o |
REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal
year ended
|
December 31, 2008 |
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from __________________
to
__________________
|
o
|
SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
|
Date
of event requiring this shell company
report
|
|
For
the transition period from
__________________ to
__________________
|
EUROSEAS
LTD.
|
(Exact
name of Registrant as specified in its charter)
|
(Translation
of Registrant's name into English)
|
Marshall
Islands
|
(Jurisdiction
of incorporation or organization)
|
Aethrion
Center, 40 Ag. Konstantinou Street, 151 24 Maroussi
Greece
|
(Address
of principal executive offices)
|
Tasos
Aslidis, Tel: (908) 301-9091, Euroseas Ltd. c/o Tasos
Aslidis,
11
Canterbury Lane, Watchung, NJ 07069
|
(Name,
Telephone, E-mail and/or Facsimile, and address of Company Contact
Person)
|
Indicate
by check mark which basis of accounting the registrant has used to prepare
the financial statements included in this filing:
|
||
x
|
U.S.
GAAP
|
|
o
|
International
Financial Reporting Standards as issued by the international Accounting
Standards Board.
|
|
o |
Other
|
|
If
"Other" has been checked in response to the previous question, indicate by
check mark which financial statement item the registrant has elected to
follow:
|
||
o
Item
17
o
Item
18
|
||
If
this is an annual report, indicate by check mark whether the registrant is
a shell company (as defined in Rule 12b-2 of the Exchange
Act).
|
||
o
Yes
x
No
|
||
(APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)
|
||
Indicate by check
mark whether the registrant has filed all
documents and
reports to be filed by Sections 12, 13 or 15(d) of the Securities Act of
1934 subsequent to the distribution of securities under a plan confirmed
by a court.
|
||
o
Yes
o
No
|
||
o
Yes
o
No
|
Forward-Looking
Statements
|
1
|
|
Part
I
|
||
Item
1.
|
Identity
of Directors, Senior Management and Advisers
|
2
|
Item
2.
|
Offer
Statistics and Expected Timetable
|
2
|
Item
3.
|
Key
Information
|
2
|
Item
4.
|
Information
on the Company
|
25
|
Item
4A.
|
Unresolved
Staff Comments
|
41
|
Item
5.
|
Operating
and Financial Review and Prospects
|
41
|
Item
6.
|
Directors,
Senior Management and Employees
|
57
|
Item
7.
|
Major
Shareholders and Related Party Transactions
|
63
|
Item
8.
|
Financial
information
|
66
|
Item
9.
|
The
Offer and Listing
|
67
|
Item
10.
|
Additional
Information
|
69
|
Item
11.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
75
|
Item
12.
|
Description
of Securities Other than Equity Securities
|
77
|
Part
II
|
||
Item
13.
|
Defaults,
Dividend Arrearages and Delinquencies
|
78
|
Item
14.
|
Material
Modifications to the Rights of Security Holders and Use of
Proceeds
|
78
|
Item
15.
|
Controls
and Procedures
|
78
|
Item
16A.
|
Audit
Committee Financial Expert
|
80
|
Item
16B.
|
Code
of Ethics
|
80
|
Item
16C.
|
Principal
Accountant Fees and Services
|
81
|
Item
16D.
|
Exemptions
from the Listing Standards for Audit Committees
|
81
|
Item
16E.
|
Purchase
of Equity Securities by the Issuer and Affiliated
Purchasers
|
81
|
Item
16 F.
|
Change
in Registrant's Certifying Accountant
|
81
|
Item
16 G.
|
Corporate
Governance
|
81
|
Part
III
|
||
Item
17.
|
Financial
Statements
|
83
|
Item
18.
|
Financial
Statements
|
83
|
Item
19.
|
Exhibits
|
83
|
|
·
|
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, drydocking 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."
|
Item 1.
|
Identity
of Directors, Senior Management and Advisers
|
Item 2.
|
Offer
Statistics and Expected Timetable
|
Item 3.
|
Key
Information
|
A.
|
Selected
Financial Data
|
Euroseas
Ltd. – Summary of Selected Historical Financials
|
|||||||||||||||||||||
Year
Ended December 31,
|
|||||||||||||||||||||
2004
|
2005
|
2006
|
2007
|
2008
|
|||||||||||||||||
Income
Statement Data
|
|||||||||||||||||||||
Voyage
revenues
|
45,718,006 | 44,523,401 | 42,143,361 | 86,104,365 | 132,243,918 | ||||||||||||||||
Commissions
|
(2,215,197 | ) | (2,388,349 | ) | (1,829,534 | ) | (4,024,032 | ) | (5,940,460 | ) | |||||||||||
Net
revenue
|
43,502,809 | 42,135,052 | 40,313,827 | 82,080,333 | 126,303,458 | ||||||||||||||||
Voyage
expenses
|
(370,345 | ) | (670,551 | ) | (1,154,738 | ) | (897,463 | ) | (3,092,323 | ) | |||||||||||
Vessel
operating expenses
|
(8,906,252 | ) | (8,610,279 | ) | (10,368,817 | ) | (17,240,132 | ) | (27,521,194 | ) | |||||||||||
Amortization
drydocking and special survey expense and vessel
depreciation (1)
|
(3,461,678 | ) | (4,208,252 | ) | (7,292,838 | ) | (17,963,072 | ) | (32,230,901 | ) | |||||||||||
Impairment
loss
|
- | - | - | - | (25,113,364 | ) | |||||||||||||||
Management
fees
|
(1,972,252 | ) | (1,911,856 | ) | (2,266,589 | ) | (3,669,137 | ) | (5,387,415 | ) | |||||||||||
Other
general and administration expenses
|
- | (420,755 | ) | (1,076,884 | ) | (2,656,176 | ) | (4,057,736 | ) | ||||||||||||
Net
gain on sale of vessels
|
2,315,477 | - | 4,445,856 | 3,411,397 | - | ||||||||||||||||
Operating
income
|
31,107,759 | 26,313,359 | 22,599,817 | 43,065,750 | 28,900,526 | ||||||||||||||||
Interest
and other financing costs
|
(708,284 | ) | (1,495,871 | ) | (3,398,858 | ) | (4,850,239 | ) | (2,930,737 | ) | |||||||||||
Interest
income
|
187,069 | 460,457 | 870,046 | 2,357,633 | 3,168,501 | ||||||||||||||||
Other
income (loss)
|
25,221 | (99,491 | ) | (1,598 | ) | 90,920 | (5,464,271 | ) | |||||||||||||
Net
income
|
30,611,765 | 25,178,454 | 20,069,407 | 40,664,064 | 23,674,018 | ||||||||||||||||
Balance
Sheet Data
|
|||||||||||||||||||||
Current
assets
|
16,461,159 | 25,350,707 | 9,975,596 | 118,307,463 | 92,538,220 | ||||||||||||||||
Vessels,
net
|
34,171,164 | 52,334,897 | 95,494,342 | 238,248,984 | 231,963,606 | ||||||||||||||||
Deferred
assets and other long term assets
|
2,205,178 | 1,855,829 | 12,035,321 | 14,634,384 | 16,114,600 | ||||||||||||||||
Total
assets
|
52,837,501 | 79,541,433 | 117,505,259 | 371,190,831 | 340,616,426 | ||||||||||||||||
Current
liabilities including current portion of long term debt
|
13,764,846 | 18,414,877 | 21,665,399 | 35,182,511 | 21,417,515 | ||||||||||||||||
Long
term debt, including current portion
|
13,990,000 | 48,560,000 | 74,950,000 | 81,590,000 | 56,015,000 | ||||||||||||||||
Total
liabilities
|
21,724,846 | 52,544,877 | 79,493,599 | 99,400,483 | 76,387,354 | ||||||||||||||||
Common
shares outstanding (adjusted for the 1-for-3 split)
|
9,918,056 | 12,260,387 | 12,620,150 | 30,261,113 | 30,575,611 | ||||||||||||||||
Share
capital
|
297,542 | 367,812 | 378,605 | 907,834 | 917,269 | ||||||||||||||||
Total
shareholders' equity
|
31,112,655 | 26,996,556 | 38,011,660 | 271,790,348 | 264,229,072 | ||||||||||||||||
Other
Financial Data
|
|||||||||||||||||||||
Net
cash provided by operating activities
|
34,208,693 | 20,594,782 | 20,968,824 | 48,958,771 | 74,283,741 | ||||||||||||||||
Net
cash provided by (used in) investing activities
|
6,756,242 | (21,833,616 | ) | (55,367,015 | ) | (146,671,991 | ) | (46,145,503 | ) | ||||||||||||
Net
cash provided by (used in) financing activities
|
(33,567,500 | ) | 6,188,653 | 16,741,997 | 199,057,433 | (58,422,367 | ) | ||||||||||||||
Earnings
per share, basic
|
3.09 | 2.34 | 1.60 | 1.89 | 0.78 | ||||||||||||||||
Earnings
per share, diluted
|
3.09 | 2.34 | 1.60 | 1.88 | 0.78 | ||||||||||||||||
Dividends
declared
|
25,435,501 | 30,175,223 |
(2)
|
9,465,082 | 20,278,538 | 34,664,699 | |||||||||||||||
Cash
paid for common dividend / return of capital
|
26,962,500 | 46,875,223 | (2) | 9,465,082 | 20,278,538 | 34,547,949 | ||||||||||||||||
Cash
dividends / return of capital, declared per common share
|
2.72 | 4.67 | (2) | 0.75 | 1.00 | 1.13 | ||||||||||||||||
Weighted
average number of shares outstanding during period, basic
|
9,918,056 | 10,739,476 | 12,535,365 | 21,566,619 | 30,437,107 | |||||||||||||||||
Weighted
average number of shares outstanding during period,
diluted
|
9,918,056 | 10,739,476 | 12,535,365 | 21,644,920 | 30,505,476 |
2004
|
2005
|
2006
|
2007
|
2008
|
||||||||||||||||
Other
Fleet Data (3)
|
||||||||||||||||||||
Number
of vessels
|
7.31 | 7.10 | 8.09 | 11.48 | 15.61 | |||||||||||||||
Calendar
days
|
2,677 | 2,591 | 2,942 | 4,190 | 5,714 | |||||||||||||||
Available
days
|
2,554 | 2,546 | 2,895 | 3,980 | 5,563 | |||||||||||||||
Voyage
days
|
2,542 | 2,508 | 2,864 | 3,969 | 5,451 | |||||||||||||||
Utilization
Rate (percent)
|
99.5 | % | 98.5 | % | 98.9 | % | 99.7 | % | 98.0 | % | ||||||||||
(In
U.S. dollars per day per vessel)
|
||||||||||||||||||||
Average
TCE rate (4)
|
17,839 | 17,485 | 14,312 | 21,468 | 23,693 | |||||||||||||||
Vessel
Operating Expenses
|
3,327 | 3,323 | 3,524 | 4,115 | 4,816 | |||||||||||||||
Management
Fees
|
737 | 738 | 770 | 875 | 943 | |||||||||||||||
G&A
Expenses
|
- | 162 | 366 | 634 | 710 | |||||||||||||||
Total
Operating Expenses
|
4,064 | 4,223 | 4,660 | 5,624 | 6,469 |
(1)
In 2004, the estimated scrap value of the vessels was increased from $170
to $300 per light ton to better reflect market price developments in the
scrap metal market. The effect of this change in estimate was to reduce
2004 depreciation expense by $1,400,010 and increase 2004 net income by
the same amount. In addition, in 2004, the estimated useful life of the
vessel m/v
Ariel
was extended from
28 years to 30 years since the vessel performed drydocking and it was not
expected to be sold until year - 2007 (m/v
Ariel
was sold in
February 2007). In November 2008, the estimated useful life of the
containerships and multipurpose vessels was increased to 30 years (from 25
years until then) in line with industry practice and intended use of such
vessels; also, the estimated scrap value of the vessels was reduced from
$300 to $250 per light ton to better reflect market price developments in
the scrap metal market. The effect of this change was to reduce 2008
depreciation expenses by $836,200 and increase 2008 net income by the same
amount.
|
(2)
This amount reflects a dividend in the amount of $30,175,223 ($2.99 per
share) and a return of capital in the amount of $16,700,000 ($1.68 per
share). The total payment to shareholders made in 2005 is in excess of
previously retained earnings because the Company decided to distribute to
its original shareholders in advance of going public most of the profits
relating to the Company's operations up to that time and to recapitalize
the Company. This one-time dividend cannot be considered indicative of
future dividend payments and the Company refers you to the other sections
in this annual report for a clearer understanding of the Company's
dividend policy.
|
(3)
For the definition of calendar days, available days, voyage days and
utilization rate see Item 5A-Operating Results.
|
(4)
Time charter equivalent rate, or, "TCE rate", is determined by dividing
voyage revenues less voyage expenses or time charter equivalent revenue or
"TCE revenues" by the number of voyage days during the relevant time
period. TCE revenues, a non-GAAP measure, provides additional meaningful
information in conjunction with shipping revenues, the most directly
comparable GAAP measure, because it assists Company management in making
decisions regarding the deployment and use of its vessels and in
evaluating their financial performance. TCE revenues and TCE rate is also
a standard shipping industry performance measure used primarily to compare
period-to-period changes in a shipping company's performance despite
changes in the mix of charter types (i.e., spot charters, time charters
and bareboat charters) under which the vessels may be employed between the
periods (see also Item 5A-Operating
Results).
|
2004
|
2005
|
2006
|
2007
|
2008
|
||||||||||||||||
(In
U.S. dollars except TCE rates, expressed in U.S. dollars per day and
voyage days)
|
||||||||||||||||||||
Voyage
revenues
|
45,718,006 | 44,523,401 | 42,143,361 | 86,104,365 | 132,243,918 | |||||||||||||||
Voyage
expenses
|
(370,345 | ) | (670,551 | ) | (1,154,738 | ) | (897,463 | ) | (3,092,323 | ) | ||||||||||
Time
Charter Equivalent ("TCE") Revenues
|
45,347,661 | 43,852,850 | 40,988,623 | 85,206,902 | 129,151,595 | |||||||||||||||
Voyage
days
|
2,542 | 2,508 | 2,864 | 3,969 | 5,451 | |||||||||||||||
Average
TCE rate
|
17,839 | 17,485 | 14,312 | 21,468 | 23,693 |
Capitalization
and Indebtedness
|
C.
|
Reasons
for the Offer and Use of Proceeds
|
D.
|
Risk
Factors
|
|
·
|
supply
of and demand for drybulk commodities, as well as containerized
cargo;
|
|
·
|
changes
in the exploration or production of energy resources, commodities,
semi-finished and finished consumer and industrial
products;
|
|
·
|
global
and regional economic and political conditions, including armed conflicts
and terrorist activities; embargoes and
strikes;
|
|
·
|
the
location of regional and global exploration, production and manufacturing
facilities;
|
|
·
|
availability
of credit to finance international
trade;
|
|
·
|
the
location of consuming regions for energy resources, commodities,
semi-finished and finished consumer and industrial
products;
|
|
·
|
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;
|
|
·
|
changes
in seaborne and other transportation patterns;
and
|
|
·
|
weather.
|
|
·
|
the
number of newbuilding deliveries;
|
|
·
|
the
scrapping rate of older vessels;
|
|
·
|
the
price of steel and other materials;
|
|
·
|
port
and canal congestion;
|
|
·
|
changes
in environmental and other regulations that may limit the useful life of
vessels;
|
|
·
|
vessel
casualties; and
|
|
·
|
the
number of vessels that are out of
service.
|
|
·
|
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;
|
|
·
|
cost
of newbuildings;
|
|
·
|
new
regulatory requirements from governments or self-regulated organizations;
and
|
|
·
|
prevailing
level of charter rates.
|
|
·
|
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.
|
|
·
|
incur
additional indebtedness;
|
|
·
|
create
liens on our assets;
|
|
·
|
sell
capital stock of our subsidiaries;
|
|
·
|
make
investments;
|
|
·
|
engage
in mergers or acquisitions;
|
|
·
|
pay
dividends;
|
|
·
|
make
capital expenditures;
|
|
·
|
change
the management of our vessels or terminate or materially amend the
management agreement relating to each vessel;
and
|
|
·
|
sell
our vessels.
|
|
·
|
marine
disaster;
|
|
·
|
piracy;
|
|
·
|
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.
|
|
·
|
actual
or anticipated fluctuations in quarterly and annual variations in our
results of operations;
|
|
·
|
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;
|
|
·
|
payment
of dividends;
|
|
·
|
strategic
actions by us or our competitors such as mergers, acquisitions, strategic
alliances or restructurings;
|
|
·
|
changes
in government 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.
|
|
Item
4.
|
A.
|
History
and Development of the Company
|
B.
|
Business
Overview
|
Name
|
Type
|
Dwt
|
TEU
|
Year
Built
|
Employment
|
TCE Rate
($/day)
|
Dry Bulk Vessels
|
||||||
ELENI
P
|
Panamax
|
72,119
|
1997
|
Spot
'til late May-09
Expected TC 'til late May-10
|
$15,350
|
|
IRINI
(*)
|
Panamax
|
69,734
|
1988
|
Baumarine
Pool
|
||
ARISTIDES
N.P.
|
Panamax
|
69,268
|
1993
|
TC
'til Jan-10
|
$12,350
|
|
MONICA
P (**)
|
Handymax
|
46,667
|
1998
|
Bulkhandling
Pool
|
||
GREGOS
|
Handysize
|
38,691
|
1984
|
Spot
|
||
Total
Dry Bulk Vessels
|
5
|
296,479
|
||||
Multipurpose Dry Cargo
Vessels
|
||||||
TASMAN
TRADER
|
1
|
22,568
|
950
|
1990
|
TC
'til Mar-12
|
$9,500
'til Dec-10,
$9,000
'til Mar-12
|
Container Carriers
|
||||||
MAERSK
NOUMEA
|
Intermediate
|
34,677
|
2,556
|
2001
|
TC
'til Aug-11
(3
annual options 'til Aug-14)
|
$16,800
'til Aug 11
$18,735
'til Aug 12
$19,240
'til Aug 13
$19,750
'til Aug 14
|
TIGER
BRIDGE
|
Intermediate
|
31,627
|
2,228
|
1990
|
TC
'til Mar-10
|
$7,500
|
ARTEMIS
|
Intermediate
|
29,693
|
2,098
|
1987
|
Laid-up
|
|
DESPINA
P
|
Handy
size
|
33,667
|
1,932
|
1990
|
Laid-up
|
|
JONATHAN
P
(ex-
OEL INTEGRITY)
|
Handy
size
|
33,667
|
1,932
|
1990
|
Laid-up
|
|
OEL
TRANSWORLD
(ex-CLAN
GLADIATOR)
|
Handy
size
|
30,007
|
1,742
|
1992
|
TC
'til Oct-09
'til
Oct-10
(owner's
option)
|
$12,000
$10,000
(owner's
option)
|
YM
XINGANG I
|
Handy
size
|
23,596
|
1,599
|
1993
|
TC
'til Jul-09
|
$26,650
|
MANOLIS
P
|
Handy
size
|
20,346
|
1,452
|
1995
|
TC
'til Oct-09
|
$15,800
|
NINOS
(ex-YM
QINGDAO I)
|
Feeder
|
18,253
|
1,169
|
1990
|
TC
'til Apr-10
|
$8,060
|
KUO
HSIUNG
|
Feeder
|
18,154
|
1,169
|
1993
|
TC
'til Dec-09
(option
'til Jun-10)
|
$4,100
'til Jun-09
$3,850
'til Jun-10
|
Total
Container Carriers
|
10
|
273,687
|
17,877
|
|||
Fleet
Grand Total
|
16
|
592,734
|
18,827
|
|
(*)
"Irini" is employed in the Baumarine spot pool that is managed by
Klaveness, a major global charterer in the drybulk
area.
|
|
(**)
"Monica P" is employed in the Bulkhandling spot pool that is managed by
Klaveness, a major global charterer in the drybulk
area.
|
|
·
|
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
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 2008, our total vessel operating expenses,
including management fees and general and administrative expenses were
$6,469 per day for the year ended December 31, 2008. 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, 2008, our fleet utilization was 98.0% and since 2003
our utilization rate has averaged around 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.
