by the Board
of Directors at any regular or special meeting.
Section
2.
PRESIDENT:
In the absence of the Chairman of the Board, the President of the Corporation
shall preside at all meetings of the Board of Directors and of the shareholders
at which he or she shall be present. The President shall perform all duties
incident to the office of president of a corporation and such other duties as
may, from time to time, be assigned to him or her by the Board of Directors or
as may be provided by law.
Section
3.
SECRETARY:
The Secretary shall act as Secretary of all meetings of the shareholders and of
the Board of Directors at which he is present, shall have supervision over the
giving and serving of notices of the Corporation, shall be the custodian of the
corporate records of the corporate seal of the Corporation, shall be empowered
to affix the corporate seal to those documents, the execution of which, on
behalf of the Corporation under its seal, is duly authorized and when so affixed
may attest the same, and shall exercise the powers and perform such other duties
as may be assigned to him by the Board of Directors or the
President.
Section
4.
TREASURER:
The Treasurer shall have general supervision over the care and custody of the
funds, securities, and other valuable effects of the Corporation and shall
deposit the same or cause the same to be deposited in the name of the
Corporation in such depositories as the Board of Directors may designate, shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall have supervision over the accounts of all receipts and
disbursements of the Corporation, shall, whenever required by the Board, render
or cause to be rendered financial statements of the Corporation, shall have the
power and perform the duties usually incident to the office of Treasurer, and
shall have such powers and perform other duties as may be assigned to him by the
Board of Directors or President.
Section
5.
OTHER
OFFICERS:
Officers other than those treated in Sections 2 through 4 of
this Article V shall exercise such powers and perform such duties as may be
assigned to them by the Board of Directors or the President.
Section
6.
BOND:
The Board of Directors shall have power to the extent permitted by law to
require any officer, agent or employee of the Corporation to give bond for the
faithful discharge of his duties in such form and with such surety as the Board
of Directors may deem advisable.
ARTICLE
VI
CERTIFICATES
FOR SHARES
Section
1.
FORM AND
ISSUANCE:
The Shares of the Corporation shall be represented by
certificates in form meeting the requirements of law and approved by the Board
of Directors. Certificates shall be signed by the President or a Vice-President
and by the Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer. These signatures may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or its employee.
Section
2.
TRANSFER:
The Board of Directors shall have power and authority to make such rules and
regulations as they may deem expedient concerning the issuance, registration and
transfer of certificates representing shares of the Corporation's stock, and may
appoint transfer agents and registrars thereof.
Section
3.
LOSS OF
STOCK CERTIFICATES:
The Board of Directors may direct a new certificate
of stock to be issued in place of any certificate or certificates theretofore
issued by the Corporation alleged to have been lost or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed. When authorizing such issue of a new certificate
or certificates, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or give the Corporation a bond
in such sum as it may direct indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost or destroyed.
ARTICLE
VII
DIVIDENDS
DECLARATION
AND FORM:
Dividends may be declared in conformity with applicable law by,
and at the discretion of, the Board of Directors at any regular or special
meeting. Dividends may be declared and paid in cash, stock or other property of
the Corporation.
ARTICLE
VIII
INDEMNIFICATION
Section
1.
INDEMNIFICATION:
Any person who is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of another,
partnership, joint venture, trust or other enterprise shall be entitled to be
indemnified by the Corporation upon the same terms, under the same conditions,
and to the same extent as authorized by Section 60 of the Business Corporation
Act of the Marshall Islands, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section
2.
INSURANCE:
The Corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation or
is or was serving at the request of the Corporation as a director or officer
against any liability asserted against such person and incurred by such person
in such capacity whether or not the Corporation would have the power to
indemnify such person against such liability by law or under the provisions of
these By Laws.
ARTICLE
IX
CORPORATE
SEAL
FORM:
The Seal of the Corporation, if any, shall be circular in form, with the name of
the Corporation in the circumference and such other appropriate legend as the
Board of Directors may from time to time determine.
ARTICLE
X
FISCAL
YEAR
FISCAL
YEAR:
The fiscal year of the Corporation shall be such period of twelve
consecutive months as the Board of Directors may by resolution
designate.
ARTICLE
XI
AMENDMENTS
AMENDMENTS:
These By Laws may be amended, added to, altered or repealed, or new By Laws may
be adopted, solely at any regular or special meeting of the Board of Directors
by the affirmative vote of 51% of the entire Board. The phrase "51% of the
entire Board" shall be deemed to refer to 51% of the number of directors
constituting the Board of Directors as set forth in accordance with Article III,
without regard to any vacancies, or if the number of Directors constituting 51%
of the entire Board is greater than the number of members of the Board then in
office, the unanimous vote of Directors in office.
EXHIBIT
3.3
ARTICLES
OF AMENDMENT OF
ARTICLES
OF INCORPORATION OF
EUROSEAS
LTD.
UNDER
SECTION 90 OF THE BUSINESS CORPORATIONS ACT
I,
Aristides J. Pittas, President of EUROSEAS LTD., a corporation incorporated
under the laws of the Republic of the Marshall Islands, for the purpose of
amending the Articles of Incorporation of said Corporation hereby
certify:
1.
|
The
name of the Corporation is: EUROSEAS
LTD.
|
2.
|
The
Articles of Incorporation were filed with the Registrar of Corporations as
of the 5th day of May, 2005.
|
3.
|
Section
D of the Articles of Incorporation is hereby amended to read as
follows:
|
|
(a)
|
The
aggregate number of shares of stock that the Corporation is authorized to
issue is one hundred twenty million (120,000,000) registered shares (of
which twenty million (20,000,000) shall be registered preferred shares);
all of the registered common shares shall have a par value of three cents
(US$0.03) per share and all of the registered preferred shares have a par
value of one cent (US$0.01) per
share.
|
|
(b)
|
The
Corporation is authorized, without further vote or action by the
shareholders, to issue the said twenty million (20,000,000) registered
preferred shares with a par value of one cent (US$0.01) per share. The
Board of Directors shall have the authority to establish such series of
preferred shares and with such designations, preferences and relative,
participating, optional or special rights and qualifications, limitations
or restrictions as shall be stated in the resolutions providing for the
issue of such preferred shares.
|
|
(c)
|
The
Corporation has effectuated, effective with the commencement of business
on October 6, 2006, a 1 for 3 reverse stock split as to its common stock
outstanding, which decreases the number of outstanding shares from
37,860,341 to 12,620,114, subject to increase to the extent that the
reverse stock split would result in any holder of the Company’s Common
Stock receiving fractional shares, in which event such fractional share
shall be rounded up to the next whole share. The reverse split shall not
change the number of registered shares of common stock the Corporation is
authorized to issue. The par value of the shares of common stock shall be
increased from $0.01 to $0.03 per share as set forth in paragraph D(a)
above. No change shall be made to the number of registered shares of
preferred stock the Corporation is authorized to issue or to the par value
of the shares of preferred stock.
|
|
4.
|
The
amendment to the Articles of Incorporation was authorized by vote of the
holders of a majority of all outstanding shares entitled to vote thereon
at a meeting of shareholders.
|
IN
WITNESS WHEREOF, I have executed these Articles of Amendment on this 4th day of
October, 2006.
|
|
|
|
|
|
|
|
|
|
/s/ Aristides
J. Pittas
|
|
Name::
Aristides J. Pittas
|
|
Title:
President
|
STATE
OF
|
|
)
|
|
|
ss:
|
COUNTY
OF
|
|
)
|
On this
day of October, 2006 before me personally came
Aristides J. Pittas known to me to be the individual described in and who
executed the foregoing instrument and he duly acknowledged to me that the
execution thereof was his act and deed/the act and deed of the
corporation.
EXHIBIT 4.1
EXHIBIT
4.6
FORM OF
SENIOR SECURITY DEBT INDENTURE
EUROSEAS
LTD.
SENIOR
INDENTURE
Dated as
of ______, 20__
[Name of
Trustee]
Trustee
ARTICLE
I.
|
DEFINITIONS
AND INCORPORATION BY REFERENCE
|
|
|
1
|
|
|
Section
1.1.
|
Definitions
|
|
|
1
|
|
|
Section
1.2.
|
Other
Definitions
|
|
|
5
|
|
|
Section
1.3.
|
Incorporation
by Reference of Trust Indenture Act
|
|
|
6
|
|
|
Section
1.4.
|
Rules
of Construction
|
|
|
6
|
|
ARTICLE
II
|
THE
SECURITIES
|
|
|
7
|
|
|
Section
2.1.
|
Issuable
in Series
|
|
|
7
|
|
|
Section
2.2.
|
Establishment
of Terms of Series of Securities
|
|
|
7
|
|
|
Section
2.3.
|
Execution
and Authentication
|
|
|
9
|
|
|
Section
2.4.
|
Registrar
and Paying Agent
|
|
|
10
|
|
|
Section
2.5.
|
Paying
Agent to Hold Money in Trust
|
|
|
10
|
|
|
Section
2.6.
|
Securityholder
Lists
|
|
|
11
|
|
|
Section
2.7.
|
Transfer
and Exchange
|
|
|
11
|
|
|
Section
2.8.
|
Mutilated,
Destroyed, Lost and Stolen Securities
|
|
|
11
|
|
|
Section
2.9.
|
Outstanding
Securities
|
|
|
12
|
|
|
Section
2.10.
|
Treasury
Securities
|
|
|
12
|
|
|
Section
2.11.
|
Temporary
Securities
|
|
|
13
|
|
|
Section
2.12.
|
Cancellation
|
|
|
13
|
|
|
Section
2.13.
|
Defaulted
Interest
|
|
|
13
|
|
|
Section
2.14.
|
Global
Securities
|
|
|
13
|
|
|
Section
2.15.
|
CUSIP
Numbers
|
|
|
14
|
|
ARTICLE
III.
|
REDEMPTION
|
|
|
15
|
|
|
Section
3.1.
|
Notice
to Trustee
|
|
|
15
|
|
|
Section
3.2.
|
Selection
of Securities to be Redeemed
|
|
|
15
|
|
|
Section
3.3.
|
Notice
of Redemption
|
|
|
15
|
|
|
Section
3.4.
|
Effect
of Notice of Redemption
|
|
|
16
|
|
|
Section
3.5.
|
Deposit
of Redemption Price
|
|
|
16
|
|
|
Section
3.6.
|
Securities
Redeemed in Part
|
|
|
16
|
|
ARTICLE
IV.
|
COVENANTS
|
|
|
16
|
|
|
Section
4.1.
|
Payment
of Principal and Interest
|
|
|
16
|
|
|
Section
4.2.
|
SEC
Reports
|
|
|
16
|
|
|
Section
4.3.
|
Compliance
Certificate
|
|
|
17
|
|
|
Section
4.4.
|
Stay,
Extension and Usury Laws
|
|
|
17
|
|
|
Section
4.5.
|
Corporate
Existence
|
|
|
17
|
|
|
Section
4.6.
|
Taxes
|
|
|
18
|
|
ARTICLE
V.
|
SUCCESSORS
|
|
|
18
|
|
|
Section
5.1.
|
When
Company May Merge, Etc
|
|
|
18
|
|
|
Section
5.2.
|
Successor
Corporation Substituted
|
|
|
18
|
|
ARTICLE
VI.
|
DEFAULTS
AND REMEDIES
|
|
|
19
|
|
|
Section
6.1.
|
Events
of Default
|
|
|
19
|
|
|
Section
6.2.
|
Acceleration
of Maturity; Rescission and Annulment
|
|
|
20
|
|
|
Section
6.3.
|
Collection
of Indebtedness and Suits for Enforcement by Trustee
|
|
|
20
|
|
|
Section
6.4.
|
Trustee
May File Proofs of Claim
|
|
|
21
|
|
|
Section
6.5.
|
Trustee
May Enforce Claims Without Possession of Securities
|
|
|
21
|
|
|
Section
6.6.
|
Application
of Money Collected
|
|
|
22
|
|
|
Section
6.7.
|
Limitation
on Suits
|
|
|
22
|
|
|
Section
6.8.
|
Unconditional
Right of Holders to Receive Principal and Interest
|
|
|
22
|
|
|
Section
6.9.
|
Restoration
of Rights and Remedies
|
|
|
23
|
|
|
Section
6.10.
|
Rights
and Remedies Cumulative
|
|
|
23
|
|
|
Section
6.11.
|
Delay
or Omission Not Waiver
|
|
|
23
|
|
|
Section
6.12.
|
Control
by Holders
|
|
|
23
|
|
|
Section
6.13.
|
Waiver
of Past Defaults
|
|
|
24
|
|
|
Section
6.14.
|
Undertaking
for Costs
|
|
|
24
|
|
ARTICLE
VII.
|
TRUSTEE
|
|
|
24
|
|
|
Section
7.1.
|
Duties
of Trustee
|
|
|
24
|
|
|
Section
7.2.
|
Rights
of Trustee
|
|
|
25
|
|
|
Section
7.3.
|
Individual
Rights of Trustee
|
|
|
26
|
|
|
Section
7.4.
|
Trustee’s
Disclaimer
|
|
|
26
|
|
|
Section
7.5.
|
Notice
of Defaults
|
|
|
26
|
|
|
Section
7.6.
|
Reports
by Trustee to Holders
|
|
|
27
|
|
|
Section
7.7.
|
Compensation
and Indemnity
|
|
|
27
|
|
|
Section
7.8.
|
Replacement
of Trustee
|
|
|
28
|
|
|
Section
7.9.
|
Successor
Trustee by Merger, etc
|
|
|
29
|
|
|
Section
7.10.
|
Eligibility;
Disqualification
|
|
|
29
|
|
|
Section
7.11.
|
Preferential
Collection of Claims Against Company
|
|
|
29
|
|
ARTICLE
VIII.
|
SATISFACTION
AND DISCHARGE; DEFEASANCE
|
|
|
29
|
|
|
Section
8.1.
|
Satisfaction
and Discharge of Indenture
|
|
|
29
|
|
|
Section
8.2.
|
Application
of Trust Funds; Indemnification
|
|
|
30
|
|
|
Section
8.3.
|
Legal
Defeasance of Securities of any Series
|
|
|
31
|
|
|
Section
8.4.
|
Covenant
Defeasance
|
|
|
32
|
|
|
Section
8.5.
|
Repayment
to Company
|
|
|
33
|
|
ARTICLE
IX.
|
AMENDMENTS
AND WAIVERS
|
|
|
33
|
|
|
Section
9.1.
|
Without
Consent of Holders
|
|
|
33
|
|
|
Section
9.2.
|
With
Consent of Holders
|
|
|
34
|
|
|
Section
9.3.
|
Limitations
|
|
|
34
|
|
|
Section
9.4.
|
Compliance
with Trust Indenture Act
|
|
|
35
|
|
|
Section
9.5.
|
Revocation
and Effect of Consents
|
|
|
35
|
|
|
Section
9.6.
|
Notation
on or Exchange of Securities
|
|
|
36
|
|
|
Section
9.7.
|
Trustee
Protected
|
|
|
36
|
|
ARTICLE
X.
|
MISCELLANEOUS
|
|
36
|
|
|
Section
10.1.
|
Trust
Indenture Act Controls
|
|
|
36
|
|
|
Section
10.2.
|
Notices
|
|
|
36
|
|
|
Section
10.3.
|
Communication
by Holders with Other Holders
|
|
|
37
|
|
|
Section
10.4.
|
Certificate
and opinion as to Conditions Precedent
|
|
|
37
|
|
|
Section
10.5.
|
Statements
Required in Certificate or opinion
|
|
|
37
|
|
|
Section
10.6.
|
Rules
by Trustee and Agents
|
|
|
38
|
|
|
Section
10.7.
|
Legal
Holidays
|
|
|
38
|
|
|
Section
10.8.
|
No
Recourse Against Others
|
|
|
38
|
|
|
Section
10.9.
|
Counterparts
|
|
|
38
|
|
|
Section
10.10.
|
Governing
Laws
|
|
|
38
|
|
|
Section
10.11.
|
No
Adverse Interpretation of Other Agreements
|
|
|
38
|
|
|
Section
10.12.
|
Successors
|
|
|
39
|
|
|
Section
10.13.
|
Severability
|
|
|
39
|
|
|
Section
10.14.
|
Table
of Contents, Headings, Etc
|
|
|
39
|
|
|
Section
10.15.
|
Securities
in a Foreign Currency or in ECU
|
|
|
39
|
|
|
Section
10.16.
|
Judgment
Currency
|
|
|
40
|
|
ARTICLE
XI.
|
SINKING
FUNDS
|
|
|
40
|
|
|
Section
11.1.
|
Applicability
of Article
|
|
|
40
|
|
|
Section
11.2.
|
Satisfaction
of Sinking Fund Payments with Securities
|
|
|
40
|
|
|
Section
11.3.
|
Redemption
of Securities for Sinking Fund
|
|
|
41
|
|
Indenture
dated as of _________, 20__ between Euroseas Ltd., a company organized under the
laws of the Marshall Islands (the “Company”) and [Name of Trustee], a
__________________ (the “Trustee”).
Each
party agrees as follows for the benefit of the other party and for the equal and
ratable benefit of the Holders of the Securities issued under this
Indenture.
ARTICLE
I.
DEFINITIONS
AND INCORPORATION BY REFERENCE
Section
1.1.
Definitions.
“Additional
Amounts” means any additional amounts which are required hereby or by any
Security, under circumstances specified herein or therein, to be paid by the
Company in respect of certain taxes imposed on Holders specified therein and
which are owing to such Holders.
“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
“Agent”
means any Registrar, Paying Agent or Service Agent.
“Authorized
Newspaper” means a newspaper in an official language of the country of
publication customarily published at least once a day for at least five days in
each calendar week and of general circulation in the place in connection with
which the term is used. If it shall be impractical in the opinion of the Trustee
to make any publication of any notice required hereby in an Authorized
Newspaper, any publication or other notice in lieu thereof that is made or given
by the Trustee shall constitute a sufficient publication of such
notice.
“Bearer
Security” means any Security, including any interest coupon appertaining
thereto, that does not provide for the identification of the Holder
thereof.
“Board of
Directors” means the Board of Directors of the Company or any duly authorized
committee thereof.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been adopted by the Board of
Directors or pursuant to authorization by the Board of Directors and to be in
full force and effect on the date of the certificate and delivered to the
Trustee.
“Business
Day” means a day (other than Saturday or Sunday) on which the Depository and
banks in the City of New York, and banks in the city in which the Corporate
Trust Office of the Trustee is located, is open for business.
“Certificated
Securities” means Securities in the form of physical, certificated Securities in
registered form.
“Company”
means the party named as such above until a successor replaces it and thereafter
means the successor.
“Company
Order” means a written order signed in the name of the Company by two Officers,
one of whom must be the Company’s principal executive officer, principal
financial officer or principal accounting officer.
“Company
Request” means a written request signed in the name of the Company by its
Chairman of the Board, a President or a Vice President, and by its Chief
Financial Officer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
“Corporate
Trust Office” means the office of the Trustee at which at any particular time
its corporate trust business shall be principally administered.
“Debt” of
any Person as of any date means, without duplication, all indebtedness of such
Person in respect of borrowed money, including all interest, fees and expenses
owed in respect thereto (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), or evidenced
by bonds, notes, debentures or similar instruments.
“Default”
means any event which is, or after notice or passage of time would be, an Event
of Default.
“Depository”
means, with respect to the Securities of any Series issuable or issued in whole
or in part in the form of one or more Global Securities, the Person designated
as Depository for such Series by the Company, which Depository shall be a
clearing agency registered under the Exchange Act; and if at any time there is
more than one such Person, “Depository” as used with respect to the Securities
of any Series shall mean the Depository with respect to the Securities of such
Series.
“Discount
Security” means any Security that provides for an amount less than the stated
Principal amount thereof to be due and payable upon declaration of acceleration
of the Maturity thereof pursuant to Section 6.2.