|
|
·
|
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 depressed price levels that exist currently. However, we will
also consider purchasing newbuildings or newbuilding resales 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 as
much as possible of 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
also use FFA contracts – as a substitute for time charter employment - to
partly provide coverage for our drybulk vessels in order to increase the
predictability of our revenues. We look to deploy the remainder
of our fleet through 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. As of May 1, 2009, on the basis of our fixed spot and
existing time charters and FFA contracts, approximately 70% of our vessel
capacity in 2009 and approximately 43% in 2010 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 in Two
Sectors
. 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 of up to Panamax size. A diversified
drybulk fleet profile will allow us to better serve our customers in both
major and minor drybulk trades, as well as to reduce any dependency on any
one cargo, trade route or customer. We will 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, 2008 plus the repayment
schedule of $20.00 million of new debt that we assumed in early 2009 call
for a reduction of more than 38% of our debt by the end of 2010. We expect
this will increase our ability to borrow funds to make additional vessel
acquisitions in order to grow our fleet and continue pay dividends to our
shareholders.
|
Year
ended December 31,
|
|||
Charterer
|
2006
|
2007
|
2008
|
A
|
-
|
12.10%
|
13.80%
|
B
|
15.06%
|
15.07%
|
8.81%
|
C
|
-
|
-
|
7.88%
|
D
|
10.40%
|
12.53%
|
7.27%
|
E
|
-
|
-
|
6.25%
|
F
|
16.63%
|
7.60%
|
5.14%
|
G
|
12.67%
|
5.19%
|
4.38%
|
H
|
5.32%
|
-
|
-
|
|
·
|
on-board
installation of automatic information systems ("AIS"), to enhance
vessel-to-vessel and vessel-to-shore
communications;
|
|
·
|
on-board
installation of ship security alert
systems;
|
|
·
|
the
development of vessel security
plans;
|
|
·
|
ship
identification number to be permanently marked on a vessel's
hull;
|
|
·
|
continuous
synopsis record kept onboard showing a vessel's history including the name
of the ship and of the state whose flag the ship is entitled to fly, the
date on which the ship was registered with that state, the ship's
identification number, the port at which the ship is registered and the
name of the registered owner(s) and their registered address;
and
|
|
·
|
compliance
with flag state security certification
requirements.
|
|
·
|
on-board
installation of automatic information systems ("AIS"), to enhance
vessel-to-vessel and vessel-to-shore
communications;
|
|
·
|
on-board
installation of ship security alert
systems;
|
|
·
|
the
development of vessel security plans;
and
|
|
·
|
compliance
with flag state security certification
requirements.
|
Vessel
|
Next
|
Type
|
||
TASMAN
TRADER
|
|
June
2010
|
|
Special
Survey
|
NINOS
|
July
2010
|
Special
Survey
|
||
ARTEMIS
|
April
2010
|
Drydocking
|
||
YM
XINGANG I
|
February
2011
|
Drydocking
|
||
ARISTIDES
N.P.
|
February
2011
|
Drydocking
|
||
KUO
HSIUNG
|
April
2011
|
Drydocking
|
||
IRINI
|
June
2011
|
Drydocking
|
||
GREGOS
|
July
2009
|
Special
Survey
|
||
MANOLIS
P
|
April
2010
|
Special
Survey
|
||
OEL
TRANSWORLD
|
April
2010
|
Drydocking
|
||
DESPINA
P
|
January
2011
|
Special
Survey
|
||
JONATHAN
P
|
December
2010
|
Special
Survey
|
||
TIGER
BRIDGE
|
November
2010
|
Special
Survey
|
||
MAERSK
NOUMEA
|
August
2009
|
Intermediate
Survey
|
||
MONICA
P
|
February
2011
|
Drydocking
|
||
ELENI
P
|
October
2009
|
Drydocking
|
Organizational
structure
|
D.
|
Property,
plants and equipment
|
|
·
|
Searoute
Maritime Ltd. incorporated in Cyprus on May 20, 1992, owner of the Cyprus
flag 33,712 dwt drybulk carrier motor vessel
Ariel
, which was built
in 1977 and acquired on March 5, 1993.
Ariel
was sold on
February 22, 2007.
|
|
·
|
Oceanopera
Shipping Ltd. incorporated in Cyprus on June 26, 1995, owner of the Cyprus
flag 34,750 dwt drybulk carrier motor vessel
Nikolaos P
, which was
built in 1984 and acquired on July 22, 1996. The vessel was sold on
February 12, 2009.
|
|
·
|
Oceanpride
Shipping Ltd. incorporated in Cyprus on March 7, 1998, owner of the Cyprus
flag 26,354 dwt drybulk carrier motor vessel
John P
, which was built
in 1981 and acquired on March 7, 1998.
John P
was sold on July
5, 2006.
|
|
·
|
Alcinoe
Shipping Ltd. incorporated in Cyprus on March 20, 1997, owner of the
Cyprus flag 26,354 dwt drybulk carrier motor vessel
Pantelis P
, which was
built in 1981 and acquired on June 4, 1997.
Pantelis P
was sold on
May 31, 2006. On February 22, 2007, Alcinoe Shipping Ltd.
acquired the 38,691 dwt Cyprus flag drybulk motor vessel
Gregos
, which was built
in 1984. On June 13, 2007, m/v
Gregos
was transferred
to Gregos Shipping Limited incorporated in the Marshall Islands and its
flag was changed to the flag of the Marshall
Islands.
|
|
·
|
Alterwall
Business Inc. incorporated in Panama on January 15, 2001, owner of the
Panama flag 18,253 dwt container carrier motor vessel
Ninos
(ex
YM Qingdao 1
), which
was built in 1990 and acquired on February 16,
2001.
|
|
·
|
Allendale
Investment S.A. incorporated in Panama on January 22, 2002, owner of the
Panama flag 18,154 dwt container carrier motor vessel
Kuo Hsiung
, which was
built in 1993 and acquired on May 13,
2002.
|
|
·
|
Diana
Trading Ltd. incorporated in the Marshall Islands on September 25, 2002,
owner of the Marshall Islands flag 69,734 dwt drybulk carrier motor vessel
Irini
, which was
built in 1988 and acquired on October 15,
2002.
|
|
·
|
Salina
Shipholding Corp., incorporated in the Marshall Islands on October 20,
2005, owner of the Marshall Islands flag 29,693 dwt container carrier
motor vessel
Artemis
, which was
built in 1987 and acquired on November 25,
2005.
|
|
·
|
Xenia
International Corp., incorporated in the Marshall Islands on April 6,
2006, owner of the Marshall Islands flag 22,568 dwt / 950 teu multipurpose
motor vessel
Tasman
Trader
, which was built in 1990 and acquired on April 27,
2006.
|
|
·
|
Prospero
Maritime Inc., incorporated in the Marshall Islands on July 21, 2006,
owner of the Marshall Islands flag 69,268 dwt drybulk motor vessel
Aristides N.P.
, which
was built in 1993 and acquired on September 4,
2006.
|
|
·
|
Xingang
Shipping Ltd., incorporated in Liberia on October 16, 2006, owner of the
Liberian flag 23,596 dwt container carrier
YM Xingang I
, which was
built in February 1993 and acquired on November 15,
2006.
|
|
·
|
Manolis Shipping
Ltd., incorporated in Marshall Islands on March 16, 2007, owner of the
Marshall Islands flag 20,346 dwt container carrier motor vessel
Manolis P
, which was
built in 1995 and acquired on April 12,
2007.
|
|
·
|
Eternity
Shipping Company, incorporated in the Marshall Islands on May 17, 2007,
owner of the Marshall Islands flag 30,007 dwt / 1,742 teu container
carrier motor vessel
OEL
Transworld
(ex
Clan Gladiator)
, which
was built in 1992 and acquired on June 13,
2007.
|
|
·
|
Emmentaly
Business Inc., incorporated in Panama on July 4, 2007, owner of the
Panamanian flag 33,667 dwt / 1,932 teu container carrier motor vessel
Jonathan P
, which
was built in 1990 and acquired on August 7, 2007. On April 16, 2008, motor
vessel
Jonathan P
was renamed to
OEL
Intergrity
;
OEL Intergrity
was
renamed back to
Jonathan
P
on March 5, 2009.
|
|
·
|
Pilory
Associates Corp., incorporated in Panama on July 4, 2007, owner of the
Panamanian flag 33,667 dwt / 1,932 teu container carrier motor vessel
Despina P
, which
was built in 1990 and acquired on August 13,
2007.
|
|
·
|
Tiger
Navigation Corp., incorporated in Marshall Islands on August 29, 2007,
owner of the Marshall Islands flag 31,627 dwt / 2,228 teu container
carrier motor vessel
Tiger Bridge
, which was
built in 1990 and acquired on October 4,
2007.
|
|
·
|
Trust
Navigation Corp., incorporated in Liberia on October 1, 2007, owner of the
Liberian flag 64,873 dwt drybulk carrier motor vessel
Ioanna P
, which was
built in 1984 and acquired on November 1, 2007. The vessel was sold on
January 12, 2009.
|
|
·
|
Noumea
Shipping Ltd, incorporated in Marshall Islands on May 14, 2008, owner of
the Marshall Islands flag 34,677 DWT / 2,556 TEU container vessel motor
vessel
Maersk
Noumea
, which was built in 2001 and acquired on May 22,
2008.
|
|
·
|
Saf-Concord
Shipping Ltd., incorporated in Liberia on June 8, 2008, owner of the
Liberian flag 46,667 dwt drybulk carrier motor vessel
Monica P
, which was
built in 1998 and acquired on January 19,
2009.
|
|
·
|
Eleni
Shipping Ltd., incorporated in Liberia on February 11, 2009, owner of the
Liberian flag 72,119 dwt drybulk carrier motor vessel
Eleni P
, which was
built in 1997 and acquired on March 6,
2009.
|
Item 5.
|
Operating
and Financial Review and Prospects
|
Operating
results
|
B.
|
Liquidity
and Capital Resources
|
C.
|
Research
and development, patents and licenses,
etc.
|
D.
|
Trend
information
|
E.
|
Off-balance
Sheet Arrangements
|
F.
|
Tabular
Disclosure of Contractual
Obligations
|
In
U.S. dollars
|
Total
|
Less
Than
One
Year
|
One
to Three Years
|
Three
to
Five
Years
|
More
Than
Five
Years
|
|||||||||||||||
Bank
debt (1)
|
$ | 56,015,000 | $ | 12,450,000 | $ | 20,700,000 | $ | 17,025,000 | $ | 5,840,000 | ||||||||||
Interest
Payments (2)
|
$ | 8,659,501 | $ | 2,700,378 | $ | 3,667,833 | $ | 1,981,210 | $ | 310,080 | ||||||||||
Vessel
Management fees (3)
|
$ | 13,885,151 | $ | 4,967,651 | $ | 6,560,425 | $ | 2,173,016 | $ | 184,059 | ||||||||||
Other
Management fees (4)
|
$ | 4,980,957 | $ | 1,150,000 | $ | 2,422,159 | $ | 1,408,798 | — | |||||||||||
Derivative
contracts (5)
|
$ | 1,239,833 | $ | 296,558 | $ | 943,275 | — | — |
Directors,
Senior Management and Employees
|
A.
|
Directors and Senior
Management
|
Name
|
Age
|
Position
|
Aristides
J. Pittas
|
49
|
Chairman,
President and CEO; Class A Director
|
Dr.
Anastasios Aslidis
|
49
|
CFO
and Treasurer; Class A Director
|
Aristides
P. Pittas
|
57
|
Vice
Chairman; Class A Director
|
Stephania
Karmiri
|
41
|
Secretary
|
Panagiotis
Kyriakopoulos
|
48
|
Class
B Director
|
George
Skarvelis
|
48
|
Class
B Director
|
George
Taniskidis
|
48
|
Class
C Director
|
Gerald
Turner
|
61
|
Class
C Director
|
B.
|
Compensation
|
C.
|
Board
Practices
|
|
·
|
We
are not required under Marshall Islands law to maintain a board of
directors with a majority of independent directors, and we cannot
guarantee that we will always in the future maintain a board of directors
with a majority of independent
directors.
|
|
·
|
In
lieu of a compensation committee comprised of independent directors, our
Board of Directors will be responsible for establishing the executive
officers' compensation and benefits. Under Marshall Islands law,
compensation of the executive officers is not required to be determined by
an independent committee.
|
|
·
|
In
lieu of a nomination committee comprised of independent directors, our
Board of Directors will be responsible for identifying and recommending
potential candidates to become board members and recommending directors
for appointment to board committees. Shareholders may also identify and
recommend potential candidates to become candidates to become board
members in writing. No formal written charter has been prepared or adopted
because this process is outlined in our
bylaws.
|
|
·
|
In
lieu of obtaining an independent review of related party transactions for
conflicts of interests, consistent with Marshall Islands law requirements,
a related party transaction will be permitted 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 of Directors and the
Board of Directors 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 Marshall
Islands Business Corporations Act, by unanimous vote of the disinterested
directors; or (ii) the material facts as to his relationship or interest
are disclosed and the shareholders are entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by a simple
majority vote of the shareholders; or (iii) the contract or transaction is
fair as to the Company as of the time it is authorized, approved or
ratified, by the Board of Directors, 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 of Directors or of a
committee which authorizes the contract or
transaction.
|
|
·
|
As
a foreign private issuer, we are not required to solicit proxies or
provide proxy statements to NASDAQ pursuant to NASDAQ corporate governance
rules or Marshall Islands law. Consistent with Marshall Islands law, we
will notify our shareholders of meetings between 15 and 60 days before the
meeting. This notification will contain, among other things, information
regarding business to be transacted at the meeting. In addition, our
bylaws provide that shareholders must give us advance notice to properly
introduce any business at a meeting of the shareholders. Our bylaws also
provide that shareholders may designate in writing a proxy to act on their
behalf.
|
|
·
|
In
lieu of holding regular meetings at which only independent directors are
present, our entire board of directors, a majority of whom are
independent, will hold regular meetings as is consistent with the laws of
the Republic of the Marshall
Islands.
|
|
·
|
The
Board of Directors adopted an equity incentive plan in October 2007 which
replaced the prior equity incentive plan. Shareholder approval was not
necessary to terminate the original equity incentive plan or to establish
a new equity incentive plan since Marshall Islands law permits the Board
of Directors to take these actions. The Company has filed the appropriate
documentation with the Nasdaq Global Market reflecting this
event.
|
D.
|
Employees
|
E.
|
Share
Ownership
|
Name
of Beneficial Owner(1)
|
Number
of Shares
of
Voting Stock
Beneficially
Owned
|
Percent
of
Voting
Stock
|
||||||
Friends
Investment Company Inc.(2)
|
10,174,117 | 33.3 | % | |||||
Aristides
J. Pittas(3)
|
110,000 | * | ||||||
George
Skarvelis(4)
|
15,000 | * | ||||||
George
Taniskidis(5)
|
15,000 | * | ||||||
Gerald
Turner(6)
|
15,000 | * | ||||||
Panagiotis
Kyriakopoulos(7)
|
15,000 | * | ||||||
Aristides
P. Pittas(8)
|
20,000 | * | ||||||
Anastasios
Aslidis(9)
|
61,500 | * | ||||||
Stefania
Karmiri (10)
|
— | * | ||||||
Simos
Pariaros (11)
|
5,000 | * | ||||||
All
directors and officers and 5% owners as a group
|
10,430,617 | 34.1 | % |
*
|
Indicates
less than 1.0%.
|
(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
10,174,117 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.
|
(3)
|
Does
not include 1,282,964 shares of common stock held of record by Friends, by
virtue of Mr. Pittas' ownership interest in Friends. Also does not
include 52,542 shares of common stock held of record by Eurobulk Marine
Holdings, Inc. ("Eurobulk Marine"), by virtue of Mr. Pittas'
ownership interest in Eurobulk Marine. Eurobulk Marine was an investor in
our Private Placement in August 2005. Friends and Eurobulk Marine are each
controlled by members of the Pittas family. Mr. Pittas disclaims
beneficial ownership except to the extent of his pecuniary interest.
Includes 20,000 shares vesting on August 11, 2009, 20,000 shares vesting
on November 16, 2009 and 20,000 shares vesting on November 16,
2010.
|
(4)
|
Does
not include 539,228 shares of common stock held of record by Friends, by
virtue of Mr. Skarvelis' ownership interest in Friends. Also does not
include 22,083 shares of common stock held of record by Eurobulk Marine,
by virtue of Mr. Skarvelis' ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Skarvelis disclaims beneficial ownership except to the
extent of his pecuniary interest. Includes 2,500 shares vesting on August
11, 2009, 2,500 shares vesting on November 16, 2009 and 2,500 shares
vesting on November 16, 2010.
|
(5)
|
Does
not include 31,588 shares of common stock held of record by Friends, by
virtue of Mr. Taniskidis' ownership in Friends. Also does not include
1,294 shares of common stock held of record by Eurobulk Marine, by virtue
of Mr. Taniskidis' ownership interest in Eurobulk Marine. Eurobulk
Marine was an investor in our Private Placement in August 2005. Friends
and Eurobulk Marine are each controlled by members of the Pittas family.
Mr. Taniskidis disclaims beneficial ownership except to the extent of
his pecuniary interest. Includes 2,500 shares vesting on August 11, 2009,
2,500 shares vesting on November 16, 2009 and 2,500 shares vesting on
November 16, 2010.
|
(6)
|
Does
not include 144,472 shares of common stock held of record by Friends, by
virtue of Mr. Turner's ownership interest in Friends. Also does not
include 5,917 shares of common stock held of record by Eurobulk Marine, by
virtue of Mr. Turner's ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Turner disclaims beneficial ownership except to the
extent of his pecuniary interest. Includes 2,500 shares vesting on August
11, 2009, 2,500 shares vesting on November 16, 2009 and 2,500 shares
vesting on November 16, 2010.
|
(7)
|
Does
not include 61,045 shares of common stock held of record by Friends, by
virtue of Mr. Kyriakopoulos' ownership in Friends. Also does not
include 2,500 shares of common stock held of record by Eurobulk Marine, by
virtue of Mr. Kyriakopoulos' ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Kyriakopoulos disclaims beneficial ownership except to
the extent of his pecuniary interest. Includes 2,500 shares vesting on
August 11, 2009, 2,500 shares vesting on November 16, 2009 and 2,500
shares vesting on November 16,
2010.
|
(8)
|
Does
not include 876,692 shares of common stock held of record by Friends, by
virtue of Mr. Pittas' ownership interest in Friends. Also does not
include 35,904 shares of common stock held of record by Eurobulk Marine,
by virtue of Mr. Pittas' ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Pittas disclaims beneficial ownership except to the
extent of his pecuniary interest. Includes 5,000 shares vesting on August
11, 2009, 5,000 shares vesting on November 16, 2009 and 5,000 shares
vesting on November 16, 2010.
|
(9)
|
Includes
12,500 shares vesting on August 11, 2009, 12,500 shares vesting on
November 16, 2009 and 12,500 shares vesting on November 16,
2010.
|
(10)
|
Does
not include 2,138 shares of common stock held of records by Friends, by
virtue of Mrs. Karmiri's ownership in Friends. Also does not include
88 shares of common stock held of record by Eurobulk Marine, by virtue of
Mrs. Karmiri's ownership interest in Eurobulk Marine. Eurobulk Marine
was an investor in our Private Placement in August 2005. Friends and
Eurobulk Marine are each controlled by members of the Pittas family.
Mrs. Karmiri disclaims beneficial ownership except to the extent of
her pecuniary interest.
|
(11)
|
Includes
2,500 shares vesting on November 16, 2009 and 2,500 shares vesting on
November 16, 2010.
|
Major
Shareholders and Related Party Transactions
|
A.
|
Major
Stockholders
|
Name
of Beneficial Owner(1)
|
Number
of Shares
of
Voting Stock
Beneficially
Owned
|
Percent
of
Voting
Stock
|
||||||
Friends
Investment Company Inc.(2)
|
10,174,117 | 33.3 | % | |||||
Aristides
J. Pittas(3)
|
110,000 | * | ||||||
George
Skarvelis(4)
|
15,000 | * | ||||||
George
Taniskidis(5)
|
15,000 | * | ||||||
Gerald
Turner(6)
|
15,000 | * | ||||||
Panagiotis
Kyriakopoulos(7)
|
15,000 | * | ||||||
Aristides
P. Pittas(8)
|
20,000 | * | ||||||
Anastasios
Aslidis(9)
|
61,500 | * | ||||||
Stefania
Karmiri (10)
|
— | * | ||||||
Simos
Pariaros (11)
|
5,000 | * | ||||||
All
directors and officers and 5% owners as a group
|
10,430,617 | 34.1 | % |
*
|
Indicates
less than 1.0%.
|
(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
10,174,117 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.
|
(3)
|
Does
not include 1,282,964 shares of common stock held of record by Friends, by
virtue of Mr. Pittas' ownership interest in Friends. Also does not
include 52,542 shares of common stock held of record by Eurobulk Marine
Holdings, Inc. ("Eurobulk Marine"), by virtue of Mr. Pittas'
ownership interest in Eurobulk Marine. Eurobulk Marine was an investor in
our Private Placement in August 2005. Friends and Eurobulk Marine are each
controlled by members of the Pittas family. Mr. Pittas disclaims
beneficial ownership except to the extent of his pecuniary interest.
Includes 20,000 shares vesting on August 11, 2009, 20,000 shares vesting
on November 16, 2009 and 20,000 shares vesting on November 16,
2010.
|
(4)
|
Does
not include 539,228 shares of common stock held of record by Friends, by
virtue of Mr. Skarvelis' ownership interest in Friends. Also does not
include 22,083 shares of common stock held of record by Eurobulk Marine,
by virtue of Mr. Skarvelis' ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Skarvelis disclaims beneficial ownership except to the
extent of his pecuniary interest. Includes 2,500 shares vesting on August
11, 2009, 2,500 shares vesting on November 16, 2009 and 2,500 shares
vesting on November 16, 2010.
|
(5)
|
Does
not include 31,588 shares of common stock held of record by Friends, by
virtue of Mr. Taniskidis' ownership in Friends. Also does not include
1,294 shares of common stock held of record by Eurobulk Marine, by virtue
of Mr. Taniskidis' ownership interest in Eurobulk Marine. Eurobulk
Marine was an investor in our Private Placement in August 2005. Friends
and Eurobulk Marine are each controlled by members of the Pittas family.
Mr. Taniskidis disclaims beneficial ownership except to the extent of
his pecuniary interest. Includes 2,500 shares vesting on August 11, 2009,
2,500 shares vesting on November 16, 2009 and 2,500 shares vesting on
November 16, 2010.
|
(6)
|
Does
not include 144,472 shares of common stock held of record by Friends, by
virtue of Mr. Turner's ownership interest in Friends. Also does not
include 5,917 shares of common stock held of record by Eurobulk Marine, by
virtue of Mr. Turner's ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Turner disclaims beneficial ownership except to the
extent of his pecuniary interest. Includes 2,500 shares vesting on August
11, 2009, 2,500 shares vesting on November 16, 2009 and 2,500 shares
vesting on November 16, 2010.
|
(7)
|
Does
not include 61,045 shares of common stock held of record by Friends, by
virtue of Mr. Kyriakopoulos' ownership in Friends. Also does not
include 2,500 shares of common stock held of record by Eurobulk Marine, by
virtue of Mr. Kyriakopoulos' ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Kyriakopoulos disclaims beneficial ownership except to
the extent of his pecuniary interest. Includes 2,500 shares vesting on
August 11, 2009, 2,500 shares vesting on November 16, 2009 and 2,500
shares vesting on November 16,
2010.
|
(8)
|
Does
not include 876,692 shares of common stock held of record by Friends, by
virtue of Mr. Pittas' ownership interest in Friends. Also does not
include 35,904 shares of common stock held of record by Eurobulk Marine,
by virtue of Mr. Pittas' ownership interest in Eurobulk Marine.
Eurobulk Marine was an investor in our Private Placement in August 2005.
Friends and Eurobulk Marine are each controlled by members of the Pittas
family. Mr. Pittas disclaims beneficial ownership except to the
extent of his pecuniary interest. Includes 5,000 shares vesting on August
11, 2009, 5,000 shares vesting on November 16, 2009 and 5,000 shares
vesting on November 16, 2010.
|
(9)
|
Includes
12,500 shares vesting on August 11, 2009, 12,500 shares vesting on
November 16, 2009 and 12,500 shares vesting on November 16,
2010.
|
(10)
|
Does
not include 2,138 shares of common stock held of records by Friends, by
virtue of Mrs. Karmiri's ownership in Friends. Also does not include
88 shares of common stock held of record by Eurobulk Marine, by virtue of
Mrs. Karmiri's ownership interest in Eurobulk Marine. Eurobulk Marine
was an investor in our Private Placement in August 2005. Friends and
Eurobulk Marine are each controlled by members of the Pittas family.
Mrs. Karmiri disclaims beneficial ownership except to the extent of
her pecuniary interest.
|
(11)
|
Includes
2,500 shares vesting November 16, 2009 and 2,500 shares vesting on
November 16, 2010.
|
Related
Party Transactions
|
C.
|
Interests
of Experts and Counsel
|
Item 8.
|
Financial
information
|
A.
|
Consolidated
Statements and Other Financial
Information
|
B.
|
Significant
Changes
|
Item 9.
|
The
Offer and Listing
|
A.
|
Offer
and Listing Details
|
Period
|
Low
|
High
|
Year
ended Dec. 31, 2006
|
6.70
|
18.93
|
2
nd
quarter 2006
|
8.82
|
18.93
|
3
rd
quarter 2006
|
8.55
|
9.15
|
4
th
quarter 2006
|
6.70
|
9.00
|
Year
ended Dec. 31, 2007
|
7.00
|
20.79
|
1
st
quarter 2007
|
7.00
|
10.00
|
2
nd
quarter 2007
|
10.35
|
15.75
|
3
rd
quarter 2007
|
11.80
|
16.91
|
4
th
quarter 2007
|
11.75
|
20.79
|
Year
ended Dec. 31, 2008
|
3.12
|
16.80
|
1
st
quarter 2008
|
9.60
|
14.08
|
2
nd
quarter 2008
|
12.32
|
16.80
|
3
rd
quarter 2008
|
7.97
|
13.40
|
4
th
quarter 2008
|
3.12
|
7.83
|
October
2008
|
3.90
|
7.83
|
November
2008
|
3.12
|
5.80
|
December
2008
|
3.60
|
5.54
|
2009*
|
3.51
|
5.95
|
1
st
quarter 2009
|
3.51
|
5.82
|
2
nd
quarter 2009
|
3.57
|
5.95(*)
|
January
2009
|
4.25
|
5.82
|
February
2009
|
4.23
|
5.52
|
March
2009
|
3.51
|
4.74
|
April
2009
|
3.57
|
4.86
|
May
2009
|
4.85
|
5.95(*)
|
B.
|
Plan
of Distribution
|
C.
|
Markets
|
D.
|
Selling
Shareholders
|
E.
|
Dilution
|
F.
|
Expenses
of the Issue
|
Item 10.
|
Additional
Information
|
A.
|
Share
Capital
|
B.
|
Articles
of Incorporation, as amended, and
Bylaws
|
Material
Contracts
|
D.
|
Exchange
Controls
|
E.
|
Taxation
|
|
·
|
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."
|
|
·
|
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.
|
|
·
|
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.
|
|
·
|
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.
|
|
·
|
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.
|
Dividends
and paying agents
|
G.
|
Statement
by experts
|
H.
|
Documents
on display
|
I.
|
Subsidiary
Information
|
Item 11.
|
Quantitative
and Qualitative Disclosures about Market
Risk
|
Year
Ended December 31,
|
Amount
in $(loans)
|
Amount
in $ (swap)
|
||||||
2009
|
661,000 | (250,000 | ) | |||||
2010
|
585,000 | (250,000 | ) | |||||
2011
|
430,000 | (250,000 | ) | |||||
2012
|
342,000 | (250,000 | ) | |||||
2013
and thereafter
|
379,000 | (134,000 | ) |
Year
Ended December 31,
|
Change
in Fair Value in $
|
|||
2009
|
(480,000 | ) | ||
2010
|
(485,000 | ) | ||
Margin
|
Amount
in $
|
|||
Increase
in margin
|
965,000 |
Item 12.
|
Description
of Securities Other than Equity
Securities
|
Item 13.
|
Defaults,
Dividend Arrearages and
Delinquencies
|
Item 14.
|
Material
Modifications to the Rights of Security Holders and Use of
Proceeds
|
Item 15.
|
Controls
and Procedures
|
Audit
Committee Financial Expert
|
Code
of Ethics
|
2008
(dollars
in thousands)
|
2007
(dollars
in thousands)
|
|||||||
Audit
Fees
|
$ | 546 | $ | 753 | ||||
Further
assurance / audit related fees
|
-
|
-
|
||||||
Tax
fees
|
-
|
-
|
||||||
Other
fees / expenses
|
-
|
-
|
||||||
Total
|
$ | 546 | $ | 753 |
Item 17.
|
Financial
Statements
|
Item 18.
|
Financial
Statements
|
Exhibits
|
1.1
|
Articles
of Incorporation of Euroseas Ltd.(7)
|
|
1.2
|
Bylaws
of Euroseas Ltd.(7)
|
|
1.3
|
Amendment
to Articles of Incorporation of Euroseas Ltd.(7)
|
|
2.1
|
Specimen
Common Stock Certificate(7)
|
|
2.2
|
Form
of Securities Purchase Agreement(1)
|
|
2.3
|
Form
of Registration Rights Agreement(1)
|
|
2.4
|
Form
of Warrant(1)
|
|
2.5
|
Registration
Rights Agreement between Euroseas Ltd. and Friends Investment Company
Inc., dated November 2, 2005(2)
|
|
4.1
|
Form
of Lock-up Agreement(1)
|
|
4.2
|
Loan
Agreement between Diana Trading Ltd., as borrower, and Oceanopera Shipping
Limited, as corporate guarantor, and HSBC Bank plc, as the lender, dated
October 16, 2002 for the amount of 5,900,000(1)
|
|
4.3
|
Loan
Agreement between Diana Trading Ltd., as borrower, and HSBC Bank plc, as
lender, for the amount of $4,200,000 dated May 9,
2005(1)
|
|
4.
|
||
4.4
|
Loan
Agreement dated May 16, 2005 between EFG Eurobank Ergasias S.A., as
lender, and Alcinoe Shipping Limited, Oceanopera Shipping Limited,
Oceanpride Shipping Limited, and Searoute Maritime Limited, as borrowers,
for the amount of $13,500,000(1)
|
|
4.5
|
Secured
Loan Facility Agreement dated May 24, 2005 between Allendale
Investments S.A. and Alterwall Business Inc. as borrowers, Fortis Bank
(Nederland) N.V. and others as lenders, and Fortis Bank (Nederland) N.V.
as agent and security trustee for $20,000,000(1)
|
|
4.6
|
Form
of Standard Ship Management Agreement(1)
|
|
4.7
|
Agreement
between Eurobulk Ltd. and Eurochart S.A., for the provision of exclusive
brokerage services, dated December 20, 2004(1)
|
|
4.8
|
Form
of Current Time Charter(1)
|
|
4.9
|
Amended
and Restated Master Management Agreement between Euroseas Ltd. and
Eurobulk Ltd. dated as of July 17, 2007, as amended February 7, 2008
(7)
|
|
4.10
|
Addendum
No. 1 to Amendment to Amended and Restated Master Management Agreement
between Euroseas Ltd. and Eurobulk Ltd. dated as of February 7, 2009
(10)
|
|
4.11
|
Loan
Agreement between Salina Shipping Corp., as borrower, and Calyon, as
lender, for the amount of USD$15,500,000 dated December 28,
2005(3)
|
|
4.12
|
Loan
Agreement between Xenia International Corp., as borrower, and Fortis Bank
N.V./S.A., Athens Branch and others, as lenders, for the amount of
USD$8,250,000 dated June 30, 2006(4)
|
|
4.13
|
Loan
Agreement between Prospero Maritime Inc., as borrower, and Calyon, as
lender, for the amount of USD$15,500,000 dated August 30,
2006(4)
|
|
4.14
|
Euroseas
2007 Equity Incentive Plan(9)
|
|
4.15
|
Loan
Agreement between Xingang Shipping Ltd., as borrower, and HSBC Bank plc,
as lender, for the amount of USD$20,000,000 dated November 14,
2006(5)
|
|
4.16
|
Form
of Right of First Refusal(6)
|
|
4.17
|
Form
of Advisory Agreement(6)
|
|
4.18
|
Loan
Agreement between Manolis Shipping Limited, as borrower, and EFG Eurobank
Ergasias S.A., as lender, for the amount of USD$10,000,000 dated June 7,
2007(7)
|
|
4.19
|
Loan
Agreement between Trust Navigation Corp., as borrower and EFG Eurobank
Ergasias S.A., as lender, for the amount of USD$15,000,000 dated October
29, 2007 (7)
|
4.20
|
Amendment
to Loan Agreement between Trust Navigation Corp., as borrower and EFG
Eurobank Ergasias S.A., as lender, dated December 30, 2008
(10)
|
|
4.21
|
Form
of Senior Security Debt Indenture(8)
|
|
4.22
|
Form
of Subordinated Debt Security Indenture(8)
|
|
4.23
|
Loan
Agreement between Saf-Concord Shipping Ltd., as borrower and
EFG Eurobank Ergasias S.A., as lender, for the amount of USD$10,000,000
dated January 9, 2009 (10)
|
|
4.24
|
Loan
Agreement between Eleni Shipping Ltd., as borrower and Calyon, as lender,
for the amount of USD$10,000,000 dated April 30, 2009
(10)
|
|
8.1
|
Subsidiaries
of the Registrant(10)
|
|
12.1
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive
Officer(10)
|
|
12.2
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial
Officer(10)
|
|
13.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002(10)
|
|
13.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002(10)
|
|
15.1
|
Consent
of Deloitte, Hadjipavlou, Sofianos & Cambanis S.A.(10)
|
(1) | Filed as an Exhibit to the Company's Registration Statement (File No. 333-129145) on October 20, 2005. | |
(2)
|
Filed
as an Exhibit to the Company's Amendment No.1 to Registration Statement
(File No. 333-129145) on December 5,
2005.
|
(3)
|
Filed
as an Exhibit to the Company's Amendment No. 2 to Registration Statement
(File No. 333-129145) on January 19,
2006.
|
(4)
|
Filed
as an Exhibit to the Company's Post-Effective Amendment No. 1 to
Registration Statement (File No. 333-12945) on September 12,
2006.
|
(5)
|
Filed
as an Exhibit to the Company's Registration Statement (File No.
333-138780) on November 16, 2006.
|
(6)
|
Filed
as an Exhibit to the Company's Amendment No. 1 to Registration Statement
(File No. 333-138780) on January 10,
2007.
|
(7)
|
Filed
as an Exhibit to the Company's Annual Report on Form 20-F (File No.
001-33283) on May 13, 2008.
|
(8)
|
Filed
as an Exhibit to the Company's Registration Statement (File No.
333-152089) on July 2, 2008.
|
(9)
|
Filed
as an Exhibit to the Company's Post-Effective Amendment No. 1 to
Registration Statement (File No. 333-148124) on July 17,
2008.
|
(10)
|
Filed
herewith.
|
EUROSEAS
LTD.