“Dollars”
means the currency of The United States of America.
“ECU”
means the European Currency Unit as determined by the Commission of the European
Union.
“Event of
Default” see Section 6.1.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Foreign
Currency” means any currency or currency unit issued by a government other than
the government of The United States of America.
“Foreign
Government Obligations” means with respect to Securities of any Series that are
denominated in a Foreign Currency, (i) direct obligations of the government that
issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by or acting as an agency or instrumentality of such government
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by such government, which, in either case under clauses (i) or
(ii), are not callable or redeemable at the option of the issuer
thereof.
“Global
Security” or “Global Securities” means a Security or Securities, as the case may
be, in the form established pursuant to Section 2.2 evidencing all or part of a
Series of Securities, issued to the Depository for such Series or its nominee,
and registered in the name of such Depository or nominee.
“Holder”
or “Securityholder” means a Person in whose name a Security is registered or the
holder of a Bearer Security.
“Indenture”
means this Indenture as amended from time to time and shall include the form and
terms of particular Series of Securities established as contemplated
hereunder.
“Maturity,”
when used with respect to any Security or installment of Principal thereof,
means the date on which the Principal of such Security or such installment of
Principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption, notice
of option to elect repayment or otherwise.
“Officer”
means the Chairman of the Board, the President, any Vice-President, the
Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary of
the Company.
“Officers’
Certificate” means a certificate signed by two Officers, one of whom must be the
Company’s principal executive officer, principal financial officer or principal
accounting officer.
“Opinion
of Counsel” means a written opinion of legal counsel who is reasonably
acceptable to the Trustee. Such legal counsel may be an employee of or counsel
to the Company.
“Participants”
means those Persons designated as participants by the Depositary.
“Person”
means any individual, corporation, partnership, joint venture, association,
limited liability company, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
“Principal”
of a Security means the principal of the Security plus, when appropriate, the
premium, if any, on, and any Additional Amounts in respect of, the
Security.
“Responsible
Officer” means any officer of the Trustee in its Corporate Trust Office and also
means, with respect to a particular corporate trust matter, any other officer to
whom any corporate trust matter is referred because of his or her knowledge of
and familiarity with a particular subject.
“SEC”
means the Securities and Exchange Commission.
“Security”
or “Securities” means the debentures, notes or other debt instruments of the
Company of any Series authenticated and delivered under this
Indenture.
“Series”
or “Series of Securities” means each series of debentures, notes or other debt
instruments of the Company created pursuant to Sections 2.1 and 2.2
hereof.
“Significant
Subsidiary” means (i) any direct or indirect Subsidiary of the Company that
would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended,
as such regulation is in effect on the date hereof, or (ii) any group of direct
or indirect Subsidiaries of the Company that, taken together as a group, would
be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such
regulation is in effect on the date hereof.
“Stated
Maturity” when used with respect to any Security or any installment of Principal
thereof or interest thereon, means the date specified in such Security as the
fixed date on which the Principal of such Security or such installment of
Principal or interest is due and payable.
“Subsidiary”
of any specified Person means any corporation of which at least a majority of
the outstanding stock having by the terms thereof ordinary voting power for the
election of directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by such Person, or by one or more other
Subsidiaries, or by such Person and one or more other Subsidiaries.
“TIA”
means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in
effect on the date of this Indenture; provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the
extent required by any such amendment, the Trust Indenture Act as so
amended.
“Trustee”
means the Person named as the “Trustee” in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Trustee” shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, “Trustee” as used with respect to the Securities of
any Series shall mean the Trustee with respect to Securities of that
Series.
“U.S.
Government Obligations” means securities which are (i) direct obligations of The
United States of America for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of The United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by The
United States of America, and which in the case of (i) and (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.
Section
1.2.
Other
Definitions.
TERM
|
DEFINED
IN SECTION
|
|
|
“Bankruptcy
Law”
|
6.1
|
“Custodian”
|
6.1
|
“Event
of Default”
|
6.1
|
“Journal”
|
10.15
|
“Judgment
Currency”
|
10.16
|
“Legal
Holiday”
|
10.7
|
“Mandatory
Sinking Fund Payment”
|
11.1
|
“Market
Exchange Rate”
|
10.15
|
“New
York Banking Day”
|
10.16
|
“Optional
Sinking Fund Payment”
|
11.1
|
“Paying
Agent”
|
2.4
|
“Registrar”
|
2.4
|
“Required
Currency”
|
10.16
|
“Service
Agent”
|
2.4
|
“Successor
Person”
|
5.1
|
Section
1.3.
Incorporation by Reference
of Trust Indenture Act.
Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
“Commission”
means the SEC.
“indenture
securities” means the Securities.
“indenture
security holder” means a Securityholder.
“indenture
to be qualified” means this Indenture.
“indenture
trustee” or “institutional trustee” means the Trustee.
“obligor”
on the indenture securities means the Company and any successor obligor upon the
Securities.
All other
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA and not
otherwise defined herein are used herein as so defined.
Section
1.4.
Rules
of Construction.
Unless
the context otherwise requires:
(a) a
term has the meaning assigned to it;
(b) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles;
(c) references
to “generally accepted accounting principles” shall mean generally accepted
accounting principles in effect as of the time when and for the period as to
which such accounting principles are to be applied;
(d) “or”
is not exclusive;
(e) words
in the singular include the plural, and in the plural include the singular;
and
(f) provisions
apply to successive events and transactions.
ARTICLE
II.
THE
SECURITIES
Section
2.1.
Issuable in
Series.
The
aggregate principal amount of Securities that may be authenticated and delivered
under this Indenture is unlimited. The Securities may be issued in one or more
Series. All Securities of a Series shall be identical except as may be set forth
in a Board Resolution, a supplemental indenture or an Officers’ Certificate
detailing the adoption of the terms thereof pursuant to the authority granted
under a Board Resolution. In the case of Securities of a Series to be issued
from time to time, the Board Resolution, Officers’ Certificate or supplemental
indenture may provide for the method by which specified terms (such as interest
rate, maturity date, record date or date from which interest shall accrue) are
to be determined. Securities may differ between Series in respect of any
matters, provided that all Series of Securities shall be equally and ratably
entitled to the benefits of the Indenture.
Section
2.2.
Establishment of Terms of
Series of Securities.
At or
prior to the issuance of any Securities within a Series, the following shall be
established (as to the Series generally, in the case of Subsection 2.2.1 and
either as to such Securities within the Series or as to the Series generally in
the case of Subsections 2.2.2 through 2.2.20) by a Board Resolution, a
supplemental indenture or an Officers’ Certificate pursuant to authority granted
under a Board Resolution:
2.2.1 the
title, designation, aggregate Principal amount and authorized denominations of
the Securities of the Series;
2.2.2 the
price or prices, (expressed as a percentage of the aggregate Principal amount
thereof) at which the Securities of the Series will be issued;
2.2.3 the
date or dates on which the Principal of the Securities of the Series is
payable;
2.2.4 the
rate or rates (which may be fixed or variable) per annum or, if applicable, the
method used to determine such rate or rates (including, but not limited to, any
commodity, commodity index, stock exchange index or financial index) at which
the Securities of the Series shall bear interest, if any, the date or dates from
which such interest, if any, shall commence and be payable and any regular
record date for the interest payable on any interest payment date;
2.2.5 any
optional or mandatory sinking fund provisions or conversion or exchangeability
provisions upon which Securities of the Series shall be redeemed or
purchased;
2.2.6 the
date, if any, after which and the price or prices at which the Securities of the
Series may be optionally redeemed or must be mandatorily redeemed and any other
terms and provisions of optional or mandatory provisions;
2.2.7 if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Securities of the Series shall be
issuable;
2.2.8 if
other than the full Principal amount, the portion of the Principal amount of the
Securities of the Series that shall be payable upon declaration of acceleration
pursuant to Section 6.2 or provable in bankruptcy;
2.2.9 any
addition to or change in the Events of Default which applies to any Securities
of the Series and any change in the right of the Trustee or the requisite
Holders of such Securities to declare the Principal amount thereof due and
payable pursuant to Section 6.2;
2.2.10 the
currency or currencies, including composite currencies, in which payments of
Principal of, premium or interest, if any, on the Securities of the Series will
be payable, if other than the currency of the United States of
America;
2.2.11 if
payments of Principal of, premium or interest, if any, on the Securities of the
Series will be payable, at the Company’s election or at the election of any
Holder, in a currency other than that in which the Securities of the Series are
stated to be payable, the period or periods within which, and the terms and
conditions upon which, the election may be made;
2.2.12 if
payments of interest, if any, on the Securities of the Series will be payable,
at the Company’s election or at the election of any Holder, in cash or
additional securities, and the terms and conditions upon which the election may
be made;
2.2.13 if
denominated in a currency or currencies other than the currency of the United
States of America, the equivalent price of the Securities of the Series in the
currency of the United States of America for purposes of determining the voting
rights of Holders of the Securities of the Series;
2.2.14 if
the amount of payments of Principal, premium or interest may be determined with
reference to an index, formula or other method based on a coin or currency other
than that in which the Securities of the Series are stated to be payable, the
manner in which the amounts will be determined;
2.2.15 any
restrictive covenants or other material terms relating to the Securities of the
Series, which may not be inconsistent with the Indenture;
2.2.16 whether
the Securities of the Series will be issued in the form of Global Securities or
certificates in registered or bearer form;
2.2.17 any
terms with respect to subordination;
2.2.18 any
listing on any securities exchange or quotation system;
2.2.19 additional
provisions, if any, related to defeasance and discharge of the offered debt
securities; and
2.2.20 the
applicability of any guarantees.
All
Securities of any one Series need not be issued at the same time and may be
issued from time to time, consistent with the terms of this Indenture, if so
provided by or pursuant to the Board Resolution, supplemental indenture or
Officers’ Certificate referred to above, and the authorized Principal amount of
any Series may not be increased to provide for issuance of additional Securities
of such Series, unless otherwise provided in such Board Resolution, supplemental
Indenture or Officers’ Certificate.
Section
2.3.
Execution and
Authentication.
Two
Officers shall sign the Securities for the Company by manual or facsimile
signature.
If an
Officer whose signature is on a Security no longer holds that office at the time
the Security is authenticated, the Security shall nevertheless be
valid.
A
Security shall not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The
Trustee shall at any time, and from time to time, authenticate Securities for
original issue in the Principal amount provided in the Board Resolution,
supplemental indenture hereto or Officers’ Certificate, upon receipt by the
Trustee of a Company Order. Such Company Order may authorize authentication and
delivery pursuant to oral or electronic instructions from the Company or its
duly authorized agent or agents, which oral instructions shall be promptly
confirmed in writing. Each Security shall be dated the date of its
authentication unless otherwise provided by a Board Resolution, a supplemental
indenture hereto or an Officers’ Certificate.
The
aggregate Principal amount of Securities of any Series outstanding at any time
may not exceed any limit upon the maximum Principal amount for such Series set
forth in the Board Resolution, supplemental indenture hereto or Officers’
Certificate delivered pursuant to Section 2.2, except as provided in Section
2.8.
Prior to
the issuance of Securities of any Series, the Trustee shall have received and
(subject to Section 7.2) shall be fully protected in relying on: (a) the Board
Resolution, supplemental indenture hereto or Officers, Certificate establishing
the form of the Securities of that Series or of Securities within that Series
and the terms of the Securities of that Series or of Securities within that
Series, (b) an Officers’ Certificate complying with Section 10.4, and (c) an
Opinion of Counsel complying with Section 10.4.
The
Trustee shall have the right to decline to authenticate and deliver any
Securities of such Series: (a) if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken; or (b) if the Trustee in
good faith by its board of directors or trustees, executive committee or a trust
committee of directors and/or vice-presidents shall determine that such action
would expose the Trustee to personal liability to Holders of any then
outstanding Series of Securities.
The
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
Section
2.4.
Registrar and Paying
Agent.
The
Company shall maintain, with respect to each Series of Securities, at the place
or places specified with respect to such Series pursuant to Section 2.2, an
office or agency where Securities of such Series may be presented or surrendered
for payment (“Paying Agent”), where Securities of such Series may be surrendered
for registration of transfer or exchange (“Registrar”) and where notices and
demands to or upon the Company in respect of the Securities of such Series and
this Indenture may be served (“Service Agent”). The Registrar shall keep a
register with respect to each Series of Securities and to their transfer and
exchange. The Company will give prompt written notice to the Trustee of the name
and address, and any change in the name or address, of each Registrar, Paying
Agent or Service Agent. If at any time the Company shall fail to maintain any
such required Registrar, Paying Agent or Service Agent or shall fail to furnish
the Trustee with the name and address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The
Company may also from time to time designate one or more co-registrars,
additional Paying Agents or additional Service Agents and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligations to
maintain a Registrar, Paying Agent and Service Agent in each place so specified
pursuant to Section 2.2 for Securities of any Series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the name or address of any such co-registrar,
additional Paying Agent or additional Service Agent. The term “Registrar”
includes any co-registrar; the term “Paying Agent” includes any additional
paying agent; and the term “Service Agent” includes any additional service
agent.
The
Company hereby appoints the Trustee the initial Registrar, Paying Agent and
Service Agent for each Series unless another Registrar, Paying Agent or Service
Agent, as the case may be, is appointed prior to the time Securities of that
Series are first issued.
Section
2.5.
Paying
Agent to Hold Money in Trust.
The
Company shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust, for the benefit of
Securityholders of any Series of Securities, or the Trustee, all money held by
the Paying Agent for the payment of Principal of or interest on the Series of
Securities, and will notify the Trustee of any Default by the Company in making
any such payment. While any such Default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of Securityholders of any Series of Securities all money
held by it as Paying Agent.
Section
2.6.
Securityholder
Lists.
The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Securityholders
of each Series of Securities and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least ten days before each interest payment date and at such other times as the
Trustee may request in writing a list, in such form and as of such date as the
Trustee may reasonably require, of the names and addresses of Securityholders of
each Series of Securities.
Section
2.7.
Transfer and
Exchange.
Where
Securities of a Series are presented to the Registrar or a co-registrar with a
request to register a transfer or to exchange them for an equal Principal amount
of Securities of the same Series, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trustee shall authenticate
Securities at the Registrar’s request. No service charge shall be made for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.11, 3.6 or 9.6).
Neither
the Company nor the Registrar shall be required (a) to issue, register the
transfer of, or exchange Securities of any Series for the period beginning at
the opening of business fifteen days immediately preceding the mailing of a
notice of redemption of Securities of that Series selected for redemption and
ending at the close of business on the day of such mailing, or (b) to register
the transfer of or exchange Securities of any Series selected, called or being
called for redemption as a whole or the portion being redeemed of any such
Securities selected, called or being called for redemption in part.
Section
2.8.
Mutilated, Destroyed, Lost
and Stolen Securities.
If any
mutilated Security is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same Series and of like tenor and Principal amount and bearing a number
not contemporaneously outstanding.
If there
shall be delivered to the Company and the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security and (ii) such
security or indemnity as may be required by them to save each of them and any
Agent of either of them harmless, then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall authenticate
and make available for delivery, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same Series and of like tenor and Principal
amount and bearing a number not contemporaneously outstanding.
In case
any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a
new Security, pay such Security.
Upon the
issuance of any new Security under this Section, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every new
Security of any Series issued pursuant to this Section in lieu of any destroyed,
lost or stolen Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that Series duly issued hereunder.
The
provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities.
Section
2.9.
Outstanding
Securities.
The
Securities outstanding at any time are all the Securities authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest on a Global Security effected by the Trustee in
accordance with the provisions hereof and those described in this Section as not
outstanding.
If a
Security is replaced pursuant to Section 2.8, it ceases to be outstanding until
the Trustee receives proof satisfactory to it that the replaced Security is held
by a bona fide purchaser.
If the
Paying Agent (other than the Company, a Subsidiary or an Affiliate of any
thereof) holds on the Maturity of Securities of a Series money sufficient to pay
such Securities payable on that date, then on and after that date such
Securities of the Series cease to be outstanding and interest on them ceases to
accrue.
A
Security does not cease to be outstanding because the Company or an Affiliate
holds the Security.
In
determining whether the Holders of the requisite Principal amount of outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, the Principal amount of a Discount Security that
shall be deemed to be outstanding for such purposes shall be the amount of the
Principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the Maturity thereof
pursuant to Section 6.2.
Section
2.10.
Treasury
Securities.
In
determining whether the Holders of the required Principal amount of Securities
of a Series have concurred in any request, demand, authorization, direction,
notice, consent or waiver Securities of a Series owned by the Company or an
Affiliate shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver only Securities of a Series
that the Trustee knows are so owned shall be so disregarded.
Section
2.11.
Temporary
Securities.
Until
definitive Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary securities upon a Company Order. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
without unreasonable delay, the Company shall prepare and the Trustee upon
request shall authenticate definitive Securities of the same Series and date of
Maturity in exchange for temporary Securities. Until so exchanged, temporary
securities shall have the same rights under this Indenture as the definitive
Securities.
Section
2.12.
Cancellation.
The
Company at any time may deliver Securities to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Securities surrendered for transfer, exchange, payment,
replacement or cancellation and shall destroy such canceled Securities (subject
to the record retention requirement of the Exchange Act) and deliver a
certificate of such destruction to the Company, unless the Company otherwise
directs. The Company may not issue new Securities to replace Securities that it
has paid or delivered to the Trustee for cancellation.
Section
2.13.
Defaulted
Interest.
If the
Company defaults in a payment of interest on a Series of Securities, it shall
pay the defaulted interest, plus, to the extent permitted by law, any interest
payable on the defaulted interest, to the Persons who are Securityholders of the
Series on a subsequent special record date. The Company shall fix the record
date and payment date. At least 30 days before the record date, the Company
shall mail to the Trustee and to each Securityholder of the Series a notice that
states the record date, the payment date and the amount of interest to be paid.
The Company may pay defaulted interest in any other lawful manner.
Section
2.14.
Global
Securities.
2.14.1 Terms
of Securities. A Board Resolution, a supplemental indenture hereto or an
Officers’ Certificate shall establish whether the Securities of a Series shall
be issued in whole or in part in the form of one or more Global Securities and
the Depository for such Global Security or Securities.
2.14.2 Transfer
and Exchange. Notwithstanding any provisions to the contrary contained in
Section 2.7 of the Indenture and in addition thereto, any Global Security shall
be exchangeable pursuant to Section 2.7 of the Indenture for Securities
registered in the names of Holders other than the Depository for such Security
or its nominee only if (i) such Depository notifies the Company that it is
unwilling or unable to continue as Depository for such Global Security or if at
any time such Depository ceases to be a clearing agency registered under the
Exchange Act, and, in either case, the Company fails to appoint a successor
Depository within 90 days of such event, (ii) the Company executes and delivers
to the Trustee an Officers’ Certificate to the effect that such Global Security
shall be so exchangeable or (iii) an Event of Default with respect to the
Securities represented by such Global Security shall have happened and be
continuing. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Securities registered in such names as the
Depository shall direct in writing in an aggregate principal amount equal to the
Principal amount of the Global Security with like tenor and terms.
Except as
provided in this Section 2.14.2, a Global Security may not be transferred except
as a whole by the Depository with respect to such Global Security to a nominee
of such Depository, by a nominee of such Depository to such Depository or
another nominee of such Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such a successor Depository.
2.14.3 Legend.
Any Global Security issued hereunder shall bear a legend in substantially the
following form:
“This
Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of the Depository or a nominee of the
Depository. This Security is exchangeable for Securities registered in the name
of a Person other than the Depository or its nominee only in the limited
circumstances described in the Indenture, and may not be transferred except as a
whole by the Depository to a nominee of the Depository, by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such a
successor Depository.”
2.14.4 Acts
of Holders. The Depository, as a Holder, may appoint agents and otherwise
authorize Participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a Holder is entitled to
give or take under the Indenture.
2.14.5 Payments.
Notwithstanding the other provisions of this Indenture, unless otherwise
specified as contemplated by Section 2.2, payment of the Principal of and
interest, if any, on any Global Security shall be made to the Holder thereof at
their registered office.
2.14.6 Consents,
Declaration and Directions. Except as provided in Section 2.14.5, the Company,
the Trustee and any Agent shall treat a Person as the Holder of such Principal
amount of outstanding Securities of such Series represented by a Global Security
as shall be specified in a written statement of the Depositary with respect to
such Global Security, for purposes of obtaining any consents, declarations,
waivers or directions required to be given by the Holders pursuant to this
Indenture.
Section
2.15.
CUSIP
Numbers.
The
Company in issuing the Securities may use “CUSIP” numbers (if then generally in
use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other elements of identification printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such numbers.
ARTICLE
III.
REDEMPTION
Section
3.1.
Notice
to Trustee.
The
Company may, with respect to any Series of Securities, reserve the right to
redeem and pay the Series of Securities or may covenant to redeem and pay the
Series of Securities or any part thereof prior to the Stated Maturity thereof at
such time and on such terms as provided for in such Securities. If a Series of
Securities is redeemable and the Company wants or is obligated to redeem prior
to the Stated Maturity thereof all or part of the Series of Securities pursuant
to the terms of such Securities, it shall notify the Trustee of the redemption
date and the Principal amount of Series of Securities to be redeemed. The
Company shall give the notice at least 45 days before the redemption date (or
such shorter notice as may be acceptable to the Trustee).
Section
3.2.
Selection of Securities to
be Redeemed.
Unless
otherwise indicated for a particular Series by a Board Resolution, a
supplemental indenture or an Officers’ Certificate, if less than all the
Securities of a Series are to be redeemed, the Trustee shall select the
Securities of the Series to be redeemed in any manner that the Trustee deems
fair and appropriate. The Trustee shall make the selection from Securities of
the Series outstanding not previously called for redemption. The Trustee may
select for redemption portions of the Principal of Securities of the Series that
have denominations larger than $1,000. Securities of the Series and portions of
them it selects shall be in amounts of $1,000 or whole multiples of $1,000 or,
with respect to Securities of any Series issuable in other denominations
pursuant to Section 2.2.7, the minimum Principal denomination for each Series
and integral multiples thereof. Provisions of this Indenture that apply to
Securities of a Series called for redemption also apply to portions of
Securities of that Series called for redemption.
Section
3.3.
Notice
of Redemption.
Unless
otherwise indicated for a particular Series by Board Resolution, a supplemental
indenture hereto or an Officers’ Certificate, at least 30 days but not more than
60 days before a redemption date, the Company shall mail a notice of redemption
by first-class mail to each Holder whose Securities are to be redeemed and if
any Bearer Securities are outstanding, publish on one occasion a notice in an
Authorized Newspaper.
The
notice shall identify the Securities of the Series to be redeemed and shall
state:
(a) the
redemption date;
(b) the
redemption price;
(c) the
name and address of the Paying Agent;
(d) that
Securities of the Series called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(e) that
interest on Securities of the Series called for redemption ceases to accrue on
and after the redemption date; and
(f) any
other information as may be required by the terms of the particular Series or
the Securities of a Series being redeemed.
At the
Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at its expense.
Section
3.4.
Effect
of Notice of Redemption.
Once
notice of redemption is mailed or published as provided in Section 3.3,
Securities of a Series called for redemption become due and payable on the
redemption date and at the redemption price. A notice of redemption may not be
conditional. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price plus accrued interest to the redemption
date.
Section
3.5.
Deposit of Redemption
Price.
On or
before the redemption date, the Company shall deposit with the Paying Agent
money sufficient to pay the redemption price of and accrued interest, if any, on
all Securities to be redeemed on that date.
Section
3.6.
Securities Redeemed in
Part.
Upon
surrender of a Security that is redeemed in part, the Trustee shall authenticate
for the Holder a new Security of the same Series and the same Maturity equal in
Principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE
IV.
COVENANTS
Section
4.1.
Payment of Principal and
Interest.
The
Company covenants and agrees for the benefit of the Holders of each Series of
Securities that it will duly and punctually pay the Principal of and interest,
if any, on the Securities of that Series in accordance with the terms of such
Securities and this Indenture.
Section
4.2.
SEC
Reports.
The
Company shall deliver to the Trustee within 15 days after it files them with the
SEC copies of the annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall
comply with the other provisions of TIA Section 314(a).
Section
4.3.
Compliance
Certificate.
The
Company shall deliver to the Trustee, within 90 days after the end of each
fiscal year of the Company, an Officers’ Certificate signed by two of the
Company’s Officers stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his knowledge the Company has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he may
have knowledge).
The
Company will, so long as any of the Securities are outstanding, deliver to the
Trustee, forthwith upon becoming aware of any Default or Event of Default, an
Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect
thereto.
Section
4.4.
Stay,
Extension and Usury Laws.
The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture or the Securities; and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
Section
4.5.
Corporate
Existence.
Subject
to Article V, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate, partnership or other existence of each Significant Subsidiary in
accordance with the respective organizational documents of each Significant
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Significant Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Significant Subsidiary,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.
Section
4.6.
Taxes.
The
Company shall, and shall cause each of its Significant Subsidiaries to, pay
prior to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
ARTICLE
V.
SUCCESSORS
Section
5.1.
When
Company May Merge, Etc.
The
Company shall not consolidate with or merge into any other Person in a
transaction in which we are not the surviving entity, or convey, transfer or
lease all or substantially all of its properties and assets to any Person (a
“Successor Person”), unless:
(a) the
Successor Person (if any) is a corporation, partnership, trust or other entity
organized and validly existing under the laws of the Marshall Islands or any
U.S. domestic jurisdiction and expressly assumes the Company’s obligations on
the Securities and under this Indenture; and
(b) immediately
after giving effect to the transaction, no Default or Event of Default, shall
have occurred and be continuing.
The
Company shall deliver to the Trustee prior to the consummation of the proposed
transaction an Officers’ Certificate to the foregoing effect and an Opinion of
Counsel stating that the proposed transaction and such supplemental indenture
comply with this Indenture.
Section
5.2.
Successor Corporation
Substituted.
Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in accordance with Section
5.1, the Successor Person formed by such consolidation or into or with which the
Company is merged or to which such sale, lease, conveyance or other disposition
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
Successor Person has been named as the Company herein; provided, however, that
the predecessor company in the case of a sale, lease, conveyance or other
disposition shall not be released from the obligation to pay the Principal of
and interest, if any, on the Securities.
ARTICLE
VI.
DEFAULTS
AND REMEDIES
Section
6.1.
Events
of Default.
“Event of
Default,” wherever used herein with respect to Securities of any Series, means
any one of the following events, unless in the establishing Board Resolution,
supplemental indenture or Officers’ Certificate, it is provided that such Series
shall not have the benefit of said Event of Default:
(a) Default
in the payment of any interest on any Security of that Series when it becomes
due and payable, and continuance of such Default for a period of 30 days (unless
the entire amount of such payment is deposited by the Company with the Trustee
or with a Paying Agent prior to the expiration of such period of 30 days);
or
(b) Default
in the payment of the Principal of any Security of that Series at its Maturity;
or
(c) Default
in the deposit of any sinking fund payment, when and as due in respect of any
Security of that Series; or
(d) Default
in the performance or breach of any covenant of the Company in this Indenture,
which Default continues uncured for a period of 60 days after there has been
given, by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in Principal amount of
the outstanding Securities of that Series a written notice specifying such
Default or breach and requiring it to be remedied and stating that such notice
is a “Notice of Default” hereunder; or
(e) Default
under any Debt of the Company (including a Default with respect to Securities of
any Series other than that Series) or any Subsidiary, whether such Debt now
exists or shall hereafter be created, if (A) such Default results from the
failure to pay any such Debt when it becomes due and (B) such Debt is not
discharged or such acceleration is not rescinded or annulled within 30 days
after written notice to the Company by the holder or holders of such Debt in the
manner provided for in the applicable debt instrument; provided, that if the
Default with respect to such Debt is remedied or cured by the Company or waived
by the holders of such Debt before entry of judgment in favor of the relevant
trustee, then the Event of Default under this Indenture will be deemed likewise
to have been remedied, cured or waived; or
(f) the
Company pursuant to or within the meaning of any Bankruptcy Law:
(i) commences
a voluntary case,
(ii) consents
to the entry of an order for relief against it in an involuntary
case,
(iii) consents
to the appointment of a Custodian of it or for all or substantially all of its
property,
(iv) makes
a general assignment for the benefit of its creditors, or
(v) generally
is unable to pay its Debts as the same become due; or
(g) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:
(i) is
for relief against the Company or any of its Significant Subsidiaries in an
involuntary case,
(ii) appoints
a Custodian of the Company or any of its Significant Subsidiaries or for all or
substantially all of its property, or
(iii) orders
the liquidation of the Company or any of its Significant Subsidiaries, and the
order or decree remains unstayed and in effect for 60 days; or
(h) any
other Event of Default provided with respect to Securities of that Series, which
is specified in a Board Resolution, a supplemental indenture hereto or an
Officers’ Certificate, in accordance with Section 2.2.18.
No Event
of Default with respect to a particular Series of Securities (except with
respect to subsections (f) and (g) above) necessarily constitutes an Event of
Default with respect to any other Series of Securities.
The term
“Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law
for the relief of debtors. The term “Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
Section
6.2.
Acceleration of Maturity;
Rescission and Annulment.
If an
Event of Default with respect to Securities of any Series at the time
outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in Principal amount of the outstanding Securities
of that Series may declare the Principal amount (or, if any Securities of that
Series are Discount Securities, such portion of the Principal amount as may be
specified in the terms of such Securities) of and accrued and unpaid interest,
if any, on all of the Securities of that Series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such Principal amount (or specified
amount) and accrued and unpaid interest, if any, shall become immediately due
and payable.
The
Holders of not less than a majority in Principal amount of the outstanding
Securities of that Series, by written notice to the Trustee, may rescind any
declaration of acceleration of such Securities of that Series and its
consequences if all existing Events of Default (other than the nonpayment of
Principal of or interest on such Securities that shall have become due by such
declaration) shall have been cured or waived.
Section
6.3.
Collection of Indebtedness
and Suits for Enforcement by Trustee.
If an
Event of Default with respect to any Securities of any Series occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Securities of such Series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section
6.4.
Trustee May File Proofs of
Claim.
In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the Principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue Principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(a) to
file and prove a claim for the whole amount of Principal and interest owing and
unpaid in respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding, and
(b) to
collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7.
Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section
6.5.
Trustee May Enforce Claims
Without Possession of Securities.
All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section
6.6.
Application of Money
Collected.
Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of Principal or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
and
First: To
the payment of all amounts due the Trustee under Section 7.7;
Second:
To the payment of the amounts then due and unpaid for Principal of and interest
on the Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for Principal and interest,
respectively; and
Third: To
the Company.
Section
6.7.
Limitation on
Suits.
No Holder
of any Security of any Series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(a) such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities of that Series;
(b) the
Holders of not less than 25% in Principal amount of the outstanding Securities
of that Series shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(c) such
Holder or Holders have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such
request;
(d) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(e) no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in Principal amount of
the outstanding Securities of that Series; it being understood and intended that
no one or more of such Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all such Holders.
Section
6.8.
Unconditional Right of
Holders to Receive Principal and Interest.
Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment of the Principal
of and interest, if any, on such Security on the Stated Maturity or Stated
Maturities expressed in such Security (or, in the case of redemption, on the
redemption date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such
Holder.
Section
6.9.
Restoration of Rights and
Remedies.
If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section
6.10.
Rights and Remedies
Cumulative.
Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section
6.11.
Delay
or Omission Not Waiver.
No delay
or omission of the Trustee or of any Holder of any Securities to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section
6.12.
Control by
Holders.
The
Holders of a majority in Principal amount of the outstanding Securities of any
Series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Securities of such
Series, provided that
(a) such
direction shall not be in conflict with any rule of law or with this
Indenture,
(b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and
(c) subject
to the provisions of Section 6.1, the Trustee shall have the right to decline to
follow any such direction if the Trustee in good faith shall, by a Responsible
Officer of the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability.
Section
6.13.
Waiver of Past
Defaults.
The
Holders of not less than a majority in Principal amount of the outstanding
Securities of any Series may on behalf of the Holders of all the Securities of
such Series waive any past Default hereunder with respect to such Series and its
consequences, except a Default in the payment of the Principal of or interest on
any Security of such Series (provided, however, that the Holders of a majority
in Principal amount of the outstanding Securities of any Series may rescind an
acceleration and its consequences, including any related payment Default that
resulted from such acceleration). Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent
thereon.
Section
6.14.
Undertaking for
Costs.
All
parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in Principal
amount of the outstanding Securities of any Series, or to any suit instituted by
any Holder for the enforcement of the payment of the Principal of or interest on
any Security on or after the Stated Maturity or Stated Maturities expressed in
such Security (or, in the case of redemption, on the redemption
date).
ARTICLE
VII.
TRUSTEE
Section
7.1.
Duties
of Trustee.
(a) If
an Event of Default has occurred and is continuing, the Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except
during the continuance of an Event of Default:
(i) The
Trustee need perform only those duties that are specifically set forth in this
Indenture and no others.
(ii) in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon Officers’ Certificates or Opinions of Counsel furnished to the
Trustee and conforming to the requirements of this Indenture; however, in the
case of any such Officers’ Certificates or Opinions of Counsel which by any
provisions hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such Officers’ Certificates and Opinions of Counsel to
determine whether or not they conform to the requirements of this
Indenture.
(c) The
Trustee may not be relieved from liability for its own its own willful negligent
action, its own negligent failure to act or misconduct, except
that:
(i) This
paragraph does not limit the effect of paragraph (b) of this
Section.
(ii) The
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(iii) The
Trustee shall not be liable with respect to any action taken, suffered or
omitted to be taken by it with respect to Securities of any Series in good faith
in accordance with the direction of the Holders of a majority in Principal
amount of the outstanding Securities of such Series relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such Series.
(d) Every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraph (a), (b) and (c) of this Section.
(e) The
Trustee may refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or
expense.
(f) The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required by
law.
(g) No
provision of this Indenture shall require the Trustee to risk its own funds or
otherwise incur any financial liability in the performance of any of its duties,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk is not reasonably assured to it.
(h) The
Paying Agent, the Registrar and any authenticating agent shall be entitled to
the protections, immunities and standard of care as are set forth in paragraphs
(a), (b) and (c) of this Section with respect to the Trustee.
Section
7.2.
Rights
of Trustee.
(a) The
Trustee may rely on and shall be protected in acting or refraining from acting
as a result of its reasonable belief that any document was genuine and had been
signed or presented by the proper Person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.
(c) The
Trustee may act through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care; provided that such agent
agree as a condition to its engagement that it shall be responsible to the
Company for its own misconduct or negligence. No Depository shall be deemed an
agent of the Trustee and the Trustee shall not be responsible for any act or
omission by any Depository.
(d) The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or
powers.
(e) The
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(f) The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
of Securities unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
Section
7.3.
Individual Rights of
Trustee.
The
Trustee in its individual or any other capacity may become the owner or pledgee
of securities and may otherwise deal with the Company or an Affiliate with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. The Trustee is also subject to Sections 7.10 and 7.11.
Section
7.4.
Trustee’s
Disclaimer.
The
Trustee makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company’s use of the
proceeds from the Securities, and it shall not be responsible for any statement
in the Securities other than its authentication.
Section
7.5.
Notice
of Defaults.
If a
Default or Event of Default occurs and is continuing with respect to the
Securities of any Series and if it is known to a Responsible Officer of the
Trustee, the Trustee shall mail to each Securityholder of the Securities of that
Series and, if any Bearer Securities are outstanding, publish on one occasion in
an Authorized Newspaper, notice of a Default or Event of Default within 90 days
after it occurs or, if later, after a Responsible Officer of the Trustee has
knowledge of such Default or Event of Default. Except in the case of a Default
or Event of Default in payment of Principal of or interest on any Security of
any Series, the Trustee may withhold the notice if and so long as its corporate
trust committee or a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Securityholders of
that Series.
Section
7.6.
Reports by Trustee to
Holders.
Within 60
days after May 15 in each year, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the register kept by the
Registrar and, if any Bearer Securities are outstanding, publish in an
Authorized Newspaper, a brief report dated as of such May 15, in accordance
with, and to the extent required under, TIA Section 313.
A copy of
each report at the time of its mailing to Securityholders of any Series shall be
filed with the SEC and each stock exchange on which the Securities of that
Series are listed. The Company shall promptly notify the Trustee when Securities
of any Series are listed on any stock exchange.
Section
7.7.
Compensation and
Indemnity.
The
Company shall pay to the Trustee from time to time reasonable compensation for
its services. The Trustee’s compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it.
Such expenses shall include the reasonable compensation and expenses of the
Trustee’s agents and counsel.
The
Company shall indemnify the Trustee (including the cost of defending itself)
against any loss, liability or expense incurred by it except as set forth in the
next paragraph in the performance of its duties under this Indenture as Trustee
or Agent. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld. This indemnification shall apply to officers, directors,
employees, shareholders and agents of the Trustee.
The
Company need not reimburse any expense or indemnify against any loss liability
incurred by the Trustee or by any officer, director, employee, shareholder or
agent of the Trustee through negligence or bad faith.
To secure
the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities of any Series on all money or property held or collected
by the Trustee, except that held in trust to pay Principal and interest on
particular Securities of that Series.
When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.1(f) or (g) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.
Section
7.8.
Replacement of
Trustee.
A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section.
The
Trustee may resign with respect to the Securities of one or more Series by so
notifying the Company. The Holders of a majority in Principal amount of the
Securities of any Series may remove the Trustee with respect to that Series by
so notifying the Trustee and the Company. The Company may remove the Trustee
with respect to Securities of one or more Series if:
(a) the
Trustee fails to comply with Section 7.10;
(b) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;
(c) a
Custodian or public officer takes charge of the Trustee or its property;
or
(d) the
Trustee becomes incapable of acting.
If the
Trustee resigns or is removed or if a vacancy exists in the office of Trustee
for any reason, the Company shall promptly appoint a successor Trustee. Within
one year after the successor Trustee takes office, the Holders of a majority in
Principal amount of the then outstanding Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If a
successor Trustee with respect to the Securities of any one or more Series does
not take office within 60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of at least 10% in Principal
amount of the Securities of the applicable Series may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the
Trustee with respect to the Securities of any one or more Series fails to comply
with Section 7.10, any Securityholder of the applicable Series may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee subject to the lien provided for in Section 7.7, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee with respect
to each Series of Securities for which it is acting as Trustee under this
Indenture. A successor Trustee shall mail a notice of its succession to each
Securityholder of each such Series and, if any Bearer Securities are
outstanding, publish such notice on one occasion in an Authorized Newspaper.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the
Company’s obligations under Section 7.7 hereof shall continue for the benefit of
the retiring trustee with respect to expenses and liabilities incurred by it
prior to such replacement.
Section
7.9.
Successor Trustee by Merger,
etc.
If the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor
Trustee.
Section
7.10.
Eligibility;
Disqualification.
This
Indenture shall always have a Trustee who satisfies the requirements of TIA
Section 310(a)(1), (2) and (5). The Trustee shall always have a combined capital
and surplus of at least $25,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section
310(b).
Section
7.11.
Preferential Collection of
Claims Against Company.
The
Trustee is subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed shall
be subject to TTA Section 311(a) to the extent indicated.
ARTICLE
VIII.
SATISFACTION
AND DISCHARGE; DEFEASANCE
Section
8.1.