|
||||
(Registrant)
|
||||
By:
|
/s/
Aristides J. Pittas
|
|||
Aristides
J. Pittas
|
||||
Chairman,
President and CEO
|
||||
Date:
May 18, 2009
|
Report of Independent Registered Public Accounting Firm |
F-2
|
Consolidated Balance Sheets as of December 31, 2007 and 2008 |
F-3
|
Consolidated
Statements of Income for the Years Ended
December
31, 2006, 2007 and 2008
|
F-4
|
|
|
Consolidated
Statements of Shareholders' Equity for the Years Ended
December
31, 2006, 2007 and 2008
|
F-5
|
|
|
Consolidated
Statements of Cash Flows for the Years Ended
December
31, 2006, 2007 and 2008
|
F-6
|
|
|
Notes to the Consolidated Financial Statements |
F-8
|
Notes
|
2007
|
2008
|
||||||||||
Assets
|
||||||||||||
Current
assets
|
||||||||||||
Cash
and cash equivalents
|
104,135,320 | 73,851,191 | ||||||||||
Trade
accounts receivable, net of allowance of $0 and $408,893
|
1,174,045 | 1,233,895 | ||||||||||
Other
receivables
|
741,081 | 1,439,628 | ||||||||||
Due
from related company
|
8 | 5,291,197 | 4,678,750 | |||||||||
Inventories
|
3 | 1,903,678 | 2,011,973 | |||||||||
Restricted
cash
|
1,739,879 | 2,181,264 | ||||||||||
Vessels
held for sale
|
4 | - | 6,067,020 | |||||||||
Trading
securities
|
16 | 2,891,658 | 771,727 | |||||||||
Derivatives
|
10, 16 | - | 61,670 | |||||||||
Prepaid
expenses
|
430,605 | 241,102 | ||||||||||
Total
current assets
|
118,307,463 | 92,538,220 | ||||||||||
Fixed
assets
|
||||||||||||
Vessels,
net
|
4 | 238,248,984 | 231,963,606 | |||||||||
Advances
for vessel acquisitions
|
- | 1,821,798 | ||||||||||
Long-term
assets
|
||||||||||||
Restricted
cash
|
4,500,000 | 4,800,000 | ||||||||||
Deferred
charges, net
|
5 | 5,529,870 | 7,771,342 | |||||||||
Derivatives
|
10, 16 | - | 68,038 | |||||||||
Fair
value of above market time charter acquired
|
7 | 4,604,514 | 1,653,422 | |||||||||
Total
long-term assets
|
252,883,368 | 248,078,206 | ||||||||||
Total
assets
|
371,190,831 | 340,616,426 | ||||||||||
Liabilities
and shareholders' equity
|
||||||||||||
Current
liabilities
|
||||||||||||
Long-term
debt, current portion
|
9 | 25,575,000 | 12,450,000 | |||||||||
Trade
accounts payable
|
3,789,764 | 2,283,488 | ||||||||||
Accrued
expenses
|
6 | 2,043,585 | 1,206,466 | |||||||||
Accrued
dividends
|
- | 116,750 | ||||||||||
Deferred
revenues
|
3,774,162 | 4,533,601 | ||||||||||
Derivatives
|
10,16 | - | 827,210 | |||||||||
Total
current liabilities
|
35,182,511 | 21,417,515 | ||||||||||
Long-term
liabilities
|
||||||||||||
Long-term
debt, net of current portion
|
9 | 56,015,000 | 43,565,000 | |||||||||
Derivatives
|
10, 16 | - | 2,700,028 | |||||||||
Fair
value of below market time charters acquired
|
7 | 8,202,972 | 8,704,811 | |||||||||
Total
long-term liabilities
|
64,217,972 | 54,969,839 | ||||||||||
Total
liabilities
|
99,400,483 | 76,387,354 | ||||||||||
Commitments
and contingencies
|
12 | - | - | |||||||||
Shareholders'
equity
|
||||||||||||
Common
stock (par value $0.03, 100,000,000 shares authorized, 30,261,113 and
30,575,611 issued and outstanding)
|
907,834 | 917,269 | ||||||||||
Preferred
shares (par value $0.01, 20,000,000 shares authorized, no shares issued
and outstanding)
|
- | - | ||||||||||
Additional
paid-in capital
|
231,147,700 | 234,567,670 | ||||||||||
Retained
earnings
|
39,734,814 | 28,744,133 | ||||||||||
Total
shareholders' equity
|
271,790,348 | 264,229,072 | ||||||||||
Total
liabilities and shareholders' equity
|
371,190,831 | 340,616,426 |
Notes
|
2006
|
2007
|
2008
|
|||||||||||||
Revenues
|
||||||||||||||||
Voyage
revenue
|
42,143,361 | 86,104,365 | 132,243,918 | |||||||||||||
Commissions
|
8, 15 | (1,829,534 | ) | (4,024,032 | ) | (5,940,460 | ) | |||||||||
Net
revenue
|
40,313,827 | 82,080,333 | 126,303,458 | |||||||||||||
Operating
expenses
|
||||||||||||||||
Voyage
expenses
|
15 | 1,154,738 | 897,463 | 3,092,323 | ||||||||||||
Vessel
operating expenses
|
15 | 10,368,817 | 17,240,132 | 27,521,194 | ||||||||||||
Amortization
of dry-docking and special survey expense and vessel
depreciation
|
4, 5 | 7,292,838 | 17,963,072 | 32,230,901 | ||||||||||||
Impairment
loss
|
4 | - | - | 25,113,364 | ||||||||||||
Management
fees
|
8 | 2,266,589 | 3,669,137 | 5,387,415 | ||||||||||||
Other
general and administrative expenses
|
1,076,884 | 2,656,176 | 4,057,736 | |||||||||||||
Net
gain on sale of vessels
|
4 | (4,445,856 | ) | (3,411,397 | ) | - | ||||||||||
Total
operating expenses
|
17,714,010 | 39,014,583 | 97,402,933 | |||||||||||||
Operating
income
|
22,599,817 | 43,065,750 | 28,900,525 | |||||||||||||
Other
income/(expenses)
|
||||||||||||||||
Interest
and other financing costs
|
(3,398,858 | ) | (4,850,239 | ) | (2,930,737 | ) | ||||||||||
Change
in fair value of derivatives
|
10 | - | - | (3,474,635 | ) | |||||||||||
Foreign
exchange gain/(loss)
|
(1,598 | ) | (7,824 | ) | 7,888 | |||||||||||
Realized
gain on investments
|
- | - | 81,193 | |||||||||||||
Unrealized
gain (loss) on investments
|
- | 98,744 | (2,393,983 | ) | ||||||||||||
Dividend
income
|
- | - | 315,266 | |||||||||||||
Interest
income
|
870,046 | 2,357,633 | 3,168,501 | |||||||||||||
Other
expenses, net
|
(2,530,410 | ) | (2,401,686 | ) | (5,226,507 | ) | ||||||||||
Net
income
|
20,069,407 | 40,664,064 | 23,674,018 | |||||||||||||
Earnings
per share - basic
|
14 | 1.60 | 1.89 | 0.78 | ||||||||||||
Weighted
average number of shares outstanding during the year,
basic
|
14 | 12,535,365 | 21,566,619 | 30,437,107 | ||||||||||||
Earnings
per share - diluted
|
14 | 1.60 | 1.88 | 0.78 | ||||||||||||
Weighted
average number of shares outstanding during the year,
diluted
|
14 | 12,535,365 | 21,644,920 | 30,505,476 |
Comprehensive
Income
|
Number
of
Shares
|
Common
Stock
Amount
|
Preferred
Shares
Amount
|
Paid
- in
Capital
|
Retained
Earnings
|
Total
|
||||||||||||||||||||||
Balance,
January
1, 2006
|
12,260,387 | 367,812 | - | 17,883,781 | 8,744,963 | 26,996,556 | ||||||||||||||||||||||
Net
income
|
20,069,407 | 20,069,407 | 20,069,407 | |||||||||||||||||||||||||
Issuance
of shares, net of issuance costs
|
359,763 | 10,793 | - | (793 | ) | - | 10,000 | |||||||||||||||||||||
Reversal
of unutilized accrued offering expenses
|
400,779 | 400,779 | ||||||||||||||||||||||||||
Dividends
declared and paid ($0.75 per share)
|
- | - | (9,465,082 | ) | (9,465,082 | ) | ||||||||||||||||||||||
Balance,
December
31, 2006
|
12,620,150 | 378,605 | - | 18,283,767 | 19,349,288 | 38,011,660 | ||||||||||||||||||||||
Net
income
|
40,664,064 | 40, 664,064 | 40,664,064 | |||||||||||||||||||||||||
Issuance
of shares in public offerings, net of issuance costs
|
17,325,000 | 519,750 | - | 209,367,229 | - | 209,886,979 | ||||||||||||||||||||||
Issuance
of shares for warrants exercised
|
248,463 | 7,454 | - | 2,675,947 | - | 2,683,401 | ||||||||||||||||||||||
Issuance
of restricted shares for stock incentive award and share-based
compensation
|
67,500 | 2,025 | - | 820,757 | - | 822,782 | ||||||||||||||||||||||
Dividends
declared and paid ($1.00 per share)
|
- | - | (20,278,538 | ) | (20,278,538 | ) | ||||||||||||||||||||||
Balance,
December
31, 2007
|
30,261,113 | 907,834 | - | 231,147,700 | 39,734,814 | 271,790,348 | ||||||||||||||||||||||
Net
income
|
23,674,018 | 23,674,018 | 23,674,018 | |||||||||||||||||||||||||
Issuance
of shares for warrants exercised
|
171,998 | 5,160 | - | 1,805,762 | - | 1,810,922 | ||||||||||||||||||||||
Issuance
of restricted shares for stock incentive award and share-based
compensation
|
142,500 | 4,275 | - | 1,614,208 | - | 1,618,483 | ||||||||||||||||||||||
Dividends
declared ($1.13 per share)
|
- | - | (34,664,699 | ) | (34,664,699 | ) | ||||||||||||||||||||||
Balance,
December
31, 2008
|
30,575,611 | 917,269 | - | 234,567,670 | 28,744,133 | 264,229,072 |
2006
|
2007
|
2008
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
20,069,407 | 40,664,064 | 23,674,018 | |||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
of vessels
|
6,277,328 | 16,423,092 | 28,284,752 | |||||||||
Impairment
loss
|
- | - | 25,113,364 | |||||||||
Amortization
of deferred charges
|
1,090,111 | 1,612,696 | 4,031,290 | |||||||||
Amortization
of fair value of time charters
|
(351,369 | ) | 548,254 | (6,144,507 | ) | |||||||
Gain
on sale of vessels
|
(4,445,856 | ) | (3,411,397 | ) | - | |||||||
Share-based
compensation
|
- | 822,782 | 1,618,484 | |||||||||
Investment
in trading securities, net
|
- | (2,792,914 | ) | (192,859 | ) | |||||||
(Gain)
loss on trading securities
|
- | (98,744 | ) | 2,312,790 | ||||||||
Loss
on derivatives
|
- | - | 3,397,530 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
(Increase)/decrease
in:
|
||||||||||||
Trade
accounts receivable
|
(332,098 | ) | (671,888 | ) | (183,791 | ) | ||||||
Prepaid
expenses
|
(156,933 | ) | (188,047 | ) | 189,503 | |||||||
Other
receivables
|
37,439 | (472,217 | ) | (698,547 | ) | |||||||
Inventories
|
(344,440 | ) | (1,187,547 | ) | (108,295 | ) | ||||||
Due
from related company
|
363,461 | (2,641,936 | ) | 612,446 | ||||||||
Increase/(decrease)
in:
|
||||||||||||
Trade
accounts payable
|
197,531 | 1,920,051 | (2,189,320 | ) | ||||||||
Accrued
expenses
|
(602,002 | ) | 1,074,809 | (870,284 | ) | |||||||
Deferred
revenue
|
(12,557 | ) | 2,292,720 | 883,380 | ||||||||
Drydocking
expenses paid
|
(821,198 | ) | (4,935,007 | ) | (5,446,213 | ) | ||||||
Net
cash provided by operating activities
|
20,968,824 | 48,958,771 | 74,283,741 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of vessels
|
(53,830,357 | ) | (149,502,254 | ) | (43,582,320 | ) | ||||||
Advance
for vessel purchase
|
- | - | (1,821,798 | ) | ||||||||
Cash
paid for above-market charter acquired
|
(7,923,480 | ) | - | - | ||||||||
Change
in restricted cash
|
(2,765,672 | ) | (2,393,258 | ) | (741,385 | ) | ||||||
Proceeds
from sale of vessels
|
9,152,494 | 5,223,521 | - | |||||||||
Net
cash used in investing activities
|
(55,367,015 | ) | (146,671,991 | ) | (46,145,503 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Issuance
of share capital
|
10,000 | 527,204 | 5,030 | |||||||||
Net
proceeds from shares issued
|
- | 213,692,072 | 1,805,892 | |||||||||
Dividends
paid/return of capital
|
(9,465,082 | ) | (20,278,538 | ) | (34,547,949 | ) | ||||||
Loan
arrangement fees paid
|
(151,250 | ) | (110,000 | ) | - | |||||||
Deferred
offering expenses paid
|
(41,671 | ) | (1,413,305 | ) | (110,340 | ) | ||||||
Proceeds
from long-term debts
|
43,750,000 | 25,000,000 | - | |||||||||
Repayment
of long-term debts
|
(17,360,000 | ) | (18,360,000 | ) | (25,575,000 | ) | ||||||
Net
cash provided by (used in) financing activities
|
16,741,997 | 199,057,433 | (58,422,367 | ) | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
(17,656,194 | ) | 101,344,213 | (30,284,129 | ) | |||||||
Cash
and cash equivalents at beginning of year
|
20,447,301 | 2,791,107 | 104,135,320 | |||||||||
Cash
and cash equivalents at end of year
|
2,791,107 | 104,135,320 | 73,851,191 | |||||||||
Cash
paid for interest
|
3,081,676 | 4,570,773 | 3,161,197 | |||||||||
Non
cash items:
|
||||||||||||
Increase
in payables from dry-docking expenses
|
- | 835,000 | 683,044 | |||||||||
Fair
value of below market charters acquired
|
1,649,572 | 9,675,481 | 9,597,438 | |||||||||
Reversal
of unutilized accrued offering expenses
|
400,779 | - | - | |||||||||
Other
increase in accrued expenses and deferred charges
|
458,329 | - | 143,505 |
·
|
Searoute
Maritime Ltd. incorporated in Cyprus on May 20, 1992, owner of the Cyprus
flag 33,712 DWT bulk carrier motor vessel (M/V) "Ariel", which was built
in 1977 and acquired on March 5, 1993. M/V "Ariel" was sold on
February 22, 2007.
|
·
|
Oceanopera
Shipping Ltd. incorporated in Cyprus on June 26, 1995, owner of the Cyprus
flag 34,750 DWT bulk carrier M/V "Nikolaos P", which was built in 1984 and
acquired on July 22, 1996. M/V "Nikolaos P" was sold in February 2009 (see
Note 17).
|
·
|
Oceanpride Shipping Ltd.
incorporated in Cyprus on March 7, 1998, owner of the Cyprus flag 26,354
DWT bulk carrier M/V "John P", which was built in 1981 and acquired on
March 7, 1998. M/V "John P" was sold on July 5,
2006.
|
·
|
Alcinoe
Shipping Ltd. incorporated in Cyprus on March 20, 1997, owner of the
Cyprus flag 26,354 DWT bulk carrier M/V "Pantelis P", which was built in
1981 and acquired on June 4, 1997. M/V "Pantelis P" was sold on
May 31, 2006. On February 22, 2007, Alcinoe Shipping Ltd.
acquired the 38,691 DWT Cyprus flag drybulk carrier M/V "Gregos", which
was built in 1984. On June 13, 2007, M/V Gregos was transferred
to Gregos Shipping Limited incorporated in the Marshall Islands and its
flag was changed to the flag of the Marshall
Islands.
|
·
|
Allendale
Investment S.A. incorporated in Panama on January 22, 2002, owner of the
Panama flag 18,154 DWT container carrier M/V "Kuo Hsiung", which was built
in 1993 and acquired on May 13,
2002.
|
·
|
Alterwall
Business Inc. incorporated in Panama on January 15, 2001, owner of the
Panama flag 18,253 DWT container carrier M/V "Ninos" (previously named M/V
"Quingdao I") which was built in 1990 and acquired on February 16,
2001.
|
·
|
Diana
Trading Ltd. incorporated in the Marshall Islands on September 25, 2002,
owner of the Marshall Islands flag 69,734 DWT bulk carrier M/V "Irini",
which was built in 1988 and acquired on October 15,
2002.
|
·
|
Salina
Shipholding Corp., incorporated in the Marshall Islands on October 20,
2005, owner of the Marshall Islands flag 29,693 DWT container carrier M/V
"Artemis", which was built in 1987 and acquired on November 25,
2005.
|
·
|
Xenia
International Corp., incorporated in the Marshall Islands on April 6,
2006, owner of the Marshall Islands flag 22,568 DWT / 950 TEU multipurpose
M/V "Tasman Trader", which was built in 1990 and acquired on April 27,
2006.
|
·
|
Prospero
Maritime Inc., incorporated in the Marshall Islands on July 21, 2006,
owner of the Marshall Islands flag 69,268 DWT dry bulk M/V "Aristides
N.P.", which was built in 1993 and acquired on September 4,
2006.
|
·
|
Xingang
Shipping Ltd., incorporated in Liberia on October 16, 2006, owner of the
Liberian flag 23,596 DWT container carrier M/V "YM Xingang I" , which was
built in February 1993 and acquired on November 15,
2006.
|
·
|
Manolis
Shipping Ltd., incorporated in the Marshall Islands on March 16, 2007,
owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container
carrier M/V "Manolis P", which was built in 1995 and acquired on April 12,
2007.
|
·
|
Eternity
Shipping Company, incorporated in the Marshall Islands on May 17, 2007,
owner of the Marshall Islands flag 30,007 DWT / 1,742 TEU container
carrier M/V "Clan Gladiator", which was built in 1992 and acquired on June
13, 2007. On May 9, 2008, M/V "Clan Gladiator" was renamed M/V "OEL
Transworld".
|
·
|
Emmentaly
Business Inc., incorporated in Panama on July 4, 2007, owner of the
Panamanian flag 33,667 DWT / 1,932 TEU container carrier M/V "Jonathan P",
which was built in 1990 and acquired on August 7, 2007. On April 16, 2008,
M/V "Jonathan P" was renamed M/V "OEL Integrity"; on March 5, 2009, the
vessel was renamed again M/V "Jonathan P" upon the expiration of its
charter with OEL.
|
·
|
Pilory
Associates Corp., incorporated in Panama on July 4, 2007, owner of the
Panamanian flag 33,667 DWT / 1,932 TEU container carrier M/V "Despina P",
which was built in 1990 and acquired on August 13,
2007.
|
·
|
Tiger
Navigation Corp., incorporated in Marshall Islands on August 29, 2007,
owner of the Marshall Islands flag 31,627 DWT / 2,228 TEU container
carrier M/V "Tiger Bridge", which was built in 1990 and acquired on
October 4, 2007.
|
·
|
Trust
Navigation Corp., incorporated in Liberia on October 1, 2007, owner of the
Liberian flag 64,873 DWT bulk carrier M/V "Ioanna P", which was built in
1984 and acquired on November 1, 2007. M/V "Ioanna P" was sold in January
2009 (see Note 17).
|
·
|
Noumea
Shipping Ltd, incorporated in Marshall Islands on May 14, 2008, owner of
the Marshall Islands flag 34,677 DWT / 2,556 TEU container
vessel M/V "Maersk Noumea", which was built in 2001 and acquired on May
22, 2008.
|
Year
ended December 31,
|
|||
Charterer
|
2006
|
2007
|
2008
|
A
|
-
|
12.10%
|
13.80%
|
B
|
15.06%
|
15.07%
|
8.81%
|
C
|
10.40%
|
12.53%
|
7.27%
|
D
|
16.63%
|
7.60%
|
5.14%
|
E
|
12.67%
|
5.19%
|
4.38%
|
2.
|
Summary
of Significant Accounting Policies -
Continued
|
2.
|
Summary
of Significant Accounting Policies -
Continued
|
2.
|
Summary
of Significant Accounting Policies -
Continued
|
2.
|
Summary
of Significant Accounting Policies -
Continued
|
2.
|
Summary
of Significant Accounting Policies -
Continued
|
2.
|
Summary
of Significant Accounting Policies -
Continued
|
3.
|
Inventories
|
2007
|
2008
|
|||||||
Lubricants
|
1,232,341 | 1,410,063 | ||||||
Victualling
|
145,767 | 164,708 | ||||||
Bunkers
|
525,570 | 437,202 | ||||||
Total
|
1,903,678 | 2,011,973 |
4.
|
Vessels,
net
|
Costs
|
Accumulated
Depreciation
|
Net Book
Value
|
||||||||||
Balance,
January 1, 2005
|
55,760,394 | (21,589,230 | ) | 34,171,164 | ||||||||
-Depreciation
for the year
|
(2,657,914 | ) | (2,657,914 | ) | ||||||||
-Purchase
of vessel
|
20,821,647 | - | 20,821,647 | |||||||||
Balance,
December 31, 2005
|
76,582,041 | (24,247,144 | ) | 52,334,897 | ||||||||
Balance,
January 1, 2006
|
76,582,041 | (24,247,144 | ) | 52,334,897 | ||||||||
-Depreciation
for the year
|
- | (6,277,328 | ) | (6,277,328 | ) | |||||||
-Purchase
of vessels
|
55,479,929 | - | 55,479,929 | |||||||||
-Vessels
held for sale
|
(6,119,713 | ) | 4,336,873 | (1,782,840 | ) | |||||||
-Sale
of vessels
|
(12,411,482 | ) | 8,151,166 | (4,260,316 | ) | |||||||
Balance,
January 1, 2007
|
113,530,775 | (18,036,433 | ) | 95,494,342 | ||||||||
-Depreciation
for the year
|
- | (16,423,092 | ) | (16,423,092 | ) | |||||||
-Purchase
of vessels
|
159,177,734 | - | 159,177,734 | |||||||||
Balance,
December 31, 2007
|
272,708,509 | (34,459,525 | ) | 238,248,984 | ||||||||
-Depreciation
for the year
|
- | (28,284,752 | ) | (28,284,752 | ) | |||||||
-Purchase
of vessel
|
53,179,758 | - | 53,179,758 | |||||||||
-Vessels
held for sale
|
(45,620,268 | ) | 14,439,884 | (31,180,384 | ) | |||||||
Balance,
December 31, 2008
|
280,267,999 | (48,304,393 | ) | 231,963,606 |
4.
|
Vessels,
net - Continued
|
5.
|
Deferred
Charges, net
|
2006
|
2007
|
2008
|
||||||||||
Balance,
beginning of year
|
1,855,829 | 1,291,844 | 5,529,870 | |||||||||
Additions
|
972,448 | 5,880,007 | 6,272,762 | |||||||||
Amortization
of drydocking and
special
survey expenses
|
(1,015,510 | ) | (1,539,981 | ) | (3,946,149 | ) | ||||||
Amortization
of loan arrangement fees
|
(74,601 | ) | (72,715 | ) | (85,141 | ) | ||||||
Unamortized
portion of drydocking and special survey expenses written-off upon sale of
vessels
|
(446,322 | ) | (29,285 | ) | - | |||||||
Balance,
end of year
|
1,291,844 | 5,529,870 | 7,771,342 |
2007
|
2008
|
|||||||
Accrued
follow-on offering expenses
|
193,919 | - | ||||||
Accrued
payroll expenses
|
152,843 | 262,370 | ||||||
Accrued
interest
|
498,317 | 182,716 | ||||||
Accrued
general and administrative expenses
|
503,560 | 48,000 | ||||||
Accrued
commissions
|
385,525 | 204,531 | ||||||
Other
accrued expenses
|
309,421 | 508,849 | ||||||
Total
|
2,043,585 | 1,206,466 |
7.
|
Fair
Value of Above or Below Market Time Charters
Acquired
|
7.
|
Fair
Value of Above or Below Market Time Charters Acquired -
continued
|
8.
|
Related
Party Transactions
|
8.
|
Related
Party Transactions - Continued
|
9.
|
Long-Term
Debt
|
Borrower
|
December
31,
2007
|
December
31,
2008
|
|||||||
Diana
Trading Limited
|
(a)
|
$ | 2,100,000 | $ | - | ||||
Alcinoe
Shipping Limited (2006)/
Oceanpride
Shipping Limited/
Searoute
Maritime Ltd/
Oceanopera
Shipping Ltd
|
(b)
|
2,600,000 | - | ||||||
Alterwall
Business Inc./
Allendale
Investments S.A
|
(c)
|
7,950,000 | 5,500,000 | ||||||
Salina
Shipholding Corp.