Satisfaction and Discharge
of Indenture.
This
Indenture shall upon Company Order cease to be of further effect (except as
hereinafter provided in this Section 8.1), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a) either
(i) all
Securities theretofore authenticated and delivered (other than Securities that
have been destroyed, lost or stolen and that have been replaced or paid) have
been delivered to the Trustee for cancellation; or
(ii) all
such Securities not theretofore delivered to the Trustee for cancellation have
become due and payable, or
(1) have
become due and payable, or
(2) will
become due and payable at their Stated Maturity within one year, or
(3) are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company, or
(4) are
deemed paid and discharged pursuant to section 8.3, as applicable; and the
Company, in the case of (1), (2) or (3) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust an amount sufficient for the
purpose of paying and discharging the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for Principal and
interest to the date of such deposit (in the case of Securities which have
become due and payable on or prior to the date of such deposit) or to the Stated
Maturity or redemption date, as the case may be;
(b) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(c) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Company
to the Trustee under Section 7.7, and, if money shall have been deposited with
the Trustee pursuant to clause (a) of this Section, the provisions of Sections
2.4, 2.7, 2.8, 8.1 8.2 and 8.5 shall survive.
Section
8.2.
Application of Trust Funds;
Indemnification.
(a) Subject
to the provisions of Section 8.5, all money deposited with the Trustee pursuant
to Section 8.1, all money and U.S. Government Obligations or Foreign Government
Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and all
money received by the Trustee in respect of U.S. Government Obligations or
Foreign Government Obligations deposited with the Trustee pursuant to Section
8.3 or 8.4, shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
Principal and interest for whose payment such money has been deposited with or
received by the Trustee or to make Mandatory Sinking Fund Payments or analogous
payments as contemplated by Sections 8.3 or 8.4.
(b) The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against U.S. Government obligations or Foreign
Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest
and Principal received in respect of such obligations other than any payable by
or on behalf of Holders.
(c) The
Trustee shall deliver or pay to the Company from time to time upon Company
Request any U.S. Government obligations or Foreign Government obligations or
money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a
nationally recognized firm of independent certified public accountants expressed
in a written certification thereof delivered to the Trustee, are then in excess
of the amount thereof which then would have been required to be deposited for
the purpose for which such U.S. Government Obligations or Foreign Government
Obligations or money were deposited or received. This provision shall not
authorize the sale by the Trustee of any U.S. Government Obligations or Foreign
Government Obligations held under this Indenture.
Section
8.3.
Legal
Defeasance of Securities of any Series.
Unless
this Section 8.3 is otherwise specified, pursuant to Section 2.2.19, to be
inapplicable to Securities of any Series, the Company shall be deemed to have
paid and discharged the entire indebtedness on all the outstanding Securities of
such Series on the 91st day after the date of the deposit referred to in
subparagraph (d) hereof, and the provisions of this Indenture, as it relates to
such outstanding Securities of such Series, shall no longer be in effect (and
the Trustee, at the expense of the Company, shall, at Company Request, execute
proper instruments acknowledging the same), except as to:
(a) the
rights of Holders of Securities of such Series to receive, from the trust funds
described in subparagraph (d) hereof, (i) payment of the Principal of and each
installment of Principal of and interest on the outstanding Securities of such
Series on the Stated Maturity of such Principal or installment of Principal or
interest and (ii) the benefit of any Mandatory Sinking Fund Payments applicable
to the Securities of such Series on the day on which such payments are due and
payable in accordance with the terms of this Indenture and the Securities of
such Series;
(b) the
provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and
(c) the
rights, powers, trust and immunities of the Trustee hereunder;
provided
that, the following conditions shall have been satisfied:
(i) the
Company shall have deposited or caused to be deposited irrevocably with the
Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for and dedicated solely to the
benefit of the Holders of such Securities W in the case of Securities of such
Series denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or U.S.
Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest and
Principal in respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge each installment of Principal
(including mandatory sinking fund or analogous payments) of and interest, if
any, on all the Securities of such Series on the dates such installments of
interest or Principal are due;
(ii) such
deposit will not result in a breach or violation of, or constitute a Default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(iii) no
Default or Event of Default with respect to the Securities of such Series shall
have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
(iv) the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel to the effect that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
Securities of such Series will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to Federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred;
(v) the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders of the Securities of such Series over any other creditors of the Company
or with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company;
(vi) such
deposit shall not result in the trust arising from such deposit constituting an
investment company (as defined in the Investment Company Act of 1940, as
amended), or such trust shall be qualified under such Act or exempt from
regulation thereunder; and
(vii) the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to the defeasance contemplated by this Section have been complied
with.
Section
8.4.
Covenant
Defeasance.
Unless
this Section 8.4 is otherwise specified pursuant to Section 2.2.19 to be
inapplicable to Securities of any Series, on and after the 91st day after the
date of the deposit referred to in subparagraph (a) hereof, the Company may omit
to comply with any term, provision or condition set forth under Sections 4.2,
4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional covenants contained in a
supplemental indenture hereto for a particular Series of Securities or a Board
Resolution or an Officers’ Certificate delivered pursuant to Section 2.2.19 (and
the failure to comply with any such covenants shall not constitute a Default or
Event of Default under Section 6.1) and the occurrence of any event described in
clause (e) of Section 6.1 shall not constitute a Default or Event of Default
hereunder, with respect to the Securities of such Series, provided that the
following conditions shall have been satisfied:
(a) With
reference to this Section 8.4, the Company has deposited or caused to be
irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as
trust funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities (i) in the case of Securities
of such Series denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or U.S.
Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest and
Principal in respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, to pay Principal and interest, if any, on and
any mandatory sinking fund in respect of the Securities of such Series on the
dates such installments of interest or Principal are due;
(b) Such
deposit will not result in a breach or violation of, or constitute a Default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(c) No
Default or Event of Default with respect to the Securities of such Series shall
have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
(d) the
Company shall have delivered to the Trustee an Opinion of Counsel confirming
that Holders of the Securities of such Series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such deposit and
defeasance had not occurred;
(e) the
Company shall have delivered to the Trustee an Officers’ Certificate stating the
deposit was not made by the Company with the intent of preferring the Holders of
the Securities of such Series over any other creditors of the Company or with
the intent of defeating, hindering, delaying or defrauding any other creditors
of the Company; and
(f) The
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the defeasance contemplated by this Section have been complied
with.
Section
8.5.
Repayment to
Company.
The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of Principal and interest that remains unclaimed
for two years. After that, Securityholders entitled to the money must look to
the Company for payment as general creditors unless an applicable abandoned
property law designates another Person.
ARTICLE
IX.
AMENDMENTS
AND WAIVERS
Section
9.1.
Without Consent of
Holders.
The
Company and the Trustee may amend or supplement this Indenture or the Securities
of one or more Series without the consent of any Securityholder:
(a) to
cure any ambiguity, defect or inconsistency;
(b) to
comply with Article V;
(c) to
provide for uncertificated Securities in addition to or in place of Certificated
Securities;
(d) to
make any change that does not adversely affect the rights of any
Securityholder;
(e) to
provide for the issuance of and establish the form and terms and conditions of
Securities of any Series as permitted by this Indenture;
(f) to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more Series and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee; or
(g) to
comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA.
Section
9.2.
With
Consent of Holders.
The
Company and the Trustee may enter into a supplemental indenture with the written
consent of the Holders of at least a majority in Principal amount of the
outstanding Securities of all Series affected by such supplemental indenture,
taken together as one class (including consents obtained in connection with a
tender offer or exchange offer for the Securities of such Series), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Securityholders of each such Series.
Except as provided in Section 6.13, the Holders of at least a majority in
Principal amount of the outstanding Securities of all Series affected by such
waiver by notice to the Trustee, taken together as one class (including consents
obtained in connection with a tender offer or exchange offer for the Securities
of such Series) may waive compliance by the Company with any provision of this
Indenture or the Securities with respect to such Series.
It shall
not be necessary for the consent of the Holders of Securities under this Section
9.2 to approve the particular form of any proposed supplemental indenture or
waiver, but it shall be sufficient if such consent approves the substance
thereof. After a supplemental indenture or waiver under this section becomes
effective, the Company shall mail to the Holders of Securities affected thereby
and, if any Bearer Securities affected thereby are outstanding, publish on one
occasion in an Authorized Newspaper, a notice briefly describing the
supplemental indenture or waiver. Any failure by the Company to mail or publish
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture or waiver.
Section
9.3.
Limitations.
Without
the consent of each Securityholder affected, an amendment or waiver may
not:
(a) change
the amount of Securities whose Holders must consent to an amendment, supplement
or waiver;
(b) reduce
the rate of or change the interest payment time on any Security or alter the
redemption provisions with respect thereto or the price at which the Company is
required to offer to purchase the Securities;
(c) reduce
the Principal or change the Stated Maturity of any Security or reduce the amount
of, or postpone the date fixed for, the payment of any sinking fund or analogous
obligation;
(d) reduce
the Principal amount of Discount Securities payable upon acceleration of the
Maturity thereof;
(e) waive
a Default or Event of Default in the payment of the Principal of or interest, if
any, on any Security (except a rescission of acceleration of the Securities of
any Series by the Holders of at least a majority in Principal amount of the
outstanding Securities of such Series and a waiver of the payment Default that
resulted from such acceleration);
(f) make
the Principal of or interest, if any, on any Security payable in any currency
other than that stated in the Security;
(g) make
any change in Sections 6.8, 6.13, 9.3 (this sentence), 10.15 or 10.16;
or
(h) waive
a redemption payment with respect to any Security or change any of the
provisions with respect to the redemption of any Securities.
Section
9.4.
Compliance with Trust
Indenture Act.
Every
amendment to this Indenture or the Securities of one or more Series shall be set
forth in a supplemental indenture hereto that complies with the TIA as then in
effect.
Section
9.5.
Revocation and Effect of
Consents.
Until an
amendment or waiver becomes effective, a consent to it by a Holder of a Security
is a continuing consent by the Holder and every subsequent Holder of a Security
or portion of a Security that evidences the same Debt as the consenting Holder’s
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective.
Any
amendment or waiver once effective shall bind every Securityholder of each
Series affected by such amendment or waiver unless it is of the type described
in any of clauses (a) through (g) of Section 9.3. in that case, the amendment or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
Debt as the consenting Holder’s Security.
Section
9.6.
Notation on or Exchange of
Securities.
The
Trustee may place an appropriate notation about an amendment or waiver on any
Security of any Series thereafter authenticated. The Company in exchange for
Securities of that Series may issue and the Trustee shall authenticate upon
request new Securities of that Series that reflect the amendment or
waiver.
Section
9.7.
Trustee
Protected.
In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee shall sign all supplemental
indentures, except that the Trustee need not sign any supplemental indenture
that adversely affects its rights.
ARTICLE
X.
MISCELLANEOUS
Section
10.1.
Trust
Indenture Act Controls.
If any
provision of this Indenture limits, qualifies, or conflicts with another
provision which is required or deemed to be included in this Indenture by the
TIA, such required or deemed provision shall control.
Section
10.2.
Notices.
Any
notice or communication by the Company or the Trustee to the other is duly given
if in writing and delivered in person or mailed by first-class
mail:
if to the
Company:
Euroseas
Ltd.
Aethrion
Center
40 Ag.
Konstantinou Street
151 24
Maroussi Greece
if to the
Trustee:
[Name of
Trustee]
[Address]
Attention:______________
The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any
notice or communication to a Securityholder shall be mailed by first-class mail
to his address shown on the register kept by the Registrar and, if any Bearer
Securities are outstanding, published in an Authorized Newspaper. Failure to
mail a notice or communication to a Securityholder of any Series or any defect
in it shall not affect its sufficiency with respect to other Securityholders of
that or any other Series.
If a
notice or communication is mailed or published in the manner provided above,
within the time prescribed, it is duly given, whether or not the Securityholder
receives it.
If the
Company mails a notice or communication to Securityholders, it mail a copy to
the Trustee and each Agent at the same time.
Section
10.3.
Communication by Holders
with Other Holders.
Securityholders
of any Series may communicate pursuant to TIA Section 312(b) with other
Securityholders of that Series or any other Series with respect to their rights
under this Indenture or the Securities of that Series or all Series. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
Section
10.4.
Certificate and opinion as
to Conditions Precedent.
Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an
Opinion of Counsel stating that, in the opinion of counsel, all such conditions
precedent have been complied with.
Section
10.5.
Statements Required in
Certificate or opinion.
Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a
statement that the Person making such certificate or opinion has read such
covenant or condition;
(b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;
(c) a
statement that, in the opinion of such Person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(d) a
statement as to whether or not, in the opinion of such Person, such condition or
covenant has been complied with.
Section
10.6.
Rules
by Trustee and Agents.
The
Trustee may make reasonable rules for action by or a meeting of Securityholders
of one or more Series. Any Agent may make reasonable rules and set reasonable
requirements for its functions.
Section
10.7.
Legal
Holidays.
Unless
otherwise provided by Board Resolution, Officers’ Certificate or supplemental
indenture for a particular Series, a “Legal Holiday” is any day that is not a
Business Day. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section
10.8.
No
Recourse Against Others.
A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
Section
10.9.
Counterparts.
This
Indenture may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
Section
10.10.
Governing
Laws.
THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK EXCLUDING (TO THE GREATEST EXTENT POSSIBLE) ANY RULE OF LAW
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
Section
10.11.
No
Adverse Interpretation of Other Agreements.
This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or a Subsidiary. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section
10.12.
Successors.
All
agreements of the Company in this Indenture and the Securities shall bind its
successor. All agreements of the Trustee in this Indenture shall bind its
successor.
Section
10.13.
Severability.
In case
any provision in this Indenture or in the Securities shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section
10.14.
Table of Contents, Headings,
Etc.
The Table
of Contents, Cross Reference Table, and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section
10.15.
Securities in a Foreign
Currency or in ECU.
Unless
otherwise specified in a Board Resolution, a supplemental indenture hereto or an
Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture with
respect to a particular Series of Securities, whenever for purposes of this
Indenture any action may be taken by the Holders of a specified percentage in
aggregate Principal amount of Securities of all Series or all Series affected by
a particular action at the time outstanding and, at such time, there are
outstanding Securities of any Series which are denominated in a coin or currency
other than Dollars (including ECUs), then the Principal amount of Securities of
such Series which shall be deemed to be outstanding for the purpose of taking
such action shall be that amount of Dollars that could be obtained for such
amount at the Market Exchange Rate at such time. For purposes of this Section
10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in New York
City for cable transfers of that currency as published by the Federal Reserve
Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate
shall mean the rate of exchange determined by the Commission of the European
Union (or any successor thereto) as published in the Official Journal of the
European union (such publication or any successor publication, the “Journal”).
If such Market Exchange Rate is not available for any reason with respect to
such currency, the Trustee shall use, in its sole discretion and without
liability on its part, such quotation of the Federal Reserve Bank of New York
or, in the case of ECUs, the rate of exchange as published in the Journal, as of
the most recent available date, or quotations or, in the case of ECUs, rates of
exchange from one or more major banks in The City of New York or in the country
of issue of the currency in question or, in the case of ECUs, in Luxembourg or
such other quotations or, in the case of ECUs, rates of exchange as the Trustee,
upon consultation with the Company, shall deem appropriate. The provisions of
this paragraph shall apply in determining the equivalent Principal amount in
respect of Securities of a Series denominated in currency other than Dollars in
connection with any action taken by Holders of Securities pursuant to the terms
of this Indenture.
All
decisions and determinations of the Trustee regarding the Market Exchange Rate
or any alternative determination provided for in the preceding paragraph shall
be in its sole discretion and shall, in the absence of manifest error, be
conclusive to the extent permitted by law for all purposes and irrevocably
binding upon the Company and all Holders.
Section
10.16.
Judgment
Currency.
The
Company agrees, to the fullest extent that it may effectively do so under
applicable law, that (a) if for the purpose of obtaining judgment in any court
it is necessary to convert the sum due in respect of the Principal of or
interest or other amount on the Securities of any Series (the “Required
Currency”) into a currency in which a judgment will be rendered (the “Judgment
Currency”), the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New
York the Required Currency with the Judgment Currency on the day on which final
unappealable judgment is entered, unless such day is not a New York Banking Day,
then, the rate of exchange used shall be the rate at which in accordance with
normal banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable, and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a
Legal Holiday in The City of New York on which banking institutions are
authorized or required by law, regulation or executive order to
close.
ARTICLE
XI.
SINKING
FUNDS
Section
11.1.
Applicability of
Article.
The
provisions of this Article shall be applicable to any sinking fund for the
retirement of the Securities of a Series, except as otherwise permitted or
required by any form of Security of such Series issued pursuant to this
Indenture.
The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any Series is herein referred to as a “Mandatory Sinking Fund
Payment” and any other amount provided for by the terms of Securities of such
Series is herein referred to as an “Optional Sinking Fund Payment.” If provided
for by the terms of Securities of any Series, the cash amount of any sinking
fund payment may be subject to reduction as provided in Section 11.2. Each
sinking fund payment shall be applied to the redemption of Securities of any
Series as provided for by the terms of the securities of such
Series.
Section
11.2.
Satisfaction of Sinking Fund
Payments with Securities.
The
Company may, in satisfaction of all or any part of any sinking fund payment with
respect to the Securities of any Series to be made pursuant to the terms of such
Securities (1) deliver outstanding Securities of such Series to which such
sinking fund payment is applicable (other than any of such Securities previously
called for mandatory sinking fund redemption) and (2) apply as credit Securities
of such Series to which such sinking fund payment is applicable and which have
been redeemed either at the election of the Company pursuant to the terms of
such Series of Securities (except pursuant to any mandatory sinking fund) or
through the application of permitted Optional Sinking Fund Payments or other
optional redemptions pursuant to the terms of such Securities, provided that
such Securities have not been previously so credited. Such Securities shall be
received by the Trustee, together with an Officers’ Certificate with respect
thereto, not later than 15 days prior to the date on which the Trustee begins
the process of selecting Securities for redemption, and shall be credited for
such purpose by the Trustee at the price specified in such Securities for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly. If as a result of the delivery or
credit of Securities in lieu of cash payments pursuant to this Section 11.2, the
Principal amount of Securities of such Series to be redeemed in order to exhaust
the aforesaid cash payment shall be less than $100,000, the Trustee need not
call Securities of such Series for redemption, except upon receipt of a Company
Order that such action be taken, and such cash payment shall be held by the
Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall from
time to time upon receipt of a Company Order pay over and deliver to the Company
any cash payment so being held by the Trustee or such Paying Agent upon delivery
by the Company to the Trustee of Securities of that Series purchased by the
Company having an unpaid Principal amount equal to the cash payment required to
be released to the Company.
Section
11.3.
Redemption of Securities for
Sinking Fund.
Not less
than 45 days (unless otherwise indicated in the Board Resolution, supplemental
indenture hereto or Officers’ Certificate in respect of a particular Series of
Securities) prior to each sinking fund payment date for any Series of
Securities, the Company will deliver to the Trustee an Officers’ Certificate
specifying the amount of the next ensuing Mandatory Sinking Fund Payment for
that Series pursuant to the terms of that Series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting of Securities of that
Series pursuant to Section 11.2., and the optional amount, if any, to be added
in cash to the next ensuing Mandatory Sinking Fund Payment, and the Company
shall thereupon be obligated to pay the amount therein specified. Not less than
30 days (unless otherwise indicated in the Board Resolution, Officers’
Certificate or supplemental indenture in respect of a particular Series of
Securities) before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.2 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 3.3. Such notice having been duly given, the redemption of such
Securities shall stated in Sections 3.4, 3.5 and 3.6.
[The
Remainder of this page is intentionally left blank.]
IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the day and year first above written.
|
|
|
Euroseas
Ltd.
|
|
|
|
By:
|
[TBD]
|
|
|
|
|
|
|
|
Name:
|
[TBD]
|
|
Its:
|
[Chief
Accounting Officer and Company Secretary]
|
|
|
|
|
[Name
of Trustee]
|
|
|
|
|
By:
|
[TBD]
|
|
|
|
By:___________________________
Name:
Its:
EXHIBIT
4.7
FORM OF
SUBORDINATED SECURITY DEBT INDENTURE
EUROSEAS
LTD.
SUBORDINATED
INDENTURE
Dated as
of ______, 20__
--------------------------------
[Name of
Trustee]
Trustee
TABLE
OF CONTENTS
|
DEFINITIONS
AND INCORPORATION BY REFERENCE
|
1
|
|
|
|
|
|
Section
1.1
|
Definitions
|
1
|
|
Section
1.2
|
Other
Definitions
|
5
|
|
Section
1.3
|
Incorporation
by Reference of Trust Indenture Act
|
6
|
|
Section
1.4
|
Rules
of Construction
|
6
|
|
|
|
ARTICLE
II
|
THE
SECURITIES
|
7
|
|
|
|
|
|
Section
2.1
|
Issuable
in Series
|
7
|
|
Section
2.2
|
Establishment
of Terms of Series of Securities
|
7
|
|
Section
2.3
|
Execution
and Authentication
|
9
|
|
Section
2.4
|
Registrar
and Paying Agent
|
10
|
|
Section
2.5
|
Paying
Agent to Hold Money in Trust
|
10
|
|
Section
2.6
|
Securityholder
Lists
|
11
|
|
Section
2.7
|
Transfer
and Exchange
|
11
|
|
Section
2.8
|
Mutilated,
Destroyed, Lost and Stolen Securities
|
11
|
|
Section
2.9
|
Outstanding
Securities
|
12
|
|
Section
2.10
|
Treasury
Securities
|
13
|
|
Section
2.11
|
Temporary
Securities
|
13
|
|
Section
2.12
|
Cancellation
|
13
|
|
Section
2.13
|
Defaulted
Interest
|
13
|
|
Section
2.14
|
Global
Securities
|
13
|
|
Section
2.15
|
CUSIP
Numbers
|
15
|
|
|
|
|
ARTICLE
III
|
REDEMPTION
|
15
|
|
|
|
|
|
Section
3.1
|
Notice
to Trustee
|
15
|
|
Section
3.2
|
Selection
of Securities to be Redeemed
|
15
|
|
Section
3.3
|
Notice
of Redemption
|
15
|
|
Section
3.4
|
Effect
of Notice of Redemption
|
16
|
|
Section
3.5
|
Deposit
of Redemption Price
|
16
|
|
Section
3.6
|
Securities
Redeemed in Part
|
16
|
|
|
|
|
ARTICLE
IV
|
COVENANTS
|
16
|
|
|
|
|
|
Section
4.1
|
Payment
of Principal and Interest
|
16
|
|
Section
4.2
|
SEC
Reports
|
17
|
|
Section
4.3
|
Compliance
Certificate
|
17
|
|
Section
4.4
|
Stay,
Extension and Usury Laws
|
17
|
|
Section
4.5
|
Corporate
Existence
|
17
|
|
Section
4.6
|
Taxes
|
18
|
|
|
|
|
ARTICLE
V
|
SUCCESSORS
|
18
|
|
|
|
|
|
Section
5.1
|
When
Company May Merge, Etc
|
18
|
|
Section
5.2
|
Successor
Corporation Substituted
|
18
|
|
|
|
|
ARTICLE
VI
|
DEFAULTS
AND REMEDIES
|
20
|
|
|
|
|
|
Section
6.1
|
Events
of Default
|
20
|
|
Section
6.2
|
Acceleration
of Maturity; Rescission and Annulment
|
21
|
|
Section
6.3
|
Collection
of Indebtedness and Suits for Enforcement by Trustee
|
21
|
|
Section
6.4
|
Trustee
May File Proofs of Claim
|
22
|
|
Section
6.5
|
Trustee
May Enforce Claims Without Possession of
Securities
|
22
|
|
Section
6.6
|
Application
of Money Collected
|
23
|
|
Section
6.7
|
Limitation
on Suits
|
23
|
|
Section
6.8
|
Unconditional
Right of Holders to Receive Principal and Interest
|
23
|
|
Section
6.9
|
Restoration
of Rights and Remedies
|
24
|
|
Section
6.10
|
Rights
and Remedies Cumulative
|
24
|
|
Section
6.11
|
Delay
or Omission Not Waiver
|
24
|
|
Section
6.12
|
Control
by Holders
|
24
|
|
Section
6.13
|
Waiver
of Past Defaults
|
25
|
|
Section
6.14
|
Undertaking
for Costs
|
25
|
|
|
|
|
ARTICLE
VII
|
TRUSTEE
|
25
|
|
|
|
|
|
Section
7.1
|
Duties
of Trustee
|
25
|
|
Section
7.2
|
Rights
of Trustee
|
27
|
|
Section
7.3
|
Individual
Rights of Trustee
|
27
|
|
Section
7.4
|
Trustee’s
Disclaimer
|
27
|
|
Section
7.5
|
Notice
of Defaults
|
28
|
|
Section
7.6
|
Reports
by Trustee to Holders
|
28
|
|
Section
7.7
|
Compensation
and Indemnity
|
28
|
|
Section
7.8
|
Replacement
of Trustee
|
29
|
|
Section
7.9
|
Successor
Trustee by Merger, etc
|
30
|
|
Section
7.10
|
Eligibility;
Disqualification
|
30
|
|
Section
7.11
|
Preferential
Collection of Claims Against Company
|
30
|
|
|
|
|
ARTICLE
VIII
|
SATISFACTION
AND DISCHARGE; DEFEASANCE
|
30
|
|
|
|
|
|
Section
8.1
|
Satisfaction
and Discharge of Indenture
|
30
|
|
Section
8.2
|
Application
of Trust Funds; Indemnification
|
31
|
|
Section
8.3
|
Legal
Defeasance of Securities of any Series
|
32
|
|
Section
8.4
|
Covenant
Defeasance
|
33
|
|
Section
8.5
|
Repayment
to Company
|
35
|
|
|
|
|
ARTICLE
IX
|
AMENDMENTS
AND WAIVERS
|
35
|
|
|
|
|
|
Section
9.1
|
Without
Consent of Holders
|
35
|
|
Section
9.2
|
With
Consent of Holders
|
35
|
|
Section
9.3
|
Limitations
|
36
|
|
Section
9.4
|
Compliance
with Trust Indenture Act
|
37
|
|
Section
9.5
|
Revocation
and Effect of Consents
|
37
|
|
Section
9.6
|
Notation
on or Exchange of Securities
|
37
|
|
Section
9.7
|
Trustee
Protected
|
37
|
|
|
|
|
ARTICLE
X
|
MISCELLANEOUS
|
37
|
|
|
|
|
|
Section
10.1
|
Trust
Indenture Act Controls
|
37
|
|
Section
10.2
|
Notices
|
38
|
|
Section
10.3
|
Communication
by Holders with Other Holders
|
38
|
|
Section
10.4
|
Certificate
and opinion as to Conditions Precedent
|
39
|
|
Section
10.5
|
Statements
Required in Certificate or opinion
|
39
|
|
Section
10.6
|
Rules
by Trustee and Agents
|
39
|
|
Section
10.7
|
Legal
Holidays
|
39
|
|
Section
10.8
|
No
Recourse Against Others
|
39
|
|
Section
10.9
|
Counterparts
|
40
|
|
Section
10.10
|
Governing
Laws
|
40
|
|
Section
10.11
|
No
Adverse Interpretation of Other Agreements
|
40
|
|
Section
10.12
|
Successors
|
40
|
|
Section
10.13
|
Severability
|
40
|
|
Section
10.14
|
Table
of Contents, Headings, Etc
|
40
|
|
Section
10.15
|
Securities
in a Foreign Currency or in ECU
|
40
|
|
Section
10.16
|
Judgment
Currency
|
41
|
|
|
|
|
ARTICLE
XI
|
SINKING
FUNDS
|
42
|
|
|
|
|
|
Section
11.1
|
Applicability
of Article
|
42
|
|
Section
11.2
|
Satisfaction
of Sinking Fund Payments with Securities
|
42
|
|
Section
11.3
|
Redemption
of Securities for Sinking Fund
|
43
|
Indenture
dated as of _________, 20__ between Euroseas Ltd., a company organized under the
laws of the Marshall Islands (the “Company”) and [Name of Trustee], a
__________________ (the “Trustee”). Each party agrees as follows for
the benefit of the other party and for the equal and ratable benefit of the
Holders of the Securities issued under this Indenture.
Each
party agrees as follows for the benefit of the other party and for the equal and
ratable benefit of the Holders of the Securities issued under this
Indenture.
ARTICLE
I
DEFINITIONS
AND INCORPORATION BY REFERENCE
Section
1.1
Definitions.
“Additional
Amounts” means any additional amounts which are required hereby or by any
Security, under circumstances specified herein or therein, to be paid by the
Company in respect of certain taxes imposed on Holders specified therein and
which are owing to such Holders.
“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
“Agent”
means any Registrar, Paying Agent or Service Agent.
“Authorized
Newspaper” means a newspaper in an official language of the country of
publication customarily published at least once a day for at least five days in
each calendar week and of general circulation in the place in connection with
which the term is used. If it shall be impractical in the opinion of the Trustee
to make any publication of any notice required hereby in an Authorized
Newspaper, any publication or other notice in lieu thereof that is made or given
by the Trustee shall constitute a sufficient publication of such
notice.
“Bearer
Security” means any Security, including any interest coupon appertaining
thereto, that does not provide for the identification of the Holder
thereof.
“Board of
Directors” means the Board of Directors of the Company or any duly authorized
committee thereof.
“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been adopted by the Board of
Directors or pursuant to authorization by the Board of Directors and to be in
full force and effect on the date of the certificate and delivered to the
Trustee.
“Business
Day” means a day (other than Saturday or Sunday) on which the Depository and
banks in the City of New York, and banks in the city in which the Corporate
Trust Office of the Trustee is located, is open for business.
“Certificated
Securities” means Securities in the form of physical, certificated Securities in
registered form.
“Company”
means the party named as such above until a successor replaces it and thereafter
means the successor.
“Company
Order” means a written order signed in the name of the Company by two Officers,
one of whom must be the Company’s principal executive officer, principal
financial officer or principal accounting officer.
“Company
Request” means a written request signed in the name of the Company by its
Chairman of the Board, a President or a Vice President, and by its Chief
Financial Officer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
“Corporate
Trust Office” means the office of the Trustee at which at any
particular time its corporate trust business shall be
principally administered.
“Debt” of
any Person as of any date means, without duplication, all indebtedness of such
Person in respect of borrowed money, including all interest, fees and expenses
owed in respect thereto (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), or evidenced
by bonds, notes, debentures or similar instruments.
“Default”
means any event which is, or after notice or passage of time would be, an Event
of Default.
“Depository”
means, with respect to the Securities of any Series issuable or issued in whole
or in part in the form of one or more Global Securities, the Person designated
as Depository for such Series by the Company, which Depository shall be a
clearing agency registered under the Exchange Act; and if at any time there is
more than one such Person, “Depository” as used with respect to the Securities
of any Series shall mean the Depository with respect to the Securities of such
Series.
“Discount
Security” means any Security that provides for an amount less than the stated
Principal amount thereof to be due and payable upon declaration of acceleration
of the Maturity thereof pursuant to Section 6.2.
“Dollars”
means the currency of The United States of America.
“ECU”
means the European Currency Unit as determined by the Commission of the European
Union.
“Event of
Default” see Section 6.1.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Foreign
Currency” means any currency or currency unit issued by a government other than
the government of The United States of America.
“Foreign
Government Obligations” means with respect to Securities of any Series that are
denominated in a Foreign Currency, (i) direct obligations of the government that
issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged
or (ii)
obligations of a Person controlled or supervised by or acting as an agency or
instrumentality of such government the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by such
government, which, in either case under clauses (i) or (ii), are not callable or
redeemable at the option of the issuer thereof.
“Global Security”
or “Global Securities” means a Security or Securities, as the case
may be, in the form established pursuant to Section 2.2 evidencing all or part
of a Series of Securities, issued to the Depository for such Series or its
nominee, and registered in the name of such Depository or nominee.
“Holder”
or “Securityholder” means a Person in whose name a Security is registered or the
holder of a Bearer Security.
“Indenture”
means this Indenture as amended from time to time and shall include the form and
terms of particular Series of Securities established as contemplated
hereunder.
“Maturity,”
when used with respect to any Security or installment of Principal thereof,
means the date on which the Principal of such Security or such installment of
Principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption, notice
of option to elect repayment or otherwise.
“Officer”
means the Chairman of the Board, the President, any Vice-President, the
Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary of
the Company.
“Officers’
Certificate” means a certificate signed by two Officers, one of whom must be the
Company’s principal executive officer, principal financial officer or principal
accounting officer.
“Opinion
of Counsel” means a written opinion of legal counsel who is reasonably
acceptable to the Trustee. Such legal counsel may be an employee of or counsel
to the Company.
“Participants”
means those Persons designated as participants by the Depositary.
“Person”
means any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
“Principal”
of a Security means the principal of the Security plus, when appropriate, the
premium, if any, on, and any Additional Amounts in respect of, the
Security.
“Responsible
Officer” means any officer of the Trustee in its Corporate Trust Office and also
means, with respect to a particular corporate trust matter, any other officer to
whom any corporate trust matter is referred because of his or her knowledge of
and familiarity with a particular subject.
“SEC”
means the Securities and Exchange Commission.
“Security”
or “Securities” means the debentures, notes or other debt instruments of the
Company of any Series authenticated and delivered under this
Indenture.
“Series”
or “Series of Securities” means each series of debentures, notes or other debt
instruments of the Company created pursuant to Sections 2.1 and 2.2
hereof.
“Significant
Subsidiary” means (i) any direct or indirect Subsidiary of the Company that
would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended,
as such regulation is in effect on the date hereof, or (ii) any group of direct
or indirect Subsidiaries of the Company that, taken together as a group, would
be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such
regulation is in effect on the date hereof.
“Stated
Maturity” when used with respect to any Security or any installment of Principal
thereof or interest thereon, means the date specified in such Security as the
fixed date on which the Principal of such Security or such installment of
Principal or interest is due and payable.
“Subsidiary”
of any specified Person means any corporation of which at least a majority of
the outstanding stock having by the terms thereof ordinary voting power for the
election of directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by such Person, or by one or more other
Subsidiaries, or by such Person and one or more other Subsidiaries.
“TIA”
means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in
effect on the date of this Indenture; provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the
extent required by any such amendment, the Trust Indenture Act as so
amended.
“Trustee”
means the Person named as the “Trustee” in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Trustee” shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, “Trustee” as used with respect to the Securities of
any Series shall mean the Trustee with respect to Securities of that
Series.
“U.S.
Government Obligations” means securities which are (i) direct obligations of The
United States of America for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of The United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by The
United States of America, and which in the case of (i) and (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.
Section
1.2
Other
Definitions.
TERM
|
DEFINED
IN SECTION
|
|
|
“Bankruptcy
Law”
|
6.1
|
“Custodian”
|
6.1
|
“Event
of Default”
|
6.1
|
“Journal”
|
10.15
|
TERM
|
DEFINED
IN SECTION
|
|
|
“Judgment
Currency”
|
10.16
|
“Legal
Holiday”
|
10.7
|
“Mandatory
Sinking Fund Payment”
|
11.1
|
“Market
Exchange Rate”
|
10.15
|
“New
York Banking Day”
|
10.16
|
“Optional
Sinking Fund Payment”
|
11.1
|
“Paying
Agent”
|
2.4
|
“Registrar”
|
2.4
|
“Required
Currency”
|
10.16
|
“Service
Agent”
|
2.4
|
“Successor
Person”
|
5.1
|
Section
1.3
Incorporation
by Reference of Trust Indenture Act.
Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
“Commission”
means the SEC.
“Indenture
Securities” means the Securities.
“Indenture
Securityholder” means a Securityholder.
“Indenture
to be Qualified” means this Indenture.
“Indenture
Trustee” or “institutional trustee” means the Trustee.
“Obligor”
on the indenture securities means the Company and any successor obligor upon the
Securities.
All other
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA and not
otherwise defined herein are used herein as so defined.
Section
1.4
Rules of
Construction.
Unless
the context otherwise requires:
(a) a
term has the meaning assigned to it;
(b) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles;
(c) references
to “generally accepted accounting principles” shall mean generally accepted
accounting principles in effect as of the time when and for the period as to
which such accounting principles are to be applied;
(d) “or”
is not exclusive;
(e) words
in the singular include the plural, and in the plural include the singular;
and
(f) provisions
apply to successive events and transactions.
ARTICLE
II
THE
SECURITIES
Section
2.1
Issuable in
Series.
The
aggregate principal amount of Securities that may be authenticated and delivered
under this Indenture is unlimited. The Securities may be issued in one or more
Series. All Securities of a Series shall be identical except as may be set forth
in a Board Resolution, a supplemental indenture or an Officers’ Certificate
detailing the adoption of the terms thereof pursuant to the authority granted
under a Board Resolution. In the case of Securities of a Series to be issued
from time to time, the Board Resolution, Officers’ Certificate or supplemental
indenture may provide for the method by which specified terms (such as interest
rate, maturity date, record date or date from which interest shall accrue) are
to be determined. Securities may differ between Series in respect of any
matters, provided that all Series of Securities shall be equally and ratably
entitled to the benefits of the Indenture.
Section
2.2
Establishment
of Terms of Series of Securities.
At or
prior to the issuance of any Securities within a Series, the following shall be
established (as to the Series generally, in the case of Subsection 2.2.1 and
either as to such Securities within the Series or as to the Series generally in
the case of Subsections 2.2.2 through 2.2.20) by a Board Resolution, a
supplemental indenture or an Officers’ Certificate pursuant to authority granted
under a Board Resolution:
2.2.1 the
title, designation, aggregate Principal amount and authorized denominations of
the Securities of the Series;
2.2.2 the
price or prices, (expressed as a percentage of the aggregate Principal amount
thereof) at which the Securities of the Series will be issued;
2.2.3 the
date or dates on which the Principal of the Securities of the Series is
payable;
2.2.4 the
rate or rates (which may be fixed or variable) per annum or, if applicable, the
method used to determine such rate or rates (including, but not limited to, any
commodity, commodity index, stock exchange index or financial index) at which
the Securities of the Series shall bear interest, if any, the date or dates from
which such interest, if any, shall commence and be payable and any regular
record date for the interest payable on any interest payment date;
2.2.5 any
optional or mandatory sinking fund provisions or conversion or exchangeability
provisions upon which Securities of the Series shall be redeemed or
purchased;
2.2.6 the
date, if any, after which and the price or prices at which the Securities of the
Series may be optionally redeemed or must be mandatorily redeemed and any other
terms and provisions of optional or mandatory provisions;
2.2.7 if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Securities of the Series shall be
issuable;
2.2.8 if
other than the full Principal amount, the portion of the Principal amount of the
Securities of the Series that shall be payable upon declaration of acceleration
pursuant to Section 6.2 or provable in bankruptcy;
2.2.9 any
addition to or change in the Events of Default which applies to any Securities
of the Series and any change in the right of the Trustee or the requisite
Holders of such Securities to declare the Principal amount thereof due and
payable pursuant to Section 6.2;
2.2.10 the
currency or currencies, including composite currencies, in which payments of
Principal of, premium or interest, if any, on the Securities of the Series will
be payable, if other than the currency of the United States of
America;
2.2.11 if
payments of Principal of, premium or interest, if any, on the Securities of the
Series will be payable, at the Company’s election or at the election of any
Holder, in a currency other than that in which the Securities of the Series are
stated to be payable, the period or periods within which, and the terms and
conditions upon which, the election may be made;
2.2.12 if
payments of interest, if any, on the Securities of the Series will be payable,
at the Company’s election or at the election of any Holder, in cash or
additional securities, and the terms and conditions upon which the election may
be made;
2.2.13 if
denominated in a currency or currencies other than the currency of the United
States of America, the equivalent price of the Securities of the Series in the
currency of the United States of America for purposes of determining the voting
rights of Holders of the Securities of the Series;
2.2.14 if
the amount of payments of Principal, premium or interest may be determined with
reference to an index, formula or other method based on a coin or currency other
than that in which the Securities of the Series are stated to be payable, the
manner in which the amounts will be determined;
2.2.15 any
restrictive covenants or other material terms relating to the Securities of the
Series, which may not be inconsistent with the Indenture;
2.2.16 whether
the Securities of the Series will be issued in the form of Global Securities or
certificates in registered or bearer form;
2.2.17 any
terms with respect to subordination;
2.2.18 any
listing on any securities exchange or quotation system;
2.2.19 additional
provisions, if any, related to defeasance and discharge of the offered debt
securities; and
2.2.20 the
applicability of any guarantees.