|
(d)
|
8,500,000 | 5,000,000 | ||||||
Xenia
International Corp
|
(e)
|
6,660,000 | 5,600,000 | ||||||
Prospero
Maritime Inc.
|
(f)
|
13,100,000 | 11,275,000 | ||||||
Xingang
Shipping Ltd. / Alcinoe Shipping Ltd
|
(g)
|
16,000,000 | 12,000,000 | ||||||
Manolis
Shipping Ltd.
|
(h)
|
9,680,000 | 9,040,000 | ||||||
Trust
Navigation Corp. / Tiger Navigation Co.
|
(i)
|
15,000,000 | 7,600,000 | ||||||
81,590,000 | 56,015,000 | ||||||||
Less:
Current portion
|
(25,575,000 | ) | (12,450,000 | ) | |||||
Long-term
portion
|
$ | 56,015,000 | $ | 43,565,000 |
(a)
|
This
consisted of a loan amounting to $4,900,000 and $1,000,000 drawn in
2002. The loan was payable in twenty-four consecutive quarterly
installments of $220,000 each, and a balloon payment of $620,000 payable
together with the final quarterly installment paid in October
2008. The interest was based on LIBOR plus 1.6% per
annum.
|
|
An
additional loan of $4,200,000 was drawn on May 9, 2005. The
loan was payable in twelve consecutive quarterly installments consisting
of four installments of $450,000 each, and eight installments of $300,000
each with the final installment paid in May 2008. The interest
was based on LIBOR plus 1.25% per
annum.
|
(b)
|
Alcinoe
Shipping Ltd., Oceanpride Shipping Ltd., Searoute Maritime Ltd. and
Oceanopera Shipping Ltd.
drew, in 2005,
$13,500,000 against a loan facility for which they were jointly and
severally liable. The loan was payable in twelve consecutive
quarterly installments consisting of two installments of $2,000,000 each,
one installment of $1,500,000, nine installments of $600,000 each and a
balloon payment of $2,600,000 payable with the final installment paid in
May 2008. The interest was based on LIBOR plus 1.5% per
annum.
|
(c)
|
Allendale
Investments S.A. and Alterwall Business Inc. drew $20,000,000 on May 26,
2005 against a loan facility for which they are jointly and severally
liable. The loan is payable in twenty-four unequal consecutive
quarterly installments of $1,500,000 each in the first year, $1,125,000
each in the second year, $775,000 each in the third year, $450,000 each in
the fourth through sixth years and a balloon payment of $1,000,000 payable
with the final installment due in May 2011. The interest is
based on LIBOR plus 1.25% per annum as long as the outstanding loan amount
remains below 60% of the fair market value (FMV) of M/V "Ninos" and M/V
"Kuo Hsiung" and plus 1.375% if the outstanding loan amount is above 60%
of the FMV of such vessels.
|
(d)
|
This
is a $15,500,000 loan drawn by Salina Shipholding Corp. on December 30,
2005. The loan is payable in ten consecutive semi-annual
installments consisting of six installments of $1,750,000 each and four
installments of $650,000 each and a balloon payment of $2,400,000 payable
with the final installment due in January 2011. The interest is based on
LIBOR plus a margin that ranges between 0.9%-1.1%, depending on the asset
cover ratio. The loan is secured with the following: (i) first priority
mortgage over M/V "Artemis", (ii) first assignment of earnings and
insurance of M/V "Artemis", (iii) a corporate guarantee of Euroseas Ltd.,
(iv) a minimum cash balance equal to an amount of no less than $300,000 in
an account Salina Shipholding Corp. maintains with the bank, and (v)
overall liquidity (cash and cash equivalents) of $300,000 for each of the
Company's vessels throughout the life of the
facility.
|
(e)
|
This
is an $8,250,000 loan drawn by Xenia International Corp. on June 30,
2006. The loan is payable in twenty three consecutive quarterly
installments consisting of $265,000 each and a balloon payment of
$2,155,000 payable with the final quarterly installment due in March 2012.
The interest is based on LIBOR plus a margin of 0.95%. The loan is secured
with the following: (i) first priority mortgage over M/V "Tasman Trader",
(ii) first assignment of earnings and insurance of M/V "Tasman Trader",
(iii) a corporate guarantee of Euroseas Ltd., and (iv) overall liquidity
(cash and cash equivalents) of $300,000 for each of the Company's vessels
throughout the life of the
facility.
|
(f)
|
This
is a $15,500,000 loan drawn by Prospero Maritime Inc. on September 4,
2006. The loan is payable in fourteen consecutive semi-annual
installments consisting of two installments of $1,200,000 each, one
installment of $1,000,000 each and eleven installments of $825,000 each
and a balloon payment of $3,025,000 payable with the final semi-annual
installment due in September 2013. The interest is based on LIBOR plus a
margin that ranges between 0.9%-0.95%, depending on the asset cover ratio.
The loan is secured with the following: (i) first priority mortgage over
M/V "Aristides N.P.", (ii) first assignment of earnings and insurance of
M/V "Aristides N.P.", (iii) a corporate guarantee of Euroseas Ltd., (iv) a
minimum cash balance equal to an amount of no less than $300,000 in an
account Prospero Maritime Inc. maintains with the bank, and (v) overall
liquidity (cash and cash equivalents) of $300,000 for each of the
Company's vessels throughout the life of the
facility.
|
(g)
|
This
is a $20,000,000 loan drawn by Xingang Shipping Ltd. on November 15, 2006;
Alcinoe Shipping Ltd., owner of the M/V "Gregos", became a guarantor to
the loan in March 2007. The loan is payable in eight consecutive quarterly
installments of $1.0 million each, the first of which is due in February
2007, followed by four consecutive quarterly installments of $750,000
each, followed by sixteen consecutive installments of $250,000 each and a
balloon payment of $5.0 million payable with the final quarterly
installment due in November 2013. The interest was based on LIBOR plus a
margin of 0.935% initially; after Alcinoe Shipping Ltd. became a guarantor
the rate became 0.90%. The loan is secured with the following: (i) first
priority mortgage over M/V "YM Xingang I", (ii) first assignment of
earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and
(iv) a third mortgage on M/V "Irini" also financed by the same
bank.
|
(h)
|
This
is a $10,000,000 loan drawn by Manolis Shipping Ltd. on June 11, 2007. The
loan is payable in thirty-two consecutive quarterly installments of
$160,000 each, the first of which is due in September 2007, plus a balloon
payment of $4,880,000 payable with the final quarterly installment in June
2015. The interest is based on LIBOR plus a margin of 0.80% if the ratio
of the outstanding loan to the vessel value is below 55%, otherwise the
margin is 0.90%. The loan is secured with the following: (i)
first priority mortgage over M/V "Manolis P", (ii) first assignment of
earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and
(iv) a minimum cash balance equal to an amount of no less than $300,000 in
an account Manolis Shipping Ltd. maintains with the bank. Other
covenants and guarantees are similar to the rest of the loans of the
Company.
|
(i)
|
This
is a $15,000,000 loan drawn by Trust Navigation Corp. on November 1, 2007.
In December 2008, vessel M/V "Tiger Bridge" owned by the Company's wholly
owned subsidiary, Tiger Navigation Corp., was added as collateral. The
loan is payable in four consecutive quarterly installments of $1,850,000
each, the first of which is due in February 2008, followed by four
consecutive quarterly installments of $750,000 each, followed by four
consecutive quarterly installments of $550,000 each, plus a balloon
payment of $2,400,000 payable with the final quarterly installment in
November 2010. The interest is based on LIBOR plus a margin of
0.90%. The loan is secured with the following: (i) first
priority mortgage over M/V "Ioanna P", (ii) first assignment of earnings
and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a
minimum cash balance equal to an amount of no less than $300,000 in an
account Trust Navigation Corp. maintains with the bank. Other
covenants and guarantees are similar to the rest of the loans of the
Company.
|
·
|
first
priority mortgage over the respective vessels on a joint and several
basis.
|
·
|
first
assignment of earnings and
insurance.
|
·
|
a
personal guarantee of one
shareholder.
|
·
|
a
corporate guarantee of Euroseas
Ltd.
|
·
|
a
pledge of all the issued shares of each
borrower.
|
12.
|
Commitments
and Contingencies
|
(a)
|
There
are no material legal proceedings to which the Company is a party or to
which any of its properties are subject, other than routine litigation
incidental to the Company's business. In the opinion of the
management, the disposition of these lawsuits should not have a material
impact on the consolidated results of operations, financial position and
cash flows.
|
(b)
|
The
distribution of the net earnings by one of the chartering pools which has
one of the Company's vessels in its pool has not yet been finalized for
the year ended December 31, 2008. The effect on the Company's
income resulting from a subsequent reallocation of pool income on the
results for the year is not
significant.
|
(c)
|
Future
minimum long-term time charter revenue net of commissions, based on
non-cancelable time charter contracts as of December 31, 2008 will be
$17.2 million for 2009, $9.6 million for 2010, $5.5 million for 2011 and
$0.5 million for 2012 assuming the scheduled drydockings and special
surveys (20-25 days every two and a half years) and one additional offhire
day per quarter to account for any unscheduled off-hire
time.
|
13.
|
Stock
Incentive Plan
|
13.
|
Stock
Incentive Plan - continued
|
Shares
|
Weighted-Average
Grant-Date Fair Value
|
|||||||
Unvested
at December 31, 2006
|
- | - | ||||||
Granted
|
135,000 | $ | 1,602,450 | |||||
Vested
|
67,500 | $ | 801,225 | |||||
Forfeited
|
- | - | ||||||
Unvested
at December 31, 2007
|
67,500 | $ | 801,225 | |||||
Granted
|
310,000 | $ | 2,290,000 | |||||
Vested
|
(142,500 | ) | $ | (1,626,225 | ) | |||
Forfeited
|
- | - | ||||||
Unvested
at December 31, 2008
|
235,000 | $ | 1,465,000 |
14.
|
Earnings
Per Share
|
2006
|
2007
|
2008
|
||||||||||
Income:
|
||||||||||||
Net
income
|
20,069,407 | 40,664,064 | 23,674,018 | |||||||||
Basic
earnings per share:
|
||||||||||||
Weighted
average common shares –
Outstanding
|
12,535,365 | 21,566,619 | 30,437,107 | |||||||||
Basic
earnings per share
|
1.60 | 1.89 | 0.78 | |||||||||
Effect
of dilutive securities
|
||||||||||||
Warrants
|
- | 78,301 | 18,932 | |||||||||
Unvested
incentive stock awards
|
- | - | 49,437 | |||||||||
Weighted
average common shares –
Outstanding
|
12,535,365 | 21,644,920 | 30,505,476 | |||||||||
Diluted
earnings per share
|
1.60 | 1.88 | 0.78 |
Year
ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Voyage
expense
|
||||||||||||
Port
charges and canal dues
|
289,496 | 335,091 | 789,303 | |||||||||
Bunkers
|
845,123 | 547,046 | 2,274,908 | |||||||||
Agency
fees
|
20,119 | 15,326 | 28,112 | |||||||||
Total
|
1,154,738 | 897,463 | 3,092,323 | |||||||||
Vessel
operating expenses
|
||||||||||||
Crew
wages and related costs
|
5,132,985 | 8,152,303 | 11,012,931 | |||||||||
Insurance
|
1,591,986 | 2,256,024 | 3,517,437 | |||||||||
Repairs
and maintenance
|
314,132 | 481,557 | 795,138 | |||||||||
Lubricants
|
808,338 | 1,815,340 | 2,583,617 | |||||||||
Spares
and consumable stores
|
1,811,691 | 3,235,221 | 5,435,171 | |||||||||
Professional
and legal fees
|
31,488 | 74,050 | 46,011 | |||||||||
Others
|
678,197 | 1,225,637 | 4,130,889 | |||||||||
Total
|
10,368,817 | 17,240,132 | 27,521,194 |
Year
ended December 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Third
parties
|
1,337,385 | 2,899,616 | 4,276,934 | |||||||||
Related
parties (see Note 8)
|
492,149 | 1,124,416 | 1,663,526 | |||||||||
1,829,534 | 4,024,032 | 5,940,460 |
Fair
Value Measurement at Reporting Date Using
|
||||||||||||||||
Total,
December
31, 2008
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Other Unobservable Inputs
(Level
3)
|
|||||||||||||
Assets
|
||||||||||||||||
Trading
securities
|
$ | 771,727 | $ | 771,727 | - | - | ||||||||||
FFA
contracts, current and long-term portion
|
$ | 129,708 | $ | 129,708 | - | |||||||||||
Liabilities
|
||||||||||||||||
Interest
rate swaps, current and long-term portion
|
$ | 2,181,447 | - | $ | 2,181,447 | - | ||||||||||
FFA
contracts, current and long-term portion
|
$ | 1,345,791 | $ | 1,345,791 | - | - |
|
a)
|
On
February 6, 2009, the Board of Directors declared a cash dividend of $0.10
per Euroseas Ltd. common share. Such cash dividend was paid on
or about March 20, 2009 to the holders of record of Euroseas Ltd. common
shares as of March 12, 2009.
|
|
b)
|
On
January 12, 2009, a subsidiary of the Company delivered to its buyers M/V
"Ioanna P" (see Note 4). The Company decided to sell the vessel in
November 2008 and entered into a memorandum of agreement to sell it on
December 23, 2008 for a gross price of $3.85 million less 4% sales
commissions.
|
|
c)
|
On
February 12, 2009, a subsidiary of the Company delivered to its buyers M/V
"Nikolaos P" (see Note 4). The Company decided to sell the vessel in
November 2008 and entered into a memorandum of agreement to sell it on
January 28, 2009 for a gross price of $2.4 million less 2% sales
commissions.
|
|
d)
|
On
December 3, 2008, a subsidiary of the Company agreed to purchase the
46,667 dwt drybulk carrier M/V "Solar Europe" (renamed M/V "Monica P"),
built in 1998 in Japan, for $18 million. The vessel was delivered to a
subsidiary of the Company on January 19, 2009. The acquisition
was financed with $8 million from the Company's cash balance and $10
million of bank debt secured by the vessel. The debt is payable
in 20 consecutive quarterly installments of $250,000 and with a $5 million
balloon payment alongside the last installment. The margin of the loan is
2.50% above LIBOR.
|
|
e)
|
On
February 10, 2009, a subsidiary of the Company agreed to purchase the
72,119 dwt drybulk carrier M/V "Glorious Wind" (renamed M/V "Eleni P")
built in 1997 in Japan, for $18.38 million. The vessel was
delivered to the Company on March 6, 2009. The Company financed
the acquisition with cash reserves from its balance sheet, and,
subsequently, arranged for a bank loan for $10 million secured by the
vessel which was drawn in the April 2009. The loan is payable in 10
consecutive semiannual installments, two in the amount of $100,000, two in
the amount of $400,000, two in the amount of $600,000 and four in the
amount of $800,000 and with a $4.6 million balloon payment to be paid
together with the last installment. The margin of the loan is 2.50% above
LIBOR for the $5.4 million repaid throughout the 5 years and 2.70% above
LIBOR for the amount of the balloon
payment.
|
|
1.
|
RENUMERATION
|
|
2.
|
APPOINTMENT
|
LOAN
AGREEMENT FOR THE AMOUNT
OF UP TO
USD 10,000,000
M/V "SOLAR
EUROPE" TBN "MONICA P"
|
C O N T E N T S
|
||
CLAUSE
|
PAGE NO
|
|
1.
|
PURPOSE,
DEFINITIONS AND
INTERPRETATION
|
1
|
2.
|
DISBURSEMENT
|
9
|
3.
|
CONDITIONS
PRECEDENT
|
10
|
4.
|
REPRESENTATIONS
AND WARRANTIES
|
11
|
5.
|
ARRANGEMENT
FEE
|
17
|
6.
|
EVIDENCE
|
17
|
7.
|
REPAYMENT
AND PREPAYMENT
|
18
|
8.
|
INTEREST
AND INTEREST PERIODS
|
19
|
9.
|
THE
MASTER SWAP AGREEMENT
|
22
|
10.
|
PAYMENTS
ACCOUNTS & CALCULATIONS
|
24
|
11.
|
UNLAWFULNESS
& INCREASED COSTS
|
25
|
12.
|
SECURITY
|
26
|
13.
|
COVENANTS
|
27
|
14.
|
EVENTS
OF DEFAULT
|
33
|
15.
|
APPLICATION
OF RECEIPTS
|
36
|
16.
|
ACCOUNTS
|
37
|
17.
|
INDEMNITY
|
40
|
18.
|
REMEDIES
AND WAIVERS
|
42
|
19.
|
LEGAL
IMMINENCE
|
43
|
20.
|
COUNTERPARTS
|
43
|
21.
|
INVALIDITY
|
43
|
22.
|
ASSIGNMENT
|
43
|
23.
|
EXPENSES
|
44
|
24.
|
NOTICE
|
45
|
25.
|
GOVERNING
LAW AND JURISDICTION
|
45
|
SCHEDULE
I
|
47
|
|
SCHEDULE
II
|
52
|
|
SCHEDULE
III
|
59
|
|
SCHEDULE
IV
|
60
|
|
SCHEDULE
V
|
61
|
A.
|
It
is entered by the Borrower at its request and subject to the Bank's
consent pursuant to the Master Swap Agreement with the
Bank;
|
B.
|
It
is designated by the Borrower, by delivery by the Borrower to the Bank of
a notice of designation in the form set out in Schedule V as a Designated
Transaction for the purposes of the Security Documents;
and
|
C.
|
Its
purpose is to provide interest and/ or currency swaps or any other
transaction to hedge any exposure of the Borrower under the Agreement for
a period expiring not later that the final Repayment
Date.
|
(a)
|
all
losses, liabilities, costs, charges, expenses, damages and outgoings of
whatever nature, (including, without limitation, taxes, repair costs, fees
of Bank Advisors and/or Consultants, registration fees and insurance
premiums, crew wages, repatriation expenses and seamen's pension fund
dues) suffered, incurred, charged to or paid or committed to be paid by
the Bank in connection with the exercise of the powers referred to in or
granted by any of the Security Documents or otherwise payable by the
Borrower or any of them in accordance with the terms of any of the
Security Documents;
|
(b)
|
the
expenses referred to in Clause 23.
|
(c)
|
interest
on all such losses, liabilities, costs, charges, expenses, damages and
outgoings from the date on which the same were suffered, incurred or paid
by the Bank until the date of receipt or recovery thereof at a rate per
annum calculated in accordance with Clause
8.4.
|
"
LIBOR
" means, for an
Interest Period the rate, rounded to the nearest four decimal places
downwards (if the digit displayed in the fifth decimal place is 1,2,3 or
4) or upwards (if the digit displayed in the fifth decimal place is
5,6,7,8 or 9) displayed as the British Bankers' Association Interest
Settlement Rate (or such other rate as may replace it at any time during
the Facility Period) on any information service selected by the Bank on
which that rate is displayed, for deposits in the Currency of Account for
a period equal in length to the relevant Interest Period, or (if the Bank
is for any reason unable to ascertain that rate) the rate, rounded (unless
the Borrower shall have entered into an interest rate swap or other
instrument with the Bank for the purpose of hedging all or any part of the
Borrower's interest rate risk under this Agreement, in which event no
rounding shall apply) upwards to the nearest whole multiple of
one-sixteenth of one per centum, at which deposits in the Currency of
Account of amounts comparable to the amount of the Facility (or any
relevant part of the Facility) are offered to the Bank for a period equal
in length to the relevant Interest
Period.
|
(a)
|
a
pledge agreement(s) creating security in respect of the
Operating Account to be held with the Bank in the name of the Borrower
and/or in the name of the Corporate Guarantor in respect of the Vessel
(the "
Operating Account
Pledge(s)
"); and
|
(b)
|
a
pledge agreement creating security in respect of the Retention Account to
be held with the Bank in the name of the Borrower (the "
Retention Account
Pledge
");
|
(a)
|
in
case of an actual total loss at the actual date and time the Vessel was
lost or if such date is not known on the date on which the Vessel was last
reported;
|
(b)
|
in
the case of constructive on compromised or arranged total loss at the date
and time notice of abandonment of the Vessel is given to its
insurers;
|
(c)
|
in
the case of capture, seizure, confiscation or compulsory acquisition on
the date of such occurrence, unless it is reasonably expected that the
Vessel will be soon restored absolutely free to its Owner always provided
however that in fact it will be so restored within forty (40) days
thereafter at the latest.