All
Securities of any one Series need not be issued at the same time and may be
issued from time to time, consistent with the terms of this Indenture, if so
provided by or pursuant to the Board Resolution, supplemental indenture or
Officers’ Certificate referred to above, and the authorized
Principal
amount of
any Series may not be increased to provide for issuance of additional Securities
of such Series, unless otherwise provided in such Board Resolution, supplemental
Indenture or Officers’ Certificate.
Section
2.3
Execution and
Authentication.
Two
Officers shall sign the Securities for the Company by manual or facsimile
signature.
If an
Officer whose signature is on a Security no longer holds that office at the time
the Security is authenticated, the Security shall
nevertheless be valid.
A
Security shall not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.
The
Trustee shall at any time, and from time to time, authenticate Securities for
original issue in the Principal amount provided in the Board Resolution,
supplemental indenture hereto or Officers’ Certificate, upon receipt by the
Trustee of a Company Order. Such Company Order may
authorize authentication and delivery pursuant to oral or electronic
instructions from the Company or its duly authorized agent or agents, which oral
instructions shall be promptly confirmed in writing. Each Security shall be
dated the date of its authentication unless otherwise provided by a Board
Resolution, a supplemental indenture hereto or an Officers’
Certificate.
The
aggregate Principal amount of Securities of any Series outstanding at any time
may not exceed any limit upon the maximum Principal amount for such Series set
forth in the Board Resolution, supplemental indenture hereto or Officers’
Certificate delivered pursuant to Section 2.2, except as provided in Section
2.8.
Prior to
the issuance of Securities of any Series, the Trustee shall have received and
(subject to Section 7.2) shall be fully protected in relying on: (a) the Board
Resolution, supplemental indenture hereto or Officers, Certificate establishing
the form of the Securities of that Series or of Securities within that Series
and the terms of the Securities of that Series or of Securities within that
Series, (b) an Officers’ Certificate complying with Section 10.4, and (c) an
Opinion of Counsel complying with Section 10.4.
The
Trustee shall have the right to decline to authenticate and deliver any
Securities of such Series: (a) if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken; or (b) if the Trustee in
good faith by its board of directors or trustees, executive committee or a trust
committee of directors and/or vice-presidents shall determine that such action
would expose the Trustee to personal liability to Holders of any then
outstanding Series of Securities.
The
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
Section
2.4
Registrar and
Paying Agent.
The
Company shall maintain, with respect to each Series of Securities, at the place
or places specified with respect to such Series pursuant to Section 2.2, an
office or agency where Securities
of such
Series may be presented or surrendered for payment (“Paying Agent”), where
Securities of such Series may be surrendered for registration of transfer or
exchange (“Registrar”) and where notices and demands to or upon the Company in
respect of the Securities of such Series and this Indenture may be served
(“Service Agent”). The Registrar shall keep a register with respect to each
Series of Securities and to their transfer and exchange. The Company will give
prompt written notice to the Trustee of the name and address, and any change in
the name or address, of each Registrar, Paying Agent or Service Agent. If at any
time the Company shall fail to maintain any such required Registrar, Paying
Agent or Service Agent or shall fail to furnish the Trustee with the name and
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The
Company may also from time to time designate one or more co-registrars,
additional Paying Agents or additional Service Agents and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligations to
maintain a Registrar, Paying Agent and Service Agent in each place so specified
pursuant to Section 2.2 for Securities of any Series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the name or address of any such co-registrar,
additional Paying Agent or additional Service Agent. The term “Registrar”
includes any co-registrar; the term “Paying Agent” includes any additional
paying agent; and the term “Service Agent” includes any additional service
agent.
The
Company hereby appoints the Trustee the initial Registrar, Paying Agent and
Service Agent for each Series unless another Registrar, Paying Agent or Service
Agent, as the case may be, is appointed prior to the time Securities of that
Series are first issued.
Section
2.5
Paying Agent
to Hold Money in Trust.
The
Company shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust, for the benefit of
Securityholders of any Series of Securities, or the Trustee, all money held by
the Paying Agent for the payment of Principal of or interest on the Series of
Securities, and will notify the Trustee of any Default by the Company in making
any such payment. While any such Default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of Securityholders of any Series of Securities all money
held by it as Paying Agent.
Section
2.6
Securityholder
Lists.
The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Securityholders
of each Series of Securities and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least ten days before each interest payment date and at such other times as the
Trustee may request in writing a list, in such form and as of such date as the
Trustee may reasonably require, of the names and addresses of Securityholders of
each Series of Securities.
Section
2.7
Transfer and
Exchange.
Where
Securities of a Series are presented to the Registrar or a co-registrar with a
request to register a transfer or to exchange them for an equal Principal amount
of Securities of the same Series, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trustee shall authenticate
Securities at the Registrar’s request. No service charge shall be made for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer tax or
similar governmental charge payable upon exchanges pursuant to Sections 2.11,
3.6 or 9.6).
Neither
the Company nor the Registrar shall be required (a) to issue, register the
transfer of, or exchange Securities of any Series for the period beginning at
the opening of business fifteen days immediately preceding the mailing of a
notice of redemption of Securities of that Series selected for redemption and
ending at the close of business on the day of such mailing, or (b) to register
the transfer of or exchange Securities of any Series selected, called or being
called for redemption as a whole or the portion being redeemed of any such
Securities selected, called or being called for redemption in part.
Section
2.8
Mutilated,
Destroyed, Lost and Stolen Securities.
If any
mutilated Security is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same Series and of like tenor and Principal amount and bearing a number
not contemporaneously outstanding.
If there
shall be delivered to the Company and the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security and (ii) such
security or indemnity as may be required by them to save each of them and any
Agent of either of them harmless, then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall authenticate
and make available for delivery, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same Series and of like tenor and Principal
amount and bearing a number not contemporaneously outstanding.
In case
any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a
new Security, pay such Security.
Upon the
issuance of any new Security under this Section, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every new
Security of any Series issued pursuant to this Section in lieu of any destroyed,
lost or stolen Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of that Series duly issued hereunder.
The
provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities.
Section
2.9
Outstanding
Securities.
The
Securities outstanding at any time are all the Securities authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest on a Global Security effected by the Trustee in
accordance with the provisions hereof and those described in this Section as not
outstanding.
If a
Security is replaced pursuant to Section 2.8, it ceases to be outstanding until
the Trustee receives proof satisfactory to it that the replaced Security is held
by a bona fide purchaser.
If the
Paying Agent (other than the Company, a Subsidiary or an Affiliate of any
thereof) holds on the Maturity of Securities of a Series money sufficient to pay
such Securities payable on that date, then on and after that date such
Securities of the Series cease to be outstanding and interest on them ceases to
accrue.
A
Security does not cease to be outstanding because the Company or an Affiliate
holds the Security.
In
determining whether the Holders of the requisite Principal amount of outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, the Principal amount of a Discount Security that
shall be deemed to be outstanding for such purposes shall be the amount of the
Principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the Maturity thereof
pursuant to Section 6.2.
Section
2.10
Treasury
Securities.
In
determining whether the Holders of the required Principal amount of Securities
of a Series have concurred in any request, demand, authorization, direction,
notice, consent or waiver Securities of a Series owned by the Company or an
Affiliate shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver only Securities of a Series
that the Trustee knows are so owned shall be so disregarded.
Section
2.11
Temporary
Securities.
Until
definitive Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary securities upon a Company Order. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
without unreasonable delay, the Company shall prepare and the Trustee upon
request shall authenticate definitive Securities of the same Series and date of
Maturity in exchange for temporary Securities. Until so exchanged, temporary
securities shall have the same rights under this Indenture as the definitive
Securities.
Section
2.12
Cancellation.
The
Company at any time may deliver Securities to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Securities surrendered for transfer, exchange, payment,
replacement or cancellation and shall destroy such canceled Securities (subject
to the record retention requirement of the Exchange Act) and deliver a
certificate of such destruction to the Company, unless the Company otherwise
directs. The Company may not issue new Securities to replace Securities that it
has paid or delivered to the Trustee for cancellation.
Section
2.13
Defaulted
Interest.
If the
Company defaults in a payment of interest on a Series of Securities, it shall
pay the defaulted interest, plus, to the extent permitted by law, any interest
payable on the defaulted interest, to the Persons who are Securityholders of the
Series on a subsequent special record date. The Company shall fix the record
date and payment date. At least 30 days before the record date, the Company
shall mail to the Trustee and to each Securityholder of the Series a notice that
states the record date, the payment date and the amount of interest to be paid.
The Company may pay defaulted interest in any other lawful manner.
Section
2.14
Global
Securities.
2.14.1 Terms
of Securities. A Board Resolution, a supplemental indenture hereto or
an Officers’ Certificate shall establish whether the Securities of a Series
shall be issued in whole or in part in the form of one or more
Global Securities and the Depository for such Global Security or
Securities.
2.14.2 Transfer
and Exchange. Notwithstanding any provisions to the contrary
contained in Section 2.7 of the Indenture and in addition thereto, any Global
Security shall be exchangeable pursuant to Section 2.7 of the Indenture for
Securities registered in the names of Holders other than the Depository for such
Security or its nominee only if (i) such Depository notifies the Company that it
is unwilling or unable to continue as Depository for such Global Security or if
at any time such Depository ceases to be a clearing agency registered under the
Exchange Act, and, in either case, the Company fails to appoint a successor
Depository within 90 days of such event, (ii) the Company executes and delivers
to the Trustee an Officers’ Certificate to the effect that such Global Security
shall be so exchangeable or (iii) an Event of Default with respect to the
Securities represented by such Global Security shall have happened and be
continuing. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Securities registered in such names as the
Depository shall direct in writing in an aggregate Principal amount equal to the
principal amount of the Global Security with like tenor and terms.
Except as
provided in this Section 2.14.2, a Global Security may not be transferred except
as a whole by the Depository with respect to such Global Security to a nominee
of such Depository, by a nominee of such Depository to such Depository or
another nominee of such Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such a successor Depository.
2.14.3 Legend. Any
Global Security issued hereunder shall bear a legend in substantially the
following form:
“This
Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of the Depository or a nominee of the
Depository. This Security is exchangeable for Securities registered in the name
of a Person other than the Depository or its nominee only in the limited
circumstances described in the Indenture, and may not be transferred except as a
whole by the Depository to a nominee of the Depository, by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such a
successor Depository.”
2.14.4 Acts
of Holders. The Depository, as a Holder, may appoint agents and
otherwise authorize Participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a Holder
is entitled to give or take under the Indenture.
2.14.5 Payments. Notwithstanding
the other provisions of this Indenture, unless otherwise specified as
contemplated by Section 2.2, payment of the Principal of and interest, if any,
on any Global Security shall be made to the Holder thereof at their registered
office.
2.14.6 Consents,
Declaration and Directions. Except as provided in Section 2.14.5, the
Company, the Trustee and any Agent shall treat a Person as the Holder of such
Principal amount of outstanding Securities of such Series represented by a
Global Security as shall be specified in a written statement of the Depositary
with respect to such Global Security, for purposes of obtaining any consents,
declarations, waivers or directions required to be given by the Holders pursuant
to this Indenture.
Section
2.15
CUSIP
Numbers.
The
Company in issuing the Securities may use “CUSIP” numbers (if then generally in
use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other elements of identification printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such numbers.
ARTICLE
III
REDEMPTION
Section
3.1
Notice to
Trustee.
The
Company may, with respect to any Series of Securities, reserve the right to
redeem and pay the Series of Securities or may covenant to redeem and pay the
Series of Securities or any part thereof prior to the Stated Maturity thereof at
such time and on such terms as provided for in such Securities. If a Series of
Securities is redeemable and the Company wants or is obligated to redeem prior
to the Stated Maturity thereof all or part of the Series of Securities pursuant
to the terms of such Securities, it shall notify the Trustee of the redemption
date and the Principal amount of Series of Securities to be redeemed. The
Company shall give the notice at least 45 days before the redemption date (or
such shorter notice as may be acceptable to the Trustee).
Section
3.2
Selection of
Securities to be Redeemed.
Unless
otherwise indicated for a particular Series by a Board Resolution, a
supplemental indenture or an Officers’ Certificate, if less than all the
Securities of a Series are to be redeemed, the Trustee shall select the
Securities of the Series to be redeemed in any manner that the Trustee deems
fair and appropriate. The Trustee shall make the selection from Securities of
the Series outstanding not previously called for redemption. The Trustee may
select for redemption portions of the Principal of Securities of the Series that
have denominations larger than $1,000. Securities of the Series and portions of
them it selects shall be in amounts of $1,000 or whole multiples of $1,000 or,
with respect to Securities of any Series issuable in other denominations
pursuant to Section 2.2.7, the minimum Principal denomination for each Series
and integral multiples thereof. Provisions of this Indenture
that
apply to
Securities of a Series called for redemption also apply to portions of
Securities of that Series called for redemption.
Section
3.3
Notice of
Redemption.
Unless otherwise indicated
for a particular Series by Board Resolution, a supplemental indenture
hereto or an Officers’ Certificate, at least 30 days but not more than 60 days
before a redemption date, the Company shall mail a notice of redemption by
first-class mail to each Holder whose Securities are to be redeemed and if any
Bearer Securities are outstanding, publish on one occasion a notice in an
Authorized Newspaper.
The
notice shall identify the Securities of the Series to be redeemed and shall
state:
(a) the
redemption date;
(b) the
redemption price;
(c) the
name and address of the Paying Agent;
(d) that
Securities of the Series called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(e) that
interest on Securities of the Series called for redemption ceases to accrue on
and after the redemption date; and
(f) any
other information as may be required by the terms of the particular Series or
the Securities of a Series being redeemed.
At the
Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at its expense.
Section
3.4
Effect of
Notice of Redemption.
Once
notice of redemption is mailed or published as provided in Section 3.3,
Securities of a Series called for redemption become due and payable on the
redemption date and at the redemption price. A notice of redemption may not be
conditional. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price plus accrued interest to the redemption
date.
Section
3.5
Deposit of
Redemption Price.
On or
before the redemption date, the Company shall deposit with the Paying Agent
money sufficient to pay the redemption price of and accrued interest, if any, on
all Securities to be redeemed on that date.
Section
3.6
Securities
Redeemed in Part.
Upon
surrender of a Security that is redeemed in part, the Trustee shall authenticate
for the Holder a new Security of the same Series and the same Maturity equal in
Principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE
IV
COVENANTS
Section
4.1
Payment of
Principal and Interest.
The
Company covenants and agrees for the benefit of the Holders of each Series of
Securities that it will duly and punctually pay the Principal of and interest,
if any, on the Securities of that Series in accordance with the terms of such
Securities and this Indenture.
Section
4.2
SEC
Reports.
The
Company shall deliver to the Trustee within 15 days after it files them with the
SEC copies of the annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall
comply with the other provisions of TIA Section 314(a).
Section
4.3
Compliance
Certificate.
The
Company shall deliver to the Trustee, within 90 days after the end of each
fiscal year of the Company, an Officers Certificate signed by two of the
Company’s Officers stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge).
The
Company will, so long as any of the Securities are outstanding, deliver to the
Trustee, forthwith upon becoming aware of any Default or Event of Default, an
Officers’ Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect
thereto.
Section
4.4
Stay,
Extension and Usury Laws.
The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture or the Securities; and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
Section
4.5
Corporate
Existence.
Subject
to Article V, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate, partnership or other
existence
of each Significant Subsidiary in accordance with the respective organizational
documents of each Significant Subsidiary and the rights (charter and statutory),
licenses and franchises of the Company and its Significant Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any Significant Subsidiary, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries taken as a whole and that the loss thereof is
not adverse in any material respect to the Holders.
Section
4.6
Taxes.
The
Company shall, and shall cause each of
its Significant Subsidiaries to, pay prior to
delinquency all taxes, assessments and governmental
levies, except as contested in good faith and by appropriate
proceedings.
ARTICLE
V
SUCCESSORS
Section
5.1
When Company
May Merge, Etc.
The
Company shall not consolidate with or merge into any other Person in a
transaction in which we are not the surviving entity, or convey, transfer or
lease all or substantially all of its properties and assets to any Person (a
“Successor Person”), unless:
(a) the
Successor Person (if any) is a corporation, partnership, trust or other entity
organized and validly existing under the laws of the Marshall Islands or any
U.S. domestic jurisdiction and expressly assumes the Company’s obligations on
the Securities and under this Indenture; and
(b) immediately
after giving effect to the transaction, no Default or Event of Default, shall
have occurred and be continuing.
The
Company shall deliver to the Trustee prior to the consummation of the proposed
transaction an Officers’ Certificate to the foregoing effect and an Opinion of
Counsel stating that the proposed transaction and such supplemental indenture
comply with this Indenture.
Section
5.2
Successor
Corporation Substituted.
Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in accordance with Section
5.1, the Successor Person formed by such consolidation or into or with which the
Company is merged or to which such sale, lease, conveyance or other disposition
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
Successor Person has been named as the Company herein; provided, however, that
the predecessor company in the case of a sale, lease, conveyance or other
disposition shall not be released from the obligation to pay the Principal of
and interest, if any, on the Securities.
ARTICLE
VI
DEFAULTS
AND REMEDIES
Section
6.1
Events of
Default.
“Event of
Default,” wherever used herein with respect to Securities of any Series, means
any one of the following events, unless in the establishing Board Resolution,
supplemental indenture or Officers’ Certificate, it is provided that such Series
shall not have the benefit of said Event of Default:
(a) Default
in the payment of any interest on any Security of that Series when it becomes
due and payable, and continuance of such Default for a period of 30 days (unless
the entire amount of such payment is deposited by the Company with the Trustee
or with a Paying Agent prior to the expiration of such period of 30 days);
or
(b) Default
in the payment of the Principal of any Security of that Series at its Maturity;
or
(c) Default
in the deposit of any sinking fund payment, when and as due in respect of any
Security of that Series; or
(d) Default
in the performance or breach of any covenant of the Company in this Indenture,
which Default continues uncured for a period of 60 days after there has been
given, by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in Principal amount of
the outstanding Securities of that Series a written notice specifying such
Default or breach and requiring it to be remedied and stating that such notice
is a “Notice of Default” hereunder; or
(e) Default
under any Debt of the Company (including a Default with respect to Securities of
any Series other than that Series) or any Subsidiary, whether such Debt now
exists or shall hereafter be created, if (A) such Default results from the
failure to pay any such Debt when it becomes due and (B) such Debt is not
discharged or such acceleration is not rescinded or annulled within 30 days
after written notice to the Company by the holder or holders of such Debt in the
manner provided for in the applicable debt instrument; provided, that if the
Default with respect to such Debt is remedied or cured by the Company or waived
by the holders of such Debt before entry of judgment in favor of the relevant
trustee, then the Event of Default under this Indenture will be deemed likewise
to have been remedied, cured or waived; or
(f) the
Company pursuant to or within the meaning of any Bankruptcy Law:
(i) commences
a voluntary case,
(ii) consents
to the entry of an order for relief against it in an involuntary
case,
(iii) consents
to the appointment of a Custodian of it or for all or substantially all of its
property,
(iv) makes
a general assignment for the benefit of its creditors, or
(v) generally
is unable to pay its Debts as the same become due; or
(g) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:
(i) is
for relief against the Company or any of its Significant Subsidiaries in an
involuntary case,
(ii) appoints
a Custodian of the Company or any of its Significant Subsidiaries or for all or
substantially all of its property, or
(iii) orders
the liquidation of the Company or any of its Significant Subsidiaries, and the
order or decree remains unstayed and in effect for 60 days; or
(h) any
other Event of Default provided with respect to Securities of that Series, which
is specified in a Board Resolution, a supplemental indenture hereto or an
Officers’ Certificate, in accordance with Section 2.2.18.
No Event
of Default with respect to a particular Series of Securities (except with
respect to subsections (f) and (g) above) necessarily constitutes an Event of
Default with respect to any other Series of Securities.
The term
“Bankruptcy Law” means title 11, U.S. Code or any similar Federal or State law
for the relief of debtors. The term “Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
Section
6.2
Acceleration
of Maturity; Rescission and Annulment.
If an
Event of Default with respect to Securities of any Series at the time
outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in Principal amount of the outstanding Securities
of that Series may declare the Principal amount (or, if any Securities of that
Series are Discount Securities, such portion of the Principal amount as may be
specified in the terms of such Securities) of and accrued and unpaid interest,
if any, on all of the Securities of that Series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such Principal amount (or specified
amount) and accrued and unpaid interest, if any, shall become immediately due
and payable.
The
Holders of not less than a majority in Principal amount of the outstanding
Securities of that Series, by written notice to the Trustee, may rescind any
declaration of acceleration of such Securities of that Series and its
consequences if all existing Events of Default (other than the nonpayment of
Principal of or interest on such Securities that shall have become due by such
declaration) shall have been cured or waived.
Section
6.3
Collection of
Indebtedness and Suits for Enforcement by Trustee.
If an
Event of Default with respect to any Securities of any Series occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Securities of such Series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section
6.4
Trustee May
File Proofs of Claim.
In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the Principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue Principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to
file and prove a claim for the whole amount of Principal and interest owing and
unpaid in respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding, and
(b) to
collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7.
Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section
6.5
Trustee May
Enforce Claims Without Possession of Securities.
All
rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of
the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section
6.6
Application
of Money Collected.
Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of Principal or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid: and
First: To
the payment of all amounts due the Trustee under Section 7.7;
Second:
To the payment of the amounts then due and unpaid for Principal of and interest
on the Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for Principal and interest,
respectively; and
Third: To
the Company.
Section
6.7
Limitation on
Suits.
No Holder
of any Security of any Series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(a) such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities of that Series;
(b) the
Holders of not less than 25% in Principal amount of the outstanding Securities
of that Series shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(c) such
Holder or Holders have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such
request;
(d) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(e) no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in Principal amount of
the outstanding Securities of that Series; it being understood and intended that
no one or more of such Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all such Holders.
Section
6.8
Unconditional
Right of Holders to Receive Principal and Interest.
Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment of the Principal
of and interest, if any, on such Security on the Stated Maturity or Stated
Maturities expressed in such Security (or, in the case of redemption, on the
redemption date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such
Holder.
Section
6.9
Restoration
of Rights and Remedies.
If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section
6.10
Rights and
Remedies Cumulative.
Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and
remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section
6.11
Delay or
Omission Not Waiver.
No delay
or omission of the Trustee or of any Holder of any Securities to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section
6.12
Control by
Holders.
The
Holders of a majority in Principal amount of the outstanding Securities of any
Series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Securities of such
Series, provided that
(a) such
direction shall not be in conflict with any rule of law or with this
Indenture,
(b) the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and
(c) subject
to the provisions of Section 6.1, the Trustee shall have the right to decline to
follow any such direction if the Trustee in good faith shall, by a Responsible
Officer of the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability.
Section
6.13
Waiver of
Past Defaults.
The
Holders of not less than a majority in Principal amount of the outstanding
Securities of any Series may on behalf of the Holders of all the Securities of
such Series waive any past Default hereunder with respect to such Series and its
consequences, except a Default in the payment of the Principal of or interest on
any Security of such Series (provided, however, that the Holders of a majority
in Principal amount of the outstanding Securities of any Series may rescind an
acceleration and its consequences, including any related payment Default that
resulted from such acceleration). Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent
thereon.
Section
6.14
Undertaking
for Costs.
All
parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not
apply to
any suit instituted by the Company, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in Principal amount of the outstanding Securities of any Series,
or to any suit instituted by any Holder for the enforcement of the payment of
the Principal of or interest on any Security on or after the Stated Maturity or
Stated Maturities expressed in such Security (or, in the case of redemption, on
the redemption date).
ARTICLE
VII
TRUSTEE
Section
7.1
Duties of
Trustee.
(a) If
an Event of Default has occurred and is continuing, the Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except
during the continuance of an Event of Default:
(i) The
Trustee need perform only those duties that are specifically set
forth in this Indenture and no others.
(ii) in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon Officers’ Certificates or Opinions of Counsel furnished to the
Trustee and conforming to the requirements of this Indenture; however, in the
case of any such Officers’ Certificates or Opinions of Counsel which by any
provisions hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such Officers’ Certificates and Opinions of Counsel to
determine whether or not they conform to the requirements of this
Indenture.
(c) The
Trustee may not be relieved from liability for its own its own willful negligent
action, its own negligent failure to act or misconduct, except
that:
(i) This
paragraph does not limit the effect of paragraph (b) of this
section.
(ii) The
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(iii) The
Trustee shall not be liable with respect to any action taken, suffered or
omitted to be taken by it with respect to Securities of any Series in good faith
in accordance with the direction of the Holders of a majority in Principal
amount of the outstanding Securities of such Series relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such Series.
(d) Every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraph (a), (b) and (c) of this Section.
(e) The
Trustee may refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or
expense.
(f) The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required by
law.
(g) No
provision of this Indenture shall require the Trustee to risk its own funds or
otherwise incur any financial liability in the performance of any of its duties,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk is not reasonably assured to it.
(h) The
Paying Agent, the Registrar and any authenticating agent shall be entitled to
the protections, immunities and standard of care as are set forth in paragraphs
(a), (b) and (c) of this Section with respect to the Trustee.
Section
7.2
Rights of
Trustee.
(a) The
Trustee may rely on and shall be protected in acting or refraining from acting
as a result of its reasonable belief that any document was genuine and had been
signed or presented by the proper Person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel.
(c) The
Trustee may act through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care; provided that such agent
agree as a condition to its engagement that it shall be responsible to the
Company for its own misconduct or negligence. No Depository shall be deemed an
agent of the Trustee and the Trustee shall not be responsible for any act or
omission by any Depository.
(d) The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or
powers.
(e) The
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(f) The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders
of Securities unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
Section
7.3
Individual
Rights of Trustee.
The
Trustee in its individual or any other capacity may become the owner or pledgee
of securities and may otherwise deal with the Company or an Affiliate with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. The Trustee is also subject to Sections 7.10 and 7.11.
Section
7.4
Trustee’s
Disclaimer.
The
Trustee makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company’s use of the
proceeds from the Securities, and it shall not be responsible for any statement
in the Securities other than its authentication.
Section
7.5
Notice of
Defaults.
If a
Default or Event of Default occurs and is continuing with respect to the
Securities of any Series and if it is known to a Responsible Officer of the
Trustee, the Trustee shall mail to each Securityholder of the Securities of that
Series and, if any Bearer Securities are outstanding, publish on one occasion in
an Authorized Newspaper, notice of a Default or Event of Default within 90 days
after it occurs or, if later, after a Responsible Officer of the Trustee has
knowledge of such Default or Event of Default. Except in the case of a Default
or Event of Default in payment of Principal of or interest on any Security of
any Series, the Trustee may withhold the notice if and so long as its corporate
trust committee or a committee of its Responsible Officers in good
faith determines that withholding the notice is
in the interests of Securityholders of that Series.
Section
7.6
Reports by
Trustee to Holders.
Within 60
days after May 15 in each year, the Trustee shall transmit by mail to all
Securityholders, as their names and addresses appear on the register kept by the
Registrar and, if any Bearer Securities are outstanding, publish in an
Authorized Newspaper, a brief report dated as of such May 15, in accordance
with, and to the extent required under, TIA Section 313.
A copy of
each report at the time of its mailing to Securityholders of any Series shall be
filed with the SEC and each stock exchange on which the Securities of that
Series are listed. The Company shall promptly notify the Trustee when Securities
of any Series are listed on any stock exchange.
Section
7.7
Compensation
and Indemnity.
The
Company shall pay to the Trustee from time to time reasonable compensation for
its services. The Trustee’s compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it.
Such expenses shall include the reasonable compensation and expenses of the
Trustee’s agents and counsel.
The
Company shall indemnify the Trustee (including the cost of defending itself)
against any loss, liability or expense incurred by it except as set forth in the
next paragraph in the performance of its duties under this Indenture as Trustee
or Agent. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld. This indemnification shall apply to officers, directors,
employees, shareholders and agents of the Trustee.
The
Company need not reimburse any expense or indemnify against any loss liability
incurred by the Trustee or by any officer, director, employee, shareholder or
agent of the Trustee through negligence or bad faith.
To secure
the Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities of any Series on all money or property held or collected
by the Trustee, except that held in trust to pay Principal and interest on
particular Securities of that Series.
When the
Trustee incurs expenses or renders services after an Event of Default specified
in Section 6.1(f) or (g) occurs, the expenses and the
compensation for the services are intended
to constitute expenses of administration under any
Bankruptcy Law.
Section
7.8
Replacement
of Trustee.
A
resignation or removal of the Trustee and appointment of a successor Trustee
shall become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section.
The
Trustee may resign with respect to the Securities of one or more Series by so
notifying the Company. The Holders of a majority in Principal amount of the
Securities of any Series may remove the Trustee with respect to that Series by
so notifying the Trustee and the Company. The Company may remove the Trustee
with respect to Securities of one or more Series if:
(a) the
Trustee fails to comply with Section 7.10;
(b) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;
(c) a
Custodian or public officer takes charge of the Trustee or its property;
or
(d) the
Trustee becomes incapable of acting.
If the
Trustee resigns or is removed or if a vacancy exists in the office of Trustee
for any reason, the Company shall promptly appoint a successor Trustee. Within
one year after the successor Trustee takes office, the Holders of a majority in
Principal amount of the then outstanding Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If a
successor Trustee with respect to the Securities of any one or more Series does
not take office within 60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of at least 10% in Principal
amount of the Securities of the applicable Series may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the
Trustee with respect to the Securities of any one or more Series fails to comply
with Section 7.10, any Securityholder of the applicable Series may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee subject to the lien provided for in Section 7.7, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee with respect
to each Series of Securities for which it is acting as Trustee under this
Indenture. A successor Trustee shall mail a notice of its succession to each
Securityholder of each such Series and, if any Bearer Securities are
outstanding, publish such notice on one occasion in an Authorized Newspaper.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the
Company’s
obligations under Section 7.7 hereof shall continue for the benefit of the
retiring trustee with respect to expenses and liabilities incurred by it prior
to such replacement.
Section
7.9
Successor
Trustee by Merger, etc.
If the
Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor
Trustee.
Section
7.10
Eligibility;
Disqualification.
This
Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee shall always have a combined
capital and surplus of at least $25,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b).
Section
7.11
Preferential
Collection of Claims Against Company.
The
Trustee is subject to TIA Section 311(a), excluding any creditor relationship
listed in TIA Section 311(b). A Trustee who has resigned or been removed shall
be subject to TTA Section 311(a) to the extent indicated.
ARTICLE
VIII
SATISFACTION
AND DISCHARGE; DEFEASANCE
Section
8.1
Satisfaction
and Discharge of Indenture.
This
Indenture shall upon Company Order cease to be of further effect (except as
hereinafter provided in this Section 8.1), and the Trustee, at the expense of
the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this
Indenture, when
(a) either
(i) all
Securities theretofore authenticated and delivered (other than Securities that
have been destroyed, lost or stolen and that have been replaced or paid) have
been delivered to the Trustee for cancellation; or
(ii) all
such Securities not theretofore delivered to the Trustee for cancellation have
become due and payable, or
(1) have
become due and payable, or
(2) will
become due and payable at their Stated Maturity within one year, or
(3) are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company, or
(4) are
deemed paid and discharged pursuant to section 8.3, as applicable; and the
Company, in the case of (1), (2) or (3) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust an amount sufficient for the
purpose of paying and discharging the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for Principal and
interest to the date of such deposit (in the case of Securities which have
become due and payable on or prior to the date of such deposit) or to the Stated
Maturity or redemption date, as the case may be;
(b) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(c) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Company
to the Trustee under Section 7.7, and, if money shall have been deposited with
the Trustee pursuant to clause (a) of this Section, the provisions of Sections
2.4, 2.7, 2.8, 8.1 8.2 and 8.5 shall survive.
Section
8.2
Application
of Trust Funds; Indemnification.
(a) Subject
to the provisions of Section 8.5, all money deposited with the Trustee pursuant
to Section 8.1, all money and U.S. Government Obligations or Foreign Government
Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and all
money received by the Trustee in respect of U.S. Government Obligations or
Foreign Government Obligations deposited with the Trustee pursuant to Section
8.3 or 8.4, shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with or
received by the Trustee or to make Mandatory Sinking Fund Payments or analogous
payments as contemplated by Sections 8.3 or 8.4.
(b) The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against U.S. Government obligations or Foreign
Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest
and Principal received in respect of such obligations other than any payable by
or on behalf of Holders.
(c) The
Trustee shall deliver or pay to the Company from time to time upon Company
Request any U.S. Government obligations or Foreign Government obligations or
money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a
nationally recognized firm of independent certified public accountants expressed
in a written certification thereof delivered to the Trustee, are then in excess
of the amount thereof which then would have been required to be deposited for
the purpose for which such U.S. Government Obligations or Foreign Government
Obligations or money were deposited or received. This provision shall not
authorize the sale by the Trustee of any U.S. Government Obligations or Foreign
Government Obligations held under this Indenture.
Section
8.3
Legal
Defeasance of Securities of any Series.
Unless
this Section 8.3 is otherwise specified, pursuant to Section 2.2.19, to be
inapplicable to Securities of any Series, the Company shall be deemed to have
paid and discharged the entire indebtedness on all the outstanding Securities of
such Series on the 91st day after the date of the deposit referred to in
subparagraph (d) hereof, and the provisions of this Indenture, as it relates to
such
outstanding
Securities of such Series, shall no longer be in effect (and the Trustee, at the
expense of the Company, shall, at Company Request, execute proper instruments
acknowledging the same), except as to:
(a) the
rights of Holders of Securities of such Series to receive, from the trust funds
described in subparagraph (d) hereof, (i) payment of the principal of and each
installment of Principal of and interest on the outstanding Securities of such
Series on the Stated Maturity of such Principal or installment of Principal or
interest and (ii) the benefit of any Mandatory Sinking Fund Payments applicable
to the Securities of such Series on the day on which such payments are due and
payable in accordance with the terms of this Indenture and the Securities of
such Series;
(b) the
provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and
(c) the
rights, powers, trust and immunities of the Trustee hereunder;
provided
that, the following conditions shall have been satisfied:
(i) the
Company shall have deposited or caused to be deposited irrevocably with the
Trustee as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for and dedicated solely to the
benefit of the Holders of such Securities W in the case of Securities of such
Series denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or U.S.
Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest and
Principal in respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge each installment of Principal
(including mandatory sinking fund or analogous payments) of and interest, if
any, on all the Securities of such Series on the dates such installments of
interest or Principal are due;
(ii) such
deposit will not result in a breach or violation of, or constitute a Default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(iii) no
Default or Event of Default with respect to the Securities of such Series shall
have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
(iv) the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel to the effect that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
Securities of such Series will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to Federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred;
(v) the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders of the
Securities
of such Series over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company;
(vi) such
deposit shall not result in the trust arising from such deposit constituting an
investment company (as defined in the Investment Company Act of 1940, as
amended), or such trust shall be qualified under such Act or exempt from
regulation thereunder; and
(vii) the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to the defeasance contemplated by this Section have been complied
with.
Section
8.4
Covenant
Defeasance.
Unless
this Section 8.4 is otherwise specified pursuant to Section 2.2.19 to be
inapplicable to Securities of any Series, on and after the 91st day after the
date of the deposit referred to in subparagraph (a) hereof, the Company may omit
to comply with any term, provision or condition set forth under Sections 4.2,
4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional covenants contained in a
supplemental indenture hereto for a particular Series of Securities or a Board
Resolution or an Officers’ Certificate delivered pursuant to Section 2.2.19 (and
the failure to comply with any such covenants shall not constitute a Default or
Event of Default under Section 6.1) and the occurrence of any event described in
clause (e) of Section 6.1 shall not constitute a Default or Event of Default
hereunder, with respect to the Securities of such Series, provided that the
following conditions shall have been satisfied:
(a) With
reference to this Section 8.4, the Company has deposited or caused to be
irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as
trust funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities (i) in the case of Securities
of such Series denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or U.S.
Government Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency), money
and/or Foreign Government Obligations, which through the payment of interest and
Principal in respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on such
Trustee), not later than one day before the due date of any payment of money, an
amount in cash, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written certification
thereof delivered to the Trustee, to pay Principal and interest, if any, on and
any mandatory sinking fund in respect of the Securities of such Series on the
dates such installments of interest or Principal are due;
(b) Such
deposit will not result in a breach or violation of, or constitute a Default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;
(c) No
Default or Event of Default with respect to the Securities of such Series shall
have occurred and be continuing on the date of such deposit or during the period
ending on the 91st day after such date;
(d) the
Company shall have delivered to the Trustee an Opinion of Counsel confirming
that Holders of the Securities of such Series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such deposit and
defeasance had not occurred;
(e) the
Company shall have delivered to the Trustee an Officers’ Certificate stating the
deposit was not made by the Company with the intent of preferring the Holders of
the Securities of such Series over any other creditors of the Company or with
the intent of defeating, hindering, delaying or defrauding any other creditors
of the Company; and
(f) The
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the defeasance contemplated by this Section have been complied
with.
Section
8.5
Repayment to
Company.
The
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of Principal and interest that remains unclaimed
for two years. After that, Securityholders entitled to the money must look to
the Company for payment as general creditors unless an applicable abandoned
property law designates another Person.
ARTICLE
IX
AMENDMENTS
AND WAIVERS
Section
9.1
Without
Consent of Holders.
The
Company and the Trustee may amend or supplement this Indenture or the Securities
of one or more Series without the consent of any Securityholder:
(a) to
cure any ambiguity, defect or inconsistency;
(b) to
comply with Article V;
(c) to
provide for uncertificated Securities in addition to or in place of Certificated
Securities;
(d) to
make any change that does not adversely affect the rights of any
Securityholder;
(e) to
provide for the issuance of and establish the form and terms and conditions of
Securities of any Series as permitted by this Indenture;
(f) to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more Series and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee; or
(g) to
comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA.
Section
9.2
With Consent
of Holders.