|
(d)
|
in
the case of detention, arrest, blockade or loss of the Vessel's possession
and/or use because of any reason whatsoever forty (40) days from the date
of such occurrence, unless it is reasonably expected that the Vessel will
be soon restored absolutely free to its Owner, always provided however
that in fact it will be so restored within forty (40) days thereafter at
the latest.
|
|
In
this Agreement
|
(a)
|
unless
the context otherwise requires, words denoting the singular
number shall include the plural and vice
versa;
|
(b)
|
references
to persons include bodies corporate, bodies unincorporate and
individuals.
|
(c)
|
references
to assets include property, rights and assets of every
description;
|
(d)
|
references
to any document are to be construed as references to such document as
amended or supplemented from time to time;
and
|
(e)
|
references
to any enactment include re-enactments, amendments and extensions
thereof.
|
2.1.
|
Amount
|
(a)
|
a
Drawdown Notice in the form set out in Schedule III not later than 10 a.m.
two (2) Banking Days before the proposed Drawdown Date of the
Commitment.
|
(b)
|
confirmation
of the terms of proposed Insurances (as defined in the Schedule II) and
notification of the identities and of the names of the insurers and of the
proposed Classification Society not later than 10 a.m. before the proposed
Drawdown Date.
|
(c)
|
the
documents and evidences referred to in Schedule I (Conditions
Precedent).
|
2.3.
|
Termination
of Commitment
|
3.1.
|
Corporate
Documents and Evidences.
|
(a)
|
the
Bank shall have received, not later than four Banking Days before the day
on which the Drawdown Notice for the Commitment is given, the documents
and evidence specified in Part 1 of Schedule I in form and substance
satisfactory to the Bank;
|
(b)
|
the
Bank shall have received, not later than four Banking Days before the day
on which the Drawdown Notice for the Commitment is given, or when this is
not possible, simultaneously with such Drawdown, the documents and
evidence specified in Part 2 of Schedule I in form and substance
satisfactory to the Bank;
|
3.2.
|
Continuing
conditions precedent.
|
3.3.
|
General
Conditions
|
(a)
|
Confirmations
from Insurance Brokers and Club Managers that the Vessel is fully insured
in accordance with the requirements in clause 4.3. (f) and that the Bank's
interest as Mortgagee is duly
noted.
|
(b)
|
The
Security Documents duly executed and when appropriate duly registered with
the appropriate registry.
|
(c)
|
Evidence
that the Operating Account for the Vessel has been duly opened and all
mandate forms, signature cards and authorities have been duly executed and
delivered to the Bank.
|
3.4
|
Further
Documents
|
3.5
|
Waiver
of conditions precedent
|
4.1.
|
Continuing
representations and warranties
|
(a)
|
Due
incorporation.
|
|
each
of the corporate Security Parties is duly incorporated and validly
existing in good standing under the laws of its Relevant Jurisdiction and
has power to carry on its business as it is now being conducted and to own
its property and other
assets;
|
(b)
|
Corporate
power
|
(c)
|
Binding
obligations
|
(d)
|
No conflict with other
obligations
|
|
the
execution and delivery of, the performance of their obligations under, and
compliance with the provisions of the Security Documents by the relevant
Security Parties will not (i) contravene any existing
applicable law, statute, rule or regulation or any judgment, decree or
permit to which any of the Security Parties is subject, (ii)
conflict with, or result in any breach of any of the terms of, or
constitute a default under, any agreement or other instrument to which any
of the Security Parties is a party or is subject or by which it or any of
its property is bound.
|
(e)
|
No
litigation
|
|
there
are no claims or actions pending or to the knowledge of any officer of the
Security Parties, threatened and no litigation, arbitration or
administrative proceeding is taking place, pending or, to the knowledge of
any officer of the Security Parties, is threatened against any of such
Security Parties or any of their Affiliates and/or Subsidiaries, which, if
adversely determined could have a material adverse effect on the business,
assets or financial condition of them, or could affect the validity or
enforceability of any of the Security
Documents.
|
(f)
|
No filings
required
|
|
save
for the registration of the Mortgage under the laws of the Flag State, it
is not necessary to ensure the legality, validity, enforceability or
admissibility in evidence of any of the Security Documents, that they or
any other instrument be notarised, filed, registered or enrolled in any
court, public office or elsewhere or that any tax be paid in any Relevant
Jurisdiction on or in relation to the Security Documents and/or to their
enforcement.
|
(g)
|
Choice of
law
|
the
choice of English law to govern the Security Documents, except the
Mortgage which is governed by the law of the flag of the Vessel, the
Pledges and the Corporate Guarantee which is governed by the laws of
Greece and the submission by the Security Parties to the nonexclusive
jurisdiction of the English Courts and/or Piraeus Courts are valid and
binding;
|
(h)
|
No
immunity
|
|
none
of the Security Parties is entitled to immunity on the grounds of
sovereignty or otherwise from any legal action or proceeding (which shall
include, without limitation, suit, attachment prior to judgment, execution
or other enforcement) and in case any such immunity will be granted to
them the Security Parties concerned will unreservedly waive as against the
Bank all their respective rights and/or entitlement to such
immunity.
|
(i)
|
Consents
obtained
|
|
every
consent, licence or approval of, or registration with or declaration to,
public bodies or authorities or courts required by any Security Party in
connection with the execution, delivery, validity, enforceability or
admissibility in evidence of each of the Security Documents or the
performance by each Security Party of its obligations under the Security
Documents has been obtained or made and is in full force and
effect;
|
(j)
|
Financial
statements
|
|
The
financial statements of the Security Parties which have been or will be
delivered to the Bank are complete and accurate, have been prepared in
accordance with generally accepted principles of good accounting practice
and fairly present the financial condition of the Security Parties as at
the date thereof and the results of their
operations.
|
(k)
|
No adverse
changes
|
|
There
has been no material adverse change in the financial condition of the
Security Parties or in their ability to perform their obligations under
the Security Documents since the date of the above financial
statements.
|
4.2.
|
Further
Representations and Warranties
|
(a)
|
No default under any
Indebtedness
|
|
none
of the Security Parties nor any of their Subsidiaries and/or Affiliates
are (nor would with the giving of notice or lapse of time or the
satisfaction of any other condition be) in breach of or in default under
the present or any other agreement relating to indebtedness to which they
are a party or by which they may be
bound;
|
(b)
|
Information
|
|
the
information, exhibits and reports furnished by any Security Party to the
Bank are true and accurate in all material respects, do not omit material
facts and all reasonable enquiries have been made to verify the facts and
statements contained therein;
|
(c)
|
No
Taxes
|
|
no
Taxes e.t.c. are imposed by withholding or otherwise on any payment to be
made by any Security Party under the Security Documents or are imposed on
or by virtue of the execution or delivery by the Security Parties of the
Security Documents or any other document or instrument to be executed or
delivered under any of the Security
Documents;
|
4.3.
|
Representations
concerning the Vessel
|
(a)
|
The
Borrower (is and) will be during the life of this Agreement the sole legal
owner of Vessel.
|
(b)
|
The
Vessel will conform to existing international regulations, and will be
registered as Ships under the laws and flag of the Flag
State.
|
(c)
|
The
Vessel is and will be during the life of this Agreement operationally
seaworthy and in every way fit for service. The Vessel is and
will always continue to be classed in the highest class with a
Classification Society member of IACS and approved by the Bank free of all
recommendations notations or average damage affecting class and will be
insured in accordance with the provisions of this
Agreement.
|
(d)
|
The
Vessel will on the drawdown of the Commitment be subject to no charter or
contract of affreightment nor to any agreement to enter into any charter
or contract other than disclosed to the
Bank.
|
(e)
|
Neither
the Vessel, nor the Earnings, or Insurances nor any part thereof will, on
the drawdown of the Commitment, or thereafter during the course of this
Agreement, be subject to any encumbrances other than encumbrances in
favour of the Bank, neither to any participation entitlement of any other
except the Borrower.
|
(f)
|
The
Borrower shall keep the Vessel insured at all times during the Loan
period, while navigating or in port, to the Bank's full satisfaction. All
insurances shall be in form and substance satisfactory to the Bank and
with Underwriters acceptable to it in accordance with the provisions of
Schedule II and shall include as a
minimum:
|
|
(i)
|
Hull
and Machinery (disbursements and/or an increased value sum insured) for an
amount not less than 120% of the aggregate amount of the Loan and the Swap
Exposure.
|
|
(ii)
|
War
Risks for the above amount.
|
|
(iii)
|
Protection
and Indemnity (with Excess Liability Insurance for Oil Pollution and FD
and D cover).
|
(iv)
|
Mortgagee's
Interest Insurance (MII) to be effected and maintained by the Bank at
Borrower's expense for an amount not less than 120% of the aggregate
amount of the Loan and the Swap
Exposure.
|
(v)
|
Mortgagee's
Additional Perils (Pollution) (MAPI) (if required by the Bank at its sole
discretion) to be effected and maintained by the Bank on account of the
Bank at Borrower's expense for an amount not less than 120% of the
aggregate amount of the Loan and the Swap
Exposure.
|
(g)
|
The
Vessel will on the Drawdown Date of the Commitment be in the absolute
ownership of the Borrower.
|
(h)
|
There
are and there will be no commissions, rebates, premiums or other
repayments by or to or on account of the Borrower, any other Security
Party other than as disclosed to the Bank by the Borrower in
writing.
|
4.4.
(a)
Compliance
with Environmental Laws and
Approvals
|
except
as may already have been disclosed by the Borrower and acknowledged in
writing by the Bank:
|
|
(i)
|
the
Borrower, the Corporate Guarantor and the other Relevant Parties and to
the best of the Borrower's knowledge and belief their respective
Environmental Affiliates have complied, and will comply during the tenure
of this Agreement with the provisions of all Environmental Laws applicable
at any area the Vessel is sailing in or anchored
at.
|
|
(ii)
|
the
Borrower, the Corporate Guarantor and the other Relevant Parties and to
the best of the Borrower's knowledge and belief their respective
Environmental Affiliates have obtained all Environmental Approvals and are
and will be during the tenure of this Agreement in compliance with all
such Environmental Approvals; and
|
|
(iii)
|
neither
the Borrower, nor the Corporate Guarantor, nor any other Relevant Party
nor to the best of the Borrower's knowledge and belief any of their
respective Environmental Affiliates has received notice of any
Environmental Claim that the Borrower or any other Relevant Party or any
such Environmental Affiliate is not in compliance with any Environmental
Law or any Environmental Approval;
|
(b)
|
No Environmental
Claims
|
(c)
|
The
Borrower shall not trade within any area if it does not comply with all
Environmental Laws applicable in that area, and that it shall require that
none of their Environmental Affiliates trade within any area if the
Environmental Affiliate cannot or does not comply with all Environmental
Laws applicable in that area which relate to the Vessel or its operation
or its carriage of cargo;
|
(d)
|
The
Borrower upon the request of the Bank, conduct and complete all reasonably
necessary investigations, studies, sampling, audits and testing required
in connection with any known (or threatened) Release of Materials of
Environmental Concern which would have a Material Adverse Effect;
and
|
(e)
|
The
Borrower shall, promptly upon the occurrence of any of the following
events, provide to the Bank a certificate specifying in detail the nature
of such event and the proposed response of the Borrower or the
Environmental Affiliate concerned:
|
(i)
|
the
receipt by the Borrower or any Environmental Affiliate of any
Environmental Claim which would have a Material Adverse Effect;
or
|
(ii)
|
any (or any threatened) Release of Materials
of Environmental Concern which would have a Material Adverse
Effect,
|
4.5.
|
ISM
Code
|
(a)
|
at
all times comply, and be responsible for compliance by itself and by the
Vessel, with the ISM Code;
|
(b)
|
at
all times ensure that:
|
|
(i)
|
the
Vessel has a valid Safety Management
Certificate;
|
|
(ii)
|
the
Vessel is subject to a safety management system which complies with the
ISM Code; and
|
|
(iii)
|
it
has a valid
Document of Compliance on board the Vessel to which the Documents of
Compliance relates,
|
(c)
|
promptly
notify the Bank of any actual or threatened withdrawal of an applicable
Safety Management Certificate or Document of
Compliance;
|
(d)
|
promptly
notify the Bank of the identity of the person ashore designated for the
purposes of paragraph 4 of the ISM Code and of any change in the identity
of that person; and
|
(e)
|
promptly
notify the Bank of the occurrence of any accident or major non-conformity
requiring action under the ISM
Code.
|
4.6.
|
ISPS
Code
|
(a)
|
at
all times comply, and be responsible for compliance by the Vessel with the
ISPS Code;
|
(b)
|
at
all times ensure that:
|
|
(i)
|
the
Vessel has a valid Ship Security
Certificate;
|
|
(ii)
|
the
Vessel is subject to a security system and any associated security
equipment of the Vessel which comply with the ISPS
Code; and
|
|
(iii)
|
it
has an approved
Ship Security Plan on board the
Vessel
|
4.8.
|
Repetition
of representations and warranties
|
7.2
|
Voluntary
Prepayment
|
|
7.2.1
|
The
Borrower may prepay part or all of the Loan at any Interest Payment Date
relating to the whole of the Loan provided that it will have given a ten
(10) days prior written notice to the Bank, specifying the amount to be
prepaid on such date.
|
|
7.2.2
|
The
Borrower may also at any other time prepay the Loan or a part thereof upon
ten (10) days prior written notice provided that it will also prepay all
sums that the Bank shall determine to be its loss and cost sustained
because of the prepayment within an Interest Period or Periods including
but not limited to payment of interest Break Costs (if any) and of such
additional amounts (if any) to compensate the Bank for the cost of
redeploying funds as a result of such prepayment as well as any loss of
Interest up to the end of the then current Interest Period or
Periods in respect of the whole amount of the Loan
outstanding
|
7.3
|
Conditions
|
|
7.3.1
|
The
interest accrued on the Loan to the date of prepayment and any other
additional sums due hereunder and/or under any of the other Security
Documents will be paid to the Bank.
|
|
7.3.2
|
Every
notice of prepayment shall be effective on actual receipt by the Bank,
shall be irrevocable, shall oblige the Borrower to make such prepayment on
the date specified and shall specify the amount to be prepaid, which shall
be not less than United States Dollar five hundred thousand (USD 500,000)
or a higher integral multiple therof. Any amount so prepaid may not be
re-borrowed under this Agreement.
|
|
7.3.3
|
Any
prepayment of less than the whole of the Loan will be applied by the Bank
towards repayment of the Repayment Instalments in inverse order of
maturity or any other way determined by the Bank at its
discretion.
|
7.4
|
Compulsory
Prepayment
|
8.1.
|
Interest
Rate
|
8.2.
|
Interest
Period
|
8.3.
|
Determination
of Interest Periods
|
(a)
|
the
first Interest Period shall commence on the Drawdown Date of the
Commitment and each subsequent Interest Period in respect thereof shall
commence on the last day of the immediately preceding Interest Period in
question
|
(b)
|
if
the last Interest Period would overrun the last Repayment Date, such
Interest Period shall end on such Repayment Date. Should an Interest
Period determined in accordance with the provisions of this Clause overrun
one or more Repayment Dates, so many additional Interest Periods will be
specified as the number of the Repayment Dates being overrun by the above
Interest Period. Each of such additional Interest Periods will
be of a duration ending at the corresponding Repayment Date and for an
amount equal to the instalment due on such Date, while the above
overrunning Interest Period shall be for the remaining balance of the Loan
after the deduction of the amount(s) of the additional Interest Period(s)
ending on the Repayment Date(s) falling within the said over-running
Interest Period.
|
(d)
|
if
the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of Clause 8.2. and this Clause 8.3 such
Interest Period shall have a duration of three months or such other period
as shall comply with this Clause
8.3.;
|
(e)
|
if
the Bank determines that the duration of an Interest Period specified by
the Borrower in accordance with Clause 8.2. is not readily available, then
that Interest Period shall have such duration as the Bank after having
consulted with the Borrower may
determine.
|
8.4.
|
Default
Rate.
|
8.5.
|
Notification
|
8.6.
|
Non
availability.
|
(a)
|
If
and whenever, at any time prior to the commencement of any Interest
Period, the Bank shall have determined any of the following facts (which
determination shall be conclusive):
|
|
(i)
|
that
adequate and fair means do not exist for ascertaining LIBOR during such
Interest Period; or
|
|
(ii)
|
that
deposits in Dollars are not available to the Bank in the London InterBank
Market in the ordinary course of business in sufficient amounts or it is
impracticable for the Bank to fund or to continue to fund the Loan in
Dollars.
|
|
(iii)
|
that
LIBOR for that Interest Period will not adequately reflect the cost of
funding the Loan for that Interest
Period.
|
(b)
|
During
the period of 30 Banking Days after any Determination Notice has been
given by the Bank under Clause 8.6.(a), the Bank shall certify an
alternative basis (the "Substitute Basis") for maintaining the Loan. The
Substitute Basis may (without limitation) include alternative interest
periods, alternative currencies or alternative rates of interest but shall
include a margin above the cost of funds to the Bank equivalent to the
Margin. Each Substitute Basis so certified shall be binding
upon the Borrower and shall take effect in accordance with its terms from
the date specified in the Determination Notice until such time as the Bank
notifies the Borrower that none of the circumstances specified in
Sub-clause 8.6.(a) continues to exist whereupon the normal interest rate
fixing provisions of the Agreement shall
apply.
|
(c)
|
In
any event, during the thirty (30) days following the giving of a
Determination Notice, the Borrower and the Bank shall negotiate
in good faith in order to arrive at the Substitute Basis for the Bank to
fund or continue to fund the Loan (or the relevant part thereof) during
such Interest Period. If within such thirty (30) day period the
Substitute Basis to fund or to continue to fund the Loan (or the relevant
part thereof) is agreed upon, then such Substitute Basis shall take effect
in accordance with its terms. If the Borrower and the Bank fails to agree
on such Substitute Basis within such thirty (30) day period and such
circumstances are continuing at the end of such thirty
|
9.
|
THE MASTER SWAP
AGREEMENT
|
9.1
|
Purpose
The
Bank and the Borrower have entered, and/or may during the Facility Period
enter, into one or more Transactions pursuant to a Master Swap Agreement,
the terms and conditions of each of which are or will be specified in a
Confirmation sent by the Bank to the
Borrower.
|
9.2
|
Additional Termination
Event
If the Loan is for any reason not advanced to the
Borrower on or before the Latest Permissible Drawdown Date, and the Bank
and the Borrower has entered into any Transactions on or before the Latest
Permissible Drawdown Date, for the purposes of the Master Swap Agreement
an Additional Termination Event (with the Bank as the Affected Party)
shall be deemed to have occurred on the Latest Permissible Drawdown
Date.
|
9.3
|
Adjustment of Notional
Amounts
If the aggregate amount of the Loan actually
advanced by the Bank to the Borrower is less than the Notional Amount (or
the aggregate Notional Amounts) of the Transactions entered into on or
before the Drawdown Date, the obligations of the Borrower in respect of
those Transactions shall, unless otherwise agreed by the Bank, be
calculated, so far as the Bank considers it practicable to do so, by
reference to a Notional Amount (or aggregate Notional Amounts) equal to
the amount of the Loan actually advanced, reduced on each Repayment Date
by the amount of the Repayment Instalment due on that Repayment Date,
adjusted if necessary in accordance with Clause
7.1.
|
9.4
|
Effect of
prepayment
If the Borrower, subject always to Clause 7,
prepay part of the Loan (whether pursuant to Clause 7, Clause 13.5.2 or
any other provision of this Agreement), and the amount of the Loan
remaining outstanding after application of that prepayment is less than
the Notional Amount (or the aggregate Notional Amounts) of the
Transactions then in effect (reduced, if appropriate, in accordance with
the Confirmations relating to those Transactions), the obligations of the
Borrower in respect of those Transactions shall, unless otherwise agreed
by the Bank, be calculated, so far as the Bank considers it practicable to
do so, by reference to a Notional Amount (or aggregate Notional Amounts)
equal to the amount of the Loan remaining outstanding after application of
the prepayment in question, reduced on each Repayment Date by the
Repayment Instalment due on that Repayment Date after taking into account
the application of the prepayment.