The
Company and the Trustee may enter into a supplemental indenture with the written
consent of the Holders of at least a majority in Principal amount of the
outstanding Securities of all Series
affected
by such supplemental indenture, taken together as one class
(including consents obtained in connection with a tender offer or exchange offer
for the Securities of such Series), for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Indenture
or of any supplemental indenture or of modifying in any manner the rights of the
Securityholders of each such Series. Except as provided in Section 6.13, the
Holders of at least a majority in Principal amount of the outstanding Securities
of all Series affected by such waiver by notice to the Trustee, taken together
as one class (including consents obtained in connection with a tender offer or
exchange offer for the Securities of such Series) may waive compliance by the
Company with any provision of this Indenture or the Securities with respect to
such Series.
It shall
not be necessary for the consent of the Holders of Securities under this Section
9.2 to approve the particular form of any proposed supplemental indenture or
waiver, but it shall be sufficient if such consent approves the substance
thereof. After a supplemental indenture or waiver under this section becomes
effective, the Company shall mail to the Holders of Securities affected thereby
and, if any Bearer Securities affected thereby are outstanding, publish on one
occasion in an Authorized Newspaper, a notice briefly describing the
supplemental indenture or waiver. Any failure by the Company to mail or publish
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture or waiver.
Section
9.3
Limitations.
Without
the consent of each Securityholder affected, an amendment or waiver may
not:
(a) change
the amount of Securities whose Holders must consent to an amendment, supplement
or waiver;
(b) reduce
the rate of or change the interest payment time on any Security or alter the
redemption provisions with respect thereto or the price at which the Company is
required to offer to purchase the Securities;
(c) reduce
the Principal or change the Stated Maturity of any Security or reduce the amount
of, or postpone the date fixed for, the payment of any sinking fund or analogous
obligation;
(d) reduce
the Principal amount of Discount Securities payable upon acceleration of the
Maturity thereof;
(e) waive
a Default or Event of Default in the payment of the Principal of or interest, if
any, on any Security (except a rescission of acceleration of the Securities of
any Series by the Holders of at least a majority in Principal amount of the
outstanding Securities of such Series and a waiver of the payment Default that
resulted from such acceleration);
(f) make
the Principal of or interest, if any, on any Security payable in any currency
other than that stated in the Security;
(g) make
any change in Sections 6.8, 6.13, 9.3 (this sentence), 10.15 or 10.16;
or
(h) waive
a redemption payment with respect to any Security or change any of the
provisions with respect to the redemption of any Securities.
Section
9.4
Compliance
with Trust Indenture Act.
Every
amendment to this Indenture or the Securities of one or more Series shall be set
forth in a supplemental indenture hereto that complies with the TIA as then in
effect.
Section
9.5
Revocation
and Effect of Consents.
Until an
amendment or waiver becomes effective, a consent to it by a Holder of a Security
is a continuing consent by the Holder and every subsequent Holder of a Security
or portion of a Security that evidences the same Debt as the consenting Holder’s
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective.
Any
amendment or waiver once effective shall bind every Securityholder of each
Series affected by such amendment or waiver unless it is of the type described
in any of clauses (a) through (g) of Section 9.3. in that case, the amendment or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
Debt as the consenting Holder’s Security.
Section
9.6
Notation on
or Exchange of Securities.
The
Trustee may place an appropriate notation about an amendment or waiver on any
Security of any Series thereafter authenticated. The Company in exchange for
Securities of that Series may issue and the Trustee shall authenticate upon
request new Securities of that Series that reflect the amendment or
waiver.
Section
9.7
Trustee
Protected.
In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee shall sign all
supplemental indentures, except that the Trustee need not sign any supplemental
indenture that adversely affects its rights.
ARTICLE
X
MISCELLANEOUS
Section
10.1
Trust
Indenture Act Controls.
If any
provision of this Indenture limits, qualifies, or conflicts with another
provision which is required or deemed to be included in this Indenture by the
TIA, such required or deemed provision shall control.
Section
10.2
Notices.
Any
notice or communication by the Company or the Trustee to the other is duly given
if in writing and delivered in person or mailed by first-class
mail:
if to the
Company:
Euroseas
Ltd.
Aethrion
Center
40 Ag.
Konstantinou Street
151 24
Maroussi Greece
if to the
Trustee:
[Name of
Trustee]
[Address]
Attention:______________
The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any
notice or communication to a Securityholder shall be mailed by first-class mail
to his address shown on the register kept by the Registrar and, if any Bearer
Securities are outstanding, published in an Authorized Newspaper. Failure to
mail a notice or communication to a Securityholder of any Series or any defect
in it shall not affect its sufficiency with respect to other Securityholders of
that or any other Series.
If a
notice or communication is mailed or published in the manner provided above,
within the time prescribed, it is duly given, whether or not the Securityholder
receives it.
If the
Company mails a notice or communication to Securityholders, it mail a copy to
the Trustee and each Agent at the same time.
Section
10.3
Communication by Holders
with Other Holders.
Securityholders
of any Series may communicate pursuant to TIA Section 312(b) with other
Securityholders of that Series or any other Series with respect to their rights
under this Indenture or the Securities of that Series or all Series. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
Section
10.4
Certificate
and opinion as to Conditions Precedent.
Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an
Officers’ Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an
Opinion of Counsel stating that, in the opinion of counsel, all such conditions
precedent have been complied with.
Section
10.5
Statements
Required in Certificate or opinion.
Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a
statement that the Person making such certificate or opinion has read such
covenant or condition;
(b) a
brief statement as to the nature and scope of the examination or
investigation upon which the statements or
opinions contained in such certificate or opinion are
based;
(c) a
statement that, in the opinion of such Person, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(d) a
statement as to whether or not, in the opinion of such Person, such condition or
covenant has been complied with.
Section
10.6
Rules by
Trustee and Agents.
The
Trustee may make reasonable rules for action by or a meeting of Securityholders
of one or more Series. Any Agent may make reasonable rules and set reasonable
requirements for its functions.
Section
10.7
Legal
Holidays.
Unless
otherwise provided by Board Resolution, Officers’ Certificate or supplemental
indenture for a particular Series, a “Legal Holiday” is any day that is not a
Business Day. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section
10.8
No Recourse
Against Others.
A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
Section
10.9
Counterparts.
This
Indenture may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
Section
10.10
Governing
Laws.
THIS
INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK EXCLUDING (TO THE GREATEST EXTENT POSSIBLE) ANY RULE OF LAW THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
Section
10.11
No Adverse
Interpretation of Other Agreements.
This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or a Subsidiary. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section
10.12
Successors.
All
agreements of the Company in this Indenture and the Securities shall bind its
successor. All agreements of the Trustee in this Indenture shall bind its
successor.
Section
10.13
Severability.
In case
any provision in this Indenture or in the Securities shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section
10.14
Table of
Contents, Headings, Etc.
The Table
of Contents, Cross Reference Table, and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section
10.15
Securities
in a Foreign Currency or in ECU.
Unless
otherwise specified in a Board Resolution, a supplemental indenture hereto or an
Officers’ Certificate delivered pursuant to Section 2.2 of this Indenture with
respect to a particular Series of Securities, whenever for purposes of this
Indenture any action may be taken by the Holders of a specified percentage in
aggregate Principal amount of Securities of all Series or all Series affected by
a particular action at the time outstanding and, at such time, there are
outstanding Securities of any Series which are denominated in a coin or currency
other than Dollars (including ECUs), then the Principal amount of Securities of
such Series which shall be deemed to be outstanding for the purpose of taking
such action shall be that amount of Dollars that could be obtained for such
amount at the Market Exchange Rate at such time. For purposes of this Section
10.15, “Market Exchange Rate” shall mean the noon Dollar buying rate in New York
City for cable transfers of that currency as published by the Federal Reserve
Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate
shall mean the rate of exchange determined by the Commission of the European
Union (or any successor thereto) as published in the Official Journal of the
European union (such publication or any successor publication, the “Journal”).
If such Market Exchange Rate is not available for any reason with respect to
such currency, the Trustee shall use, in its sole discretion and without
liability on its part, such quotation of the Federal Reserve Bank of New York
or, in the case of ECUs, the rate of exchange as published in the Journal, as of
the most recent available date, or quotations or, in the case of ECUs, rates of
exchange from one or more major banks in The City of New York or in the country
of issue of the currency in question or, in the case of ECUs, in Luxembourg or
such other quotations or, in the case of ECUs, rates of exchange as the Trustee,
upon consultation with the Company, shall deem appropriate. The provisions of
this paragraph shall apply in determining the equivalent Principal amount in
respect of Securities of a Series denominated in currency other than Dollars in
connection with any action taken by Holders of Securities pursuant to the terms
of this Indenture.
All
decisions and determinations of the Trustee regarding the Market Exchange Rate
or any alternative determination provided for in the preceding paragraph shall
be in its sole discretion and shall, in the absence of manifest error, be
conclusive to the extent permitted by law for all purposes and irrevocably
binding upon the Company and all Holders.
Section
10.16
Judgment
Currency.
The
Company agrees, to the fullest extent that it may effectively do so under
applicable law, that (a) if for the purpose of obtaining judgment in any court
it is necessary to convert the sum due in respect of the Principal of or
interest or other amount on the Securities of any Series (the “Required
Currency”) into a currency in which a judgment will be rendered (the “Judgment
Currency”), the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New
York the Required Currency with the Judgment Currency on the day on which final
unappealable judgment is entered, unless such day is not a New York Banking Day,
then, the rate of exchange used shall be the rate at which in accordance with
normal banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable, and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a
Legal Holiday in The City of New York on which banking institutions are
authorized or required by law, regulation or executive order to
close.
ARTICLE
XI
SINKING
FUNDS
Section
11.1
Applicability of
Article.
The
provisions of this Article shall be applicable to any sinking fund for the
retirement of the Securities of a Series, except as otherwise permitted or
required by any form of Security of such Series issued pursuant to this
Indenture.
The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any Series is herein referred to as a “Mandatory Sinking Fund
Payment” and any other amount provided for by the terms of Securities of such
Series is herein referred to as an “Optional Sinking Fund Payment.” If provided
for by the terms of Securities of any Series, the cash amount of any sinking
fund payment may be subject to reduction as provided in Section 11.2. Each
sinking fund payment shall be applied to the redemption of Securities of any
Series as provided for by the terms of the securities of such
Series.
Section
11.2
Satisfaction
of Sinking Fund Payments with Securities.
The
Company may, in satisfaction of all or any part of any sinking fund payment with
respect to the Securities of any Series to be made pursuant to the terms of such
Securities (1) deliver outstanding Securities of such Series to which such
sinking fund payment is applicable (other than any of such Securities previously
called for mandatory sinking fund redemption) and (2) apply as credit Securities
of such Series to which such sinking fund payment is applicable and which have
been redeemed either at the election of the Company pursuant to the terms of
such Series of Securities (except pursuant to any mandatory sinking fund) or
through the application of permitted Optional Sinking Fund Payments or other
optional redemptions pursuant to the terms of such Securities, provided that
such Securities have not been previously so credited. Such Securities shall be
received by the Trustee, together with an Officers’ Certificate with respect
thereto, not later than 15 days prior to the date on which the Trustee begins
the process of selecting Securities for redemption, and shall be credited for
such purpose by the Trustee at the price specified in such Securities for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly. If as a result of the delivery or
credit of Securities in lieu of cash payments pursuant to this Section 11.2, the
Principal amount of Securities of such Series to be redeemed in order to exhaust
the aforesaid cash payment shall be less than $100,000, the Trustee need not
call Securities of such Series for redemption, except upon receipt of a Company
Order that such action be taken, and such cash payment shall be held by the
Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall from
time to time upon receipt of a Company Order pay over and deliver to the Company
any cash payment so being held by the Trustee or such Paying Agent upon delivery
by the Company to the Trustee of Securities of that Series purchased by the
Company having an unpaid Principal amount equal to the cash payment required to
be released to the Company.
Section
11.3
Redemption
of Securities for Sinking Fund.
Not less
than 45 days (unless otherwise indicated in the Board Resolution, supplemental
indenture hereto or Officers’ Certificate in respect of a particular Series of
Securities) prior to each sinking fund payment date for any Series of
Securities, the Company will deliver to the Trustee an Officers’ Certificate
specifying the amount of the next ensuing Mandatory Sinking Fund Payment for
that Series pursuant to the terms of that Series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting of Securities of that
Series pursuant to Section 11.2., and the optional amount, if any, to be added
in cash to the next ensuing Mandatory Sinking Fund Payment, and the Company
shall thereupon be obligated to pay the amount therein specified. Not less than
30 days (unless otherwise indicated in the Board Resolution, Officers’
Certificate or supplemental indenture in respect of a particular Series of
Securities) before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.2 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 3.3. Such notice having been duly given, the redemption of such
Securities shall stated in Sections 3.4, 3.5 and 3.6.
[The
Remainder of this page is intentionally left blank.]
IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the day and year first above written.
|
Euroseas
Ltd.
|
|
|
|
By:
|
/s/
[TBD]
|
|
|
|
Name:
[TBD]
|
|
|
Its:
[Chief Accounting Officer and Company Secretary]
|
|
|
|
|
|
|
|
|
[Name
of Trustee]
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Its:
|
|
|
EXHIBIT
5.1
July 2, 2008
Euroseas
Ltd.
Aethrion
Center
40 Ag.
Konstantinou Street
151 24
Maroussi Greece
Re: Euroseas
Ltd.
Ladies
and Gentlemen:
We have
acted as counsel to Euroseas Ltd. (the "Company") in connection with the
Company's Registration Statement on Form F-3 (File No.
333- )
(the "Registration Statement") as filed with the U.S. Securities and Exchange
Commission (the "Commission") on July 2, 2008, as thereafter amended or
supplemented, with respect to the public offering by the Company (the
"Offering") of up to an aggregate of $400,000,000 of securities which may
include common shares, preferred shares, debt securities, warrants, purchase
contracts and units (the "Primary Securities") and 9,955,879 common shares of
the Company, par value $0.03 per share, by the selling shareholders, Friends
Investment Company Inc. and Eurobulk Marine Holdings, Inc. (the "Secondary
Securities").
We have
examined originals or copies, certified or otherwise identified to our
satisfaction, of: (i) the Registration Statement; (ii) the prospectus of the
Company (the "Prospectus") included in the Registration Statement; and (iii)
such corporate documents and records of the Company and such other instruments,
certificates and documents as we have deemed necessary or appropriate as a basis
for the opinions hereinafter expressed. In such examinations, we have assumed
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as copies or drafts of
documents to be executed, the genuineness of all signatures and the legal
competence or capacity of persons or entities to complete the execution of
documents. As to various questions of fact which are material to the opinions
hereinafter expressed, we have relied upon statements or certificates of public
officials, directors of the Company and others.
We have
further assumed for the purposes of this opinion, without investigation, that
(i) all documents contemplated by the Prospectus to be executed in connection
with the Offering have been duly authorized, executed and delivered by each of
the parties thereto other than the Company, and (ii) the terms of the Offering
comply in all respects with the terms, conditions and restrictions set forth in
the Prospectus and all of the instruments, agreements and other documents
relating thereto or executed in connection therewith.
Based
upon and subject to the foregoing, and having regard to such other legal
considerations which we deem relevant, we are of the opinion that:
1. Under
the laws of the Republic of the Marshall Islands, the Primary Securities have
been duly authorized, and when the Primary Securities are issued, sold and paid
for as contemplated in the Prospectus, will be validly issued, fully paid and
non-assessable.
2. Under
the laws of the Republic of the Marshall Islands, the Secondary Securities have
been duly authorized and validly issued and are fully paid for and
non-assessable.
This
opinion is limited to the law of the State of New York and the Federal law of
the United States of America and the laws of the Republic of the Marshall
Islands as in effect on the date hereof.
We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement, and to each reference to us and the discussions of advice provided by
us under the headings "Legal Matters" in the Prospectus, without admitting we
are "experts" within the meaning of the Securities Act of 1933, as amended, or
the rules and regulations of the Commission thereunder with respect to any part
of the Registration Statement.
Very truly yours,
/s/ Seward & Kissel
LLP
EXHIBIT
8.1
July 2,
2008
Euroseas
Ltd.
Aethrion
Center
40 Ag.
Konstantinou Street
151 24
Maroussi Greece
Re:
Euroseas Ltd.
Ladies
and Gentlemen:
You have
requested our opinion regarding certain United States federal income tax matters
relating to Euroseas Ltd. (the “Company”) and certain holders of shares of the
Company's Common Stock, as described in the prospectus included in the
Registration Statement filed by the Company on Form F-3 (File No.
333- )
with the Securities and Exchange Commission on July 2, 2008, as thereafter
amended or supplemented (the “Registration Statement”).
In
formulating our opinion as to these matters, we have examined such documents as
we have deemed appropriate, including the Registration Statement. We also have
obtained such additional information as we have deemed relevant and necessary
from representatives of the Company. Capitalized terms not defined herein have
the meanings ascribed to them in the Registration Statement.
Based on
the facts as set forth in the Registration Statement and, in particular, on the
representations, covenants, assumptions, conditions and qualifications described
under the captions “Risk Factors” and “Taxation” therein, we hereby confirm that
the opinions of Seward & Kissel LLP with respect to United States federal
income tax matters are those opinions attributed to Seward & Kissel LLP
expressed in the Registration Statement under the captions “Taxation.” It is
further our opinion that the tax discussion set forth under the captions
“Company Risk Factors - U.S. tax authorities could treat us as a ‘passive
foreign investment company,’ which could have adverse U.S. federal income tax
consequences to U.S. holders” and “Company Risk Factors - We may have to pay tax
on United States source income, which would reduce our earnings” accurately
states our views as to the tax matters discussed therein.
Our
opinions and the tax discussion as set forth in the Registration Statement are
based on the current provisions of the Internal Revenue Code of 1986, as
amended, the Treasury Regulations promulgated thereunder, published
pronouncements of the Internal Revenue Service which may be cited or used as
precedents, and case law, any of which may be changed at any time with
retroactive effect. No opinion is expressed on any matters other than those
specifically referred to above by reference to the Registration
Statement.
We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Seward & Kissel
LLP
EXHIBIT
21.1
Registrant’s
Subsidiaries
|
Jurisdiction
of Organization
|
|
|
Alcinoe
Shipping Limited
|
Republic
of Cyprus
|
Allendale
Investments S.A.
|
Republic
of Panama
|
Alterwall
Business Inc.
|
Republic
of Panama
|
Diana
Trading Ltd.
|
Republic
of the Marshall Islands
|
Emmentaly
Business Inc.
|
Republic
of Panama
|
Eternity
Shipping Company
|
Republic
of the Marshall Islands
|
Gregos
Shipping Limited
|
Republic
of the Marshall Islands
|
Manolis
Shipping Ltd.
|
Republic
of the Marshall Islands
|
Noumea
Shipping Ltd
|
Republic
of the Marshall Islands
|
Oceanopera
Shipping Limited
|
Republic
of Cyprus
|
Pilory
Associates Corp.
|
Republic
of Panama
|
Prospero
Maritime Inc.
|
Republic
of the Marshall Islands
|
Salina
Shipholding Corp.
|
Republic
of the Marshall Islands
|
Tiger
Navigation Corp.
|
Republic
of the Marshall Islands
|
Trust
Navigation Corp.
|
Republic
of Liberia
|
Xenia
International Corporation
|
Republic
of the Marshall Islands
|
Xingang
Shipping Ltd.
|
Republic
of
Liberia
|
EXHIBIT
23.2
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in this Registration Statement on Form
F-3 of our reports dated May 8, 2008, relating to the consolidated
financial statements of Euroseas Ltd. and Subsidiaries (the “Company”) and the
effectiveness of the Company’s internal control over financial reporting,
appearing in the Annual Report on Form 20-F of the Company for the year ended
December 31, 2007, and to the reference to us under the heading “Experts” in the
Prospectus, which is part of this Registration Statement.
/s/Deloitte.
Hadjipavlou, Sofianos & Cambanis S.A.
Athens,
Greece
July 2,
2008