|
9.5
|
Authority
In
order to give effect to Clauses 9.3 and 9.4, or in the event of voluntary
or compulsory prepayment by the Borrower of the whole of the
Loan, the Borrower and the Bank will agree to amend, restructure, unwind,
cancel, net out, terminate, liquidate, transfer or assign any of the
rights and/or obligations created pursuant to the Master Swap Agreement in
respect of those Transactions, and/or to enter into any other interest
rate exchange and/or hedging transaction or commitment with the Borrower
or with any other counterparty approved by the
Bank.
|
9.6
|
Termination of
Transactions
If the exercise of the Bank's rights under
Clause 9.5 results in the termination of any Transaction (save in the case
termination takes place due to voluntary prepayment), that Transaction
shall, for the purposes of the Master Swap Agreement (including, without
limitation, section 6(e)(i) of the Master Swap Agreement) be treated as a
Terminated Transaction resulting from an Event of Default by the
Borrower.
|
9.7
|
Indemnity
The
Borrower will indemnify the Bank from time to time on demand in respect of
all liabilities, losses, costs or expenses suffered, incurred or sustained
by the Bank arising in any way in relation to the exercise by the Bank of
its rights under this Clause, or arising in any way from any other
termination, cancellation, unwinding or restructuring of any Transaction,
together (in each case) with interest at the Default Rate from the date of
the Bank's demand until the date on which the Bank receives payment or
reimbursement, before or after any relevant
judgment.
|
9.8
|
Transaction under the Master
Swap
Agreement
. The Borrower
on the date hereof is signing the Master Swap Agreement with the Bank. At
any time during the Facility Period the Borrower may request the Bank to
conclude Transactions for the purpose of swapping its interest payment
obligations under this Agreement. Signature of the Master Swap
Agreement does not commit the Bank to conclude Transactions, or even to
offer terms for doing so, but does provide a contractual framework within
which Transactions may be concluded and secured, assuming that the Bank is
willing to conclude any Transactions at the relevant time and that, if
that is the case, mutually acceptable terms can then be agreed at the
relevant time.
|
|
9.8.1
|
In
relation to the Master Swap Agreement, the Borrower hereby agrees and
undertakes with the Bank throughout the Facility
Period:-
|
|
9.8.1.1
|
at
the Borrower's option to use Transactions concluded under the Master Swap
Agreement for the purpose of (inter alia) swapping its interest payment
obligations under Clause 8 from LIBOR-based funding to longer-term fixed
rate funding;
|
|
9.8.1.2
|
at
the Borrower's option to not to conclude Transactions which would result,
at any time during the Facility Period, in the notional principal amount
of all Transactions then remaining exceeding the amount of the Loan, as
reduced from time to time under Clause
7.1.
|
|
9.8.2
|
The
Borrower gives the Bank a right of first refusal in relation to any
proposed swap or other Transactions relative to the Loan so that (subject
only to the rates quoted by the Bank being competitive with other banks
quoting on the same basis), any swap or other Transactions concluded by
the Borrower shall be concluded with the Bank under the Master Swap
Agreement.
|
|
9.8.3
|
The
Bank agrees that, to enable the Borrower to secure its obligations to the
Bank under the Master Swap Agreement, the security of the Security
Documents shall be held by the Bank not only to secure the Borrower's
obligations under this Agreement but also the Borrower's obligations under
the Master Swap Agreement.
|
10.1.
|
Not
set off or counterclaim and no
deductions.
|
(a)
|
The
Borrower acknowledges that in performing its obligations under this
Agreement, the Bank will be incurring liabilities to third parties in
relation to the funding of amounts to the Borrower, such liabilities
matching the liabilities of the Borrower to the Bank and that it is
reasonable for the Bank to be entitled to receive payments from the
Borrower gross on the due date in order that the Bank is put in a position
to perform its matching obligations to the relevant third parties.
Accordingly, all payments to be made by the Borrower under any of the
Security Documents shall be made in full, without any set-off or
counterclaim whatsoever and free and clear of any deductions or
withholdings, in Dollars on the due date (for value on the day on which
payment is due) to the account of the Bank (with a direct tested telex
advise to the Bank) or to such other account at such other bank in such
place as the Bank may from time to time specify for this
purpose.
|
(b)
|
If
at any time the Borrower is required to make any deduction or withholding
in respect of Taxes or otherwise from any payment due under any of the
Security Documents the sum due from the Borrower in respect of such
payment shall be increased to the extent necessary to ensure that after
the making of such deduction or withholding the Bank receives on the due
date for such payment a net sum equal to the sum which it would have
received had no such deduction or withholding been required to be made.
The Borrower shall indemnify the Bank against any losses or costs incurred
by the Bank by reason of any failure of the Borrower to make any such
increased payment to the Bank on account of any deduction or withholding
or by reason of any increased payment not being made on the due date for
such payment. The Borrower shall promptly forward to the Bank official
receipts and any other proof evidencing the amounts paid or payable in
respect of any deduction or withholding as aforesaid. The obligations of
the Borrower under this provision shall remain in force notwithstanding
the repayment of the Loan.
|
(c)
|
Payments
by the Borrower shall be considered to be made as of the date on which the
Bank receives correctly authenticated advice of the credit of such account
provided that such advice is received at a time of day when the Bank is
able in accordance with its usual practice to process and utilize such
funds on such day, failing which such payment shall be considered to be
made as of the next Banking Day following receipt of such
advice.
|
10.2.
|
Payments
by the Bank.
|
10.3.
|
Calculation
|
11.1.
|
Unlawfulness.
|
(a)
|
If
it is or becomes contrary to any law or regulation for the Bank to
disburse the Loan or to maintain the Commitment or the Loan, or to fund
the Loan or to claim or receive any amount payable to it hereunder, the
Bank shall give notice to the Borrower whereupon (a) the Commitment shall
be reduced to zero and (b) the Borrower shall be obliged to prepay the
Loan on a future specified date not being later than the latest
date
|
(b)
|
permitted
by the relevant law or regulation, or, if such date is not provided,
within 40 days from the notice of the Bank, together with interest accrued
to the date of prepayment and all other sums payable by the Borrower under
the Security Documents.
|
(c)
|
If
circumstances arise which would result in a Notification under Clause
11.1. then, without in any way limiting the rights of the Bank under
Clause 11.1., the Bank shall use reasonable endeavours to transfer each
obligations, liabilities and rights under the Security Documents to
another office or financial institution not affected by the
circumstances.
|
11.2.
|
Increased
Cost.
|
(a)
|
The
cost to the Bank of making available the Commitment or any part thereof or
maintaining or funding the Loan is increased;
or
|
(b)
|
The
amount payable to the Bank or the effective return to the Bank under any
of the Security Documents, is reduced;
or
|
(c)
|
The
basis of taxation of payments to the Bank of principal or of interest on
any amounts advanced by it is
changed;
|
12.1.
|
Security
Documents
|
(a)
|
A
Master Swap Agreement and the relevant Schedule attached thereto (the
"
Master Swap
Agreement
") executed by the Borrower in form and substance
satisfactory to the Bank;
|
(b)
|
A
Master Agreement Security Deed (the "
Master Agreement Security
Deed
") executed or (as the context may require) to be executed by
the Borrower in favour of the Bank;
|
(c)
|
A
Corporate Guarantee from the Corporate Guarantor in form and substance
satisfactory to the Bank (the "
Corporate
Guarantee
");
|
(d)
|
A
duly registered First Preferred Mortgage over the Vessel providing on the
basis of the provisions of the applicable law the highest degree of
security for the Bank (the "
Mortgage
");
|
(e)
|
A
first Priority General Assignment of all the Insurances, Earnings, and
Requisition Compensation for the Vessel in form and substance satisfactory
to the Bank and respective notices of assignment and acknowledgements
thereof (the "
General
Assignment
");
|
(f)
|
Specific
assignment of the benefit of the Charter in respect of the Vessel
chartered and respective notices and acknowledgements thereof (the "
Specific
Assignment
").
|
(g)
|
Pledge
agreement(s) in form and substance satisfactory to the Bank executed or
(as the context may require) to be executed by the Borrower or by the
Corporate Guarantor in favour of the Bank creating security in respect of
the Operating Account for the Vessel (the "
Operating Account
Pledge(s)
")
|
(h)
|
A
pledge agreement in form and substance satisfactory to the Bank executed
or (as the context may require) to be executed by the Borrower in favour
of the Bank in respect of the Retention Account (the "
Retention Account
Pledge
");
|
(i)
|
Manager's
undertaking in form and substance satisfactory to the Bank pursuant to
which the Manager will subrogate its rights to the Loan throughout the
Facility Period (the "
Manager's
Undertaking
").
|
13.1.1.
|
Furnish
the Bank, in form and substance satisfactory to the Bank, with annual,
consolidating and consolidated financial statements of the Borrower, the
Corporate Guarantor and of any other of the companies of the Group within
180 days after the end of the financial year concerned, and prepared in
accordance with generally accepted accounting principles consistently
applied;
|
13.1.2.
|
Provide
the Bank from time to time as the Bank may reasonably request and in form
and substance satisfactory to the Bank with any information on the
financial conditions commitments and operations of the Borrower and of any
other of the companies of the
Group.
|
13.1.3.
|
Promptly
inform the Bank of any occurrence which came to the knowledge of the
Borrower which might adversely affect the ability of the Borrower or any
other Security Party to perform its respective obligations under this
Agreement and/or any of the other Security Documents and of any Event of
Default forthwith upon becoming aware
thereof;
|
13.1.4.
|
Promptly
inform the Bank of all major financial developments in the Group such as
new loans, refinancing/restructuring of existing loans, new acquisitions
and sales, contracts for term employment of Vessel
e.t.c.
|
13.2.
|
Banking
Arrangements.
|
13.2.1.
|
Use
the Loan exclusively for the purpose specified in this
Agreement;
|
13.2.2.
|
Ensure
that all obligations under this Agreement and the other Security Documents
will be duly and punctually
performed.
|
13.2.3.
|
Pay
to the Bank on demand any sum of money which is payable to the Bank under
this Agreement and the other Security Documents but in respect of which it
is not specified in any other Clause when it is due and
payable;
|
13.2.4.
|
Accept
that a Certificate of any of the Bank or a statement of account executed
by two authorised officers of any of the Bank or an Extract of the Books
of any of the Bank certified by an officer of the Bank shall (save for
manifest error) be conclusive evidence of the amount due under this
Agreement and shall be final and binding on all parties
hereto;
|
13.2.5.
|
Upon
request by the Bank from time to time provide such information and
evidence to the Bank as the Bank would require to demonstrate compliance
with the covenants and warranties set forth in this Agreement and any
other Security Document.
|
13.3.
|
Financial
Exposure.
|
13.3.1.
|
Incur
no debt and grant no guarantee to and/or in favour of anybody except in
the ordinary course of business, without the prior written consent of the
Bank, which shall not be unreasonably
withheld.
|
13.3.2.
|
Not
give any loans or credits or advances to any person, or entity without the
previous consenting opinion of the Bank which shall not be unreasonably
withheld;
|
13.3.3.
|
Not
declare or pay any dividends or other distribution in case of an Event of
Default without the prior written consent of the
Bank;
|
13.3.4.
|
Not
transfer, sell or otherwise dispose any of its real or personal property,
assets or rights, whether present or future, without the prior written
consent of the Bank or allow any part of its undertaking, property, assets
or rights, whether present or future, to be mortgaged, charged, pledged,
used as a lien (except for lien created by law) or otherwise encumbered
without the prior written consent of the
Bank;
|
13.3.5.
|
Ensure
that the Indebtedness of the Borrower to the Bank hereunder will not be
subordinated in priority of payment to any other present or future
claim.
|
13.3.6
|
Ensure
that the Borrower or the Corporate Guarantor will maintain throughout the
Facility Period in an account with the Bank free and unencumbered (save in
favour of the Bank) minimum liquidity balances equal to United States
Dollars three thousand
(USD300,000).
|
13.3.7
|
Ensure
that the aggregate debt to equity ratio of
the vessels owned by the Corporate Guarantor will
not exceed 75% of their aggregate current market values obtained on a
charter free basis by a broker appointed by and reporting to the Bank, the
latter having the right to obtain such valuations on a quarterly
basis
|
13.3.8
|
Ensure
that
the minimum Net
Worth
of the
Corporate Guarantor listed in Nasdaq will be United States Dollars fifteen
million (USD15,000,000)
|
13.3.9
|
Not
without the Bank's prior written consent assign, novate or in any other
way transfer any of its rights or obligations under or pursuant to the
Master Swap Agreement, nor enter into any interest rate exchange or
hedging agreement with anyone other than the Bank, nor any other agreement
or commitment the effect of which is, in the opinion of the Bank,
materially to prejudice the hedging of the Borrower's interest rate risk
effected by the Transaction from time to time entered into between the
Borrower and the Bank.
|
13.4.
|
Business
and Corporate Structure.
|
13.4.1.
|
Not
change the nature, organisation and conduct of the business of the
Borrower and/or the Corporate Guarantor as shipowner and/or Manager of the
Vessel as the case may be;
|
13.4.2.
|
Not
merge or consolidate with any other company or other legal
entity;
|
13.4.3.
|
On
demand and in any event on the thirty-first day of May in each year
deliver or cause to be delivered to the Bank official certificates from
the relevant authority confirming that the Borrower and any other
corporate Security Party is in good standing in its country of
incorporation;
|
13.4.4.
|
Ensure
that there is no change in the Directors and Officers of the Borrower and
of any other corporate Security Party and moreover ensure that no change
shall be made directly or indirectly in the ownership, beneficial
ownership, control or management of the Borrower without the prior written
consent of the Bank, which shall not be unreasonably
withheld.
|
13.5.
|
Obligation
to maintain the Security Value.
|
13.5.1.
|
At
all times the Borrower will procure that the value of the Vessel and other
security to be granted to the Bank pursuant to this Clause (the "
Security Value
") is not
less than the Minimum Value at any
time.
|
13.5.2.
|
If
the Security Value is less than the Minimum Value at any time, the
Borrower will within thirty (30) days of a request by the Bank and in
order to secure the Indebtedness on such terms as may be acceptable to the
Bank:
|
i.
|
prepay
a proportionate part of the Loan and of the Swap Exposure;
and/or
|
ii.
|
procure
for or grant to the Bank such other security as the Bank shall expressly
approve for the purpose of this Clause
13.5.
|
13.5.3.
|
As
far as clause 13.5.2.(ii) is concerned
:
|
i.
|
cash
provided by way of security shall be valued in Dollars at its principal
amount;
|
ii.
|
any
other security shall be valued on such basis as the Bank shall reasonably
determine in its discretion from time to
time; and
|
iii.
|
there
shall be deducted from any value or valuation the amount which is owing
and might become owing and which is secured on the asset concerned by any
prior or equal ranking Security Interest (other than in favour of the Bank
to secure the Indebtedness).
|
iv.
|
cash
deposits and/or any other security acceptable to the Bank it will be
provided in a way and manner also acceptable to the
Bank.
|
13.5.4.
|
At
least once every year and/or at any time that the Bank might consider it
useful and reasonably request the Borrower to undertake to have at its own
cost the Vessel valued with or without physical inspection (as the Bank
may require) in Dollars, on the basis of sale for prompt delivery free of
Encumbrances in favour of the Bank for cash at arm's length on normal
commercial terms as between a willing seller and a willing buyer by an
independent shipbroker selected by or acceptable to the Bank and reporting
to the Bank. Such valuation shall be made on the basis of the value of the
Vessel charter free. The Borrower agrees to accept the valuation made as
aforesaid as conclusive evidence of the market value of the Vessel at the
date of valuation. The Borrower will supply to the Bank and to the above
shipbrokers such information as such shipbrokers shall
require.
|
13.6.1.
|
Ensure
that the Vessel will maintain its present ownership, management, control
and ultimate beneficial ownership;
|
13.6.2.
|
Ensure
that the Vessel is and will remain properly certified in respect with the
ISM Code and in compliance with the ISO 9001 and the ISPS code when
applicable and moreover that it will remain in class free of
recommendations, notations or average damage affecting class and provide
the Bank on demand with copies of all ISM and/or all class and/or trading
certificates of the Vessel.
|
13.6.3.
|
Ensure
that at all times the Vessel is managed by the Manager or by such company
as may be approved in writing by the Bank and that such company is and
will remain ISM certified and in compliance with the ISO 9001 and the ISPS
Code when applicable and that it shall maintain at all times an
organisation and personnel which in the opinion of the Bank is adequate to
provide sufficient management, agency, financial, secretarial and other
services for the Vessel.
|
13.6.4.
|
Maintain
all Insurances of the Vessel and comply with all insurance requirements
specified in this Agreement (including in particular Schedule II) and in
case it fails to maintain the Vessel and/or such other property so
insured, the Borrower hereby, for the purpose of serving the interest of
the Bank, irrevocably authorises the Bank and grant to it the right to
effect the insurances of the Vessel and/or of the property as provided for
in Schedule II in the amount and in terms acceptable to the Bank from time
to time at the cost and on behalf of the Borrower. The Bank
will have the right but not the obligation to effect all or any of such
insurances at the cost of the Borrower and such cost shall consist
Expenses in the meaning of the Clause
1;
|
13.6.5.
|
Supply
copies of all cover notes, certificates of entry, insurance policies and
documents and furnish details of all insurances contemplated by Schedule
II and/or contracted to the Bank. The Bank may submit all such insurance
documents for examination to an insurance consultant nominated by the
Bank. The Bank will be at liberty to decide on the adequacy and the
compliance of the cover with the provisions of the Security Documents
including Schedule II and its decision shall be final and binding on the
Borrower. The cost including Value Added Tax of such insurance consultant
shall be considered as Expenses;
|
13.6.6.
|
The
Bank will be at liberty to conduct at the Borrower's cost physical
condition survey of the Vessel and a comprehensive record inspection by a
surveyor appointed by the Bank.
|
13.6.7.
|
At
the Bank's reasonable request, promptly provide a consultant nominated and
appointed by the Bank to monitor the collection of claims of whatsoever
nature with whatever information and documentation the Bank shall
require. All the cost including Value Added Tax in respect of
the appointment of such consultant shall be considered as
Expenses;
|
13.6.8.
|
Not
grant or permit any charge, lien (except for lien created by law)or other
encumbrance to be imposed upon the Vessel or otherwise dispose of any of
its rights under any charterparty or contract of affreightment relating to
the Vessel or any other earnings of the
Vessel;
|
13.6.9.
|
Ensure
that the Vessel is maintained and trade in conformity with the laws of its
flag, of its owning company or of the nationality of the officers, or
crew, and in conformity with the requirements of the Insurances and
nothing is done or permitted to be done which could endanger the flag of
the Vessel, or its free ownership and operation or its
Insurances;
|
13.6.10
|
Always
comply with all the covenants provided for in the mortgage on the
Vessel
|
13.6.11.
|
Not
without the prior written consent of the Bank enter into a charterparty,
contract of affreightment, agreement or related document in respect of the
employment of the Vessel (i) for a period of more than twelve (12) months
or (ii) below the market rate prevailing at the time when the Vessel is
fixed in or on terms which are not in accordance with the commercial
practice prevailing at the relevant time or (iii) on demise
charterparty;
|
13.6.12
|
Execute
and deliver to the Bank within fifteen (15) days of signing of any
charter, the duration of which is to be for a period, directly or by
extension of more than twelve (12) months: (a) a specific assignment of
such charter in form and substance satisfactory to the Bank and (b) a
notice of any such assignment addressed to the relevant charterer and
endorsed with an acknowledgement of receipt by the relevant charterer all
in form and substance satisfactory to the
Bank;
|
13.6.14.
|
The
Borrower undertakes to notify the Bank
forthwith:
|
(a)
|
of
any Environmental claim for an amount exceeding USD 300,000
made
against the Vessel and/or its
owner.
|
(b)
|
upon
becoming aware of any incident which may give rise to an Environmental
Claim and to keep the Bank advised in writing of the owners' response to
such Environmental claim on such regular basis and in such detail as the
Bank shall require.
|
13.7.
|
Validity
of securities
|
13.7.1.
|
Ensure
and procure that all approvals or consents and/or any other steps required
for the validity, enforceability and legality of this Agreement and the
other Security Documents and for the performance thereof by the Borrower
and any other Security Party are appropriately taken and are maintained in
full force and effect.
|
13.7.2.
|
Ensure
and procure that, unless and until directed by the Bank otherwise (i) all
the Earnings of the Vessel shall be paid to the Operating Account and (ii)
the persons from whom the Earnings are from time to time due are
irrevocably instructed to pay them to the Operating Account in accordance
with the provisions hereof and of the relevant Security
Documents;
|
13.7.3.
|
Pay
all Taxes, and other governmental charges when the same fall due, except
to the extent that the same are being contested in good faith by
appropriate proceedings and adequate reserves have been set aside for
their payment if such proceedings
fail;
|
13.7.4.
|
From
time to time at the request of the Bank execute and deliver to the Bank or
procure the execution and delivery to the Bank of all such documents as
shall be deemed desirable at the sole discretion of the Bank for giving
full effect to this Agreement, and for perfecting, protecting the value of
or enforcing any rights or securities granted to the Bank under the
Security Documents and any other documents executed pursuant hereto or
thereto.
|
13.7.5.
|
The
covenants specified in this Clause are inserted solely for the benefit of
the Bank and may be waived in whole or in part and with or without
conditions by the Bank without prejudicing the right of the Bank to
require fulfillment of such covenants at such time and manner as specified
by the Bank.
|
13.8.
|
Admission,
and warranties of the Security Parties as regards their
liability.
|
(a)
|
The
giving of the Corporate Guarantee by the Guarantor is to the commercial
benefit of such Guarantor in that the Guarantor has close financial
cooperation and mutual assistance with the Borrower and that by lending
its support to the Borrower through such Guarantee it further its own
business interests within the scope of its constitutional
documents;
|
(b)
|
The
liability of the Borrower and of the other Security Parties shall in all
cases, whether so expressed to be or not, be joint and several and each
representation and warranty and each covenant and agreement made or given
or to be made or given by any one of them will be considered as made or
given by them all jointly and
severally;
|
(c)
|
The
Borrower further represents that none of the Security Parties shall be
exonerated and its liability hereunder shall not be lessened or impaired
by any time, indulgence or relief being given by the Bank to any other
Security Party or by the variation, compromise, renewal or release of or
refusal or neglect to perfect or enforce any right, remedies or securities
against the Borrower or any other Security Party, by anything done or
omitted which but for this provision might operate to exonerate any other
Security Parties;
|
(d)
|
The
obligations of the Borrower shall not be affected by any legal limitation,
disability, incapacity or other circumstances relating to any other
Security Party, whether or not known to the Bank, by any invalidity in or
irregularity or unenforceability of the obligations of such other Security
Party under any of the Security Documents or otherwise or by any change in
the constitution of, or any amalgamation or reconstruction of any Security
Party or of the Bank.
|
14.1.1.
|
If
the Borrower and/or any other Security Party fail to pay any sum due
hereunder and/or under the other Security Documents when due, or in the
case of any sum payable on demand, within seven (7) Banking Days of such
demand;
|
14.1.2.
|
If
the Borrower and/or any other Security Party fail to obtain and/or
maintain the Insurances (as defined in Schedule II) or if any insurer in
respect of such Insurances becomes entitled to cancel the insurances or to
disclaim liability;
|
14.1.3.
|
If
the Borrower and/or any other Security Party default in the due
performance and/or observance of any covenant, term, obligation or
undertaking under this Agreement and/or any of the other Security
Documents (other than those referred to in sub-Clauses 14.1.1. and 14.1.2.
hereinabove). In case such default is in the opinion of the Bank, capable
of remedy, if it will continue unremedied for seven (7) Banking Days after
its occurrence.
|
14.2.
|
Representations
incorrect
|
14.3.
|
Events
affecting the Borrower and/or any other Security
Party
|
14.3.1.
|
If
a creditor of the Borrower attaches or takes possession of, or a distress
execution, sequestration or other process is levied or enforced upon or
sued against the whole or any part of the property of the Borrower and/or
any other Security Party and it is not discharged within fifteen (15)
Banking days;
|
14.3.2.
|
If
the Borrower and/or any other Security Party is found bankrupt or
insolvent or any order is made by any competent court or resolution passed
by the Borrower and/or any other Security Party or petition presented for
the winding-up or dissolution of the Borrower and/or any other Security
Party or for the appointment of a liquidator, trustee, receiver,
administrator or conservator of any part of the undertakings, assets,
rights or revenues of the Borrower and/or any other Security
Party;
|
14.3.3.
|
If
the Borrower and/or any other Security Party suspend payment of their
debts or are (or are reasonably deemed to be) unable to or admit inability
to pay their debts as they fall due or propose or enter into any
composition or other arrangement for the benefit of creditors generally or
proceedings are commenced in relation to the Borrower and/or any other
Security Party relating to reconstruction or readjustment of
debts;
|
14.3.4.
|
If
a meeting is convened by any Security Party for the purpose of passing any
resolution to purchase, reduce or redeem any of its share
capital;
|
14.3.5.
|
If
a material part of the undertakings, assets, rights or revenues of the
Borrower and/or any other Security Party are seized, nationalised,
expropriated or compulsorily acquired by or under the authority of any
government;
|
14.3.6.
|
If
any event occurs or proceeding is taken with respect to the Borrower
and/or any other Security Party in any jurisdiction to which anyone of
them is subject which has an effect equivalent or similar to any of the
events mentioned in Clauses 14.3.1. to
14.3.5.;
|
14.3.7.
|
If
the Borrower and/or any other Security Party suspend or threaten to
suspend or cease to carry on its
business;
|
14.3.8.
|
If
there occurs, in the opinion of the Bank, a materially adverse change in
the financial condition of the Borrower and/or any Security
Party;
|
14.3.9.
|
If
any other event occurs not mentioned in this Clause 14.3. or circumstances
arise which, in the reasonable opinion of the Bank, is likely adversely to
affect either (i) the ability of the Borrower and/or any other
Security Party to perform all or any of their obligations under or
otherwise to comply with the terms of this Agreement and/or any of the
other Security Documents, or (ii) the security created by this Agreement
and/or any of the other Security
Documents;
|
14.3.10.
|
If
there is any change in the beneficial ownership of the shares in the
Borrower and/or any other Security Party as declared to the Bank prior to
the execution hereof or as represented to the Bank in the Certificate of
beneficial shareholding given to the Bank pursuant to Schedule I, Part
1.
|
14.3.11.
|
If
any debt of any Security Party is not paid when due or any debt of any
Security Party becomes due and payable prior to the date when it would
otherwise have become due (unless as a result of the exercise by the
relevant Security Party of a voluntary right of prepayment), or any
creditor of any Security Party becomes entitled to declare its claim due
and payable, or any facility or commitment available to any Security Party
is withdrawn, suspended or cancelled by reason of any default (however
described) of such Security Party;
|
14.4.1.
|
If
this Agreement or any of the other Security Documents shall at any time
and for any reason become invalid or unenforceable or otherwise cease to
remain in full force and effect, or if the validity or enforceability of
any of the Security Documents shall at any time and for any reason be
contested by any party thereto (other than the Bank), or if any such party
shall deny that it has any, or any further, liability thereunder or shall
otherwise repudiate any of the Security Documents or do or cause or permit
to be done any act or thing evidencing an intention to repudiate this
Agreement or any of the other Security Documents or it becomes impossible
or unlawful for the Borrower and/or any other Security Party to fulfill
any of its covenants and obligations contained in this Agreement or any of
the other Security Documents or for the Bank to exercise the rights or any
of them vested in them thereunder or
otherwise;
|
14.4.2.
|
If
any Encumbrance in respect of any of the properties (or part thereof)
which belongs to the Security Parties (or any of them) becomes
enforceable.
|
14.4.3.
|
If
a notice is sent by the Bank under section 6(a) of the Master Swap
Agreement, or by any person under section 6(b)(iv) of the Master Swap
Agreement, in either case designating an Early Termination Date for the
purpose of the Master Swap Agreement, or if the Master Swap Agreement is
for any other reason terminated, cancelled, suspended, rescinded, revoked
or otherwise ceases to remain in full force and effect;
or
|
14.5.1.
|
if,
due to Borrower's default, any charter or contract of affreightment
relating to the Vessel for the time being mortgaged to the Bank hereunder
ceases for more than thirty (30) days (other than complete performance in
accordance with its terms) to be in full force and
effect.
|
14.5.2.
|
If
the Vessel either:
|
(a)
|
becomes
a Total Loss or
|
(b)
|
suffers
damage or is involved in an accident which in the opinion of the Bank may
result in being subsequently considered to be a Total Loss or which may
otherwise reduce the security of the
Bank.
|
14.5.3.
|
If
the registration of the Vessel under the laws and flag of the Flag State
is cancelled or terminated without the prior written consent of the
Bank.
|
14.5.4.
|
If
the Flag State of the Vessel becomes involved in hostilities or civil war
if, in any such case, such event could in the opinion of the Bank
reasonably be expected to have a material adverse effect on the security
constituted by any of the Security Documents and Borrower fails to comply
with the Bank's request to change flag acceptable to the Bank within
fifteen (15) Banking Days.
|
14.6.
|
Environmental
Events.
|
14.7.1.
|
At
any time after the occurrence of any Event of Default, the Bank may,
without prejudice to any other of its
rights,
|
(a)
|
by
notice to the Borrower declare that the obligation of the Bank to make the
Commitment available shall be terminated, whereupon the Commitment shall
be reduced to zero forthwith and/or
|
(b)
|
by
notice to the Borrower declare that the Loan and interest and all sums
payable under this Agreement and the other Security Documents have become
due and payable, or payable on demand, whereupon the same shall
immediately, or in accordance with the terms of such notice, become due
and payable jointly and severally by the Borrower and the other Obligors,
without any further demand protest or notice or any other procedure from
the Bank,
|
(c)
|
put
into force and exercise all or any of the rights, powers and remedies
possessed by it under this Agreement and/or under any other Security
Document.
|
14.7.2.
|
If
an event occurs in respect of the Borrower or any of the other Security
Parties of the type described in Clauses 14.3.2. to 14.3.6. the obligation
of the Bank to make the Commitment available shall terminate immediately
and all amounts under sub-clause 14.7.1.(b) above shall become immediately
due and payable without the need for any demand from the Bank or any
notice to the Borrower or other action of any kind
whatsoever.
|
16.1.
|
Loan
Account
|
16.2.
|
Set-off
|
16.2.1
|
Upon
the occurrence of any Event of Default, the Borrower authorises the Bank,
without notice to the Borrower, to apply any credit balance to which the
Borrower is then entitled and/or to whatever currency standing upon any
such account of the Borrower with any branch of the in or
towards satisfaction of the Indebtedness. For this purpose, the Bank is
authorised to purchase with the moneys standing to the credit of such
account such other currencies as may be necessary to effect such
application. The Bank shall not be obliged to exercise any
right given to it by this clause. The Bank shall notify the Borrower
without delay upon the exercise or purported exercise of any right of
set-off giving details in relation
thereto.
|
16.2.2
|
The
rights conferred on the Bank by this Clause shall be in addition to, and
without prejudice to or limitation of, the rights of netting and set off
conferred on the Bank by the Master Swap Agreement. The Borrower
acknowledges that the Bank shall be under no obligation to make any
payment to the Borrower under or pursuant to the Master Swap Agreement if,
at the time that payment becomes due, there shall have occurred an Event
of Default or Potential Event of Default, or an Event of Default or
Termination Event (as those terms are respectively defined in the Master
Swap Agreement).
|
16.3.
|
Operating
Account
|
(a)
|
on
or before the Drawdown Date open with the Bank the Operating
Account; and
|
(b)
|
procure
that all moneys payable to the Borrower in respect of the Earnings or
other receivables regarding the Vessel shall, unless and until the Bank
directs to the contrary be paid to the Operating Account free from
Encumbrances (save for Encumbrances in favour of the
Bank); Provided however that if any moneys paid to the
Operating Account are payable in a currency other than Dollars, the Bank
shall convert such moneys into Dollars at the Bank spot rate of
exchange at the relevant time for the purchase of Dollars with such
currency and the term "spot rate of exchange" shall include any premium
and costs of exchange payable in connection with the purchase of Dollars
with such currency.
|
(c)
|
The
Operating Account shall bear interest at the rate quoted by the Bank to
its customers for comparable deposits in Dollars and for such periods as
the Bank may determine, such interest to be credited to the Operating
Account at intervals the Bank usually pays interest on
deposits.
|
(d)
|
The
Borrower hereby assigns to the Bank as a continuing security for the
payment of the Indebtedness the Operating Account and all moneys from time
to time standing to the credit thereof including any interest from time to
time accrued and accruing thereon, such assignment to take effect
immediately upon the occurrence of an Event of
Default.
|
16.3.3.
|
Application
of Operating Account
|
(a)
|
The
Bank shall be entitled (but not obliged) at any time to deduct from the
balance for the time being standing to the credit of the Operating Account
all other moneys which may fall due to be paid to the Bank under the terms
of the Security Documents or otherwise howsoever in connection with the
Loan.
|
(b)
|
At
any time after the occurrence of an Event of Default, the Bank may,
without notice to the Borrower, apply all moneys then standing to the
credit of the Operating Account (together with interest from time to time
accruing or accrued thereon) in or towards satisfaction of any sums due to
the Bank under the Security Documents in the manner specified in Clause
15.
|
16.3.4.
|
Relocation
of Operating Account
|
16.4.
|
Retention
Account
|
16.4.1.
|
The Borrower on or
before the Drawdown Date will open with the Bank the Retention
Account.
|
(a)
|
For
so long as any moneys are owing under the Security Documents, the Borrower
shall pay to the Retention Account, at monthly intervals commencing with a
first payment on the date falling one Month after the Drawdown Date and at
monthly intervals thereafter (each such day being hereinafter called
"Monthly Retention Date") such sum (each sum being hereinafter called
"Monthly Retention Amount") as shall be the aggregate
of:
|
i.
|
the
quotient of the Repayment Instalment amount from time to time falling due
on the each time next Repayment Date divided by the number of the months
intervening between the immediately previous and the such next Repayment
Date, pursuant to Clause 7
hereof; and
|
ii.
|
the
quotient of the amount of interest from time to time falling due in
respect of the Loan or each part thereof on the each time next Interest
Payment Date divided by the number of months of the relevant Interest
Period.
|
(b)
|
The
Bank is hereby irrevocably authorised by the Borrower to debit at every
Monthly Retention Date the Operating Account with the Monthly Retention
Amounts and to credit them to the Retention
Account.
|
(c)
|
In
case that any Earnings paid to the Operating Account relate to a period of
employment of the Vessel longer than one (1) Month, then upon receipt of
such Earnings the Retention Account shall be funded by an amount equal to
so many Monthly Retention Amounts or part thereof as shall correspond to
the longer period to which the said Earnings relate or any amount as may
be determined by the Bank.
|
16.4.2.
|
Unless
and until there shall occur an Event of Default all Monthly Retention
Amounts credited to the Retention Account together with interest from time
to time accruing or at any time accrued thereon shall be set off and
applied by the Bank (and express and irrevocable authority is hereby given
by the Borrower to the Bank so to set off and apply the same) upon each
Repayment Date and upon each Interest Payment Date in or towards payment
of the Repayment Instalment then falling due and/or (as the case may be)
the amount of interest then due. Each such set off and
application by the Bank shall constitute a payment in or towards
satisfaction of the corresponding payment obligations of the Borrower
under this Agreement but shall be strictly without prejudice to the
obligations of the Borrower to make any such payment to the extent that
the aforesaid set off application by the Bank is insufficient to meet the
same.
|
16.4.3.
|
Any
amount for the time being standing to the credit of the Retention Account
shall bear interest at the rate quoted by the Bank to its customers for
deposits in Dollars for such period as the Bank may determine and for an
amount comparable with the amount for the time being standing to the
credit of the Retention Account.
|
16.4.4.
|
Upon
the occurrence of an Event of Default or at any time thereafter the Bank
will set off and apply all sums standing to the credit of the Retention
Account including accrued interest (if any) in the manner specified in
Clause 15 without notice to the
Borrower.
|
(a)
|
The
Loan not being drawdown hereunder whether before or after the giving of
the Drawdown Notice in accordance with the provisions of Clause 2.2.
hereof for any reason whatsoever including but not limited to the refusal
of the Bank to allow the disbursement of the Commitment because of the non
fulfillment of the Conditions Precedent contained in Schedule I or any of
them;
|
(b)
|
any
default in payment by the Borrower of any sum under any of the Security
Documents;
|
(c)
|
the
occurrence of any other Event of
Default;
|
(d)
|
the
prepayment or repayment of the Loan or part thereof being made otherwise
than on an Interest Payment Date relating to the part of the Loan prepaid
or repaid.
|
19.1.
|
Over
Other Security Documents
|
(a)
|
This
Agreement and the Security Documents unless otherwise provided for herein,
shall be governed by and construed in accordance with English Law. The
Mortgage shall be governed by the law of the Flag State of the Vessel. The
Pledges, the Corporate Guarantee shall be governed by the laws of
Greece
|
(b)
|
For
the exclusive benefit of the Bank, the Borrower hereby irrevocably submits
itself to the non-exclusive jurisdiction of the Courts of England.
Further, the Borrower agrees that any summons, writ or other legal process
issued against any of the Security Parties either in England or Greece or
in any other country as the case may be, shall be served upon the Borrower
in Greece c/o Hill Taylor Dickinson at 2, II Merarchias Street 185 35
Piraeus Greece, fax no 0030 210 4284777), or in England c/o Messrs Hill
Taylor Dickinson at Irongate House, Duke's Place, London EC3A
7LP, England or to their successors, who are hereby authorised by the
Borrower, acting on its own behalf to accept such service, which shall be
deemed to be good service on the Borrower. The foregoing shall not limit
the right of the Bank to start proceedings in any other country or to
serve process in any other manner permitted by law. The Borrower hereby
waives any objections as to the inconvenience of any forum elected by the
Bank.
|
(c)
|
If
it is decided by the Bank that any such proceedings should be commenced in
any other country, then any objections as to the jurisdiction or any claim
as to the inconvenience of the forum is hereby waived by the Borrower all
of whom the Borrower confirms that they are representing and binding, and
it is agreed and undertaken by the Borrower to accept service of legal
process and not to contest the validity of such proceedings as far as the
jurisdiction of the court or courts involved is
concerned.
|
(a)
|
Constitutional
documents
|
(i)
|
the
transfer of subscription
|
(iv)
|
all
resolutions regarding election and resignation of Directors (if any) from
the first meeting till today.
|
(b)
|
Corporate
authorisations
|
(i)
|
being
complete true and correct;
|
(ii)
|
being
duly passed at meetings duly convened and held of the directors of such
Security Party where the directors were present in person at and
throughout the said meetings and the resolutions were passed
unanimously;
|
(iii)
|
not
having been amended, modified or revoked;
and
|
(iv)
|
being
in full force and effect
|
(c)
|
Official
Certificates of Good Standing of the
Borrower.
|
(d)
|
Certificate of Incumbency:
a list of directors and officers of each Security Party and of
every corporate shareholder specifying the names and positions of such
persons, certified (in a certificate dated not earlier than five Banking
Days prior to the date of this Agreement) by an appropriate government
authority, or if this is not possible, by the Secretary of such Security
Party, or of the corporate shareholder to be true, complete and up to date
and duly notarised and legalised by the appropriate
consul.
|
(e)
|
A
certificate, on behalf of the Borrower, by a Director having been
authorised to execute same, on which the documents mentioned sub-sections
(a), (b), (c), (d) and (e) of this Part 1 of Schedule I will have been
attached, reading substantially as
follows:
|
1.
|
Attached
hereto and marked "A" is a true and complete copy of the Articles of
Incorporation and of all documents relating to the constitution of the
Company (and of all amendments thereof) which are in full force and effect
as of the date hereof.
|
2.
|
Attached
hereto and marked "B" is a true and complete copy of the Minutes of a
Meeting of the Directors of the Company held in ……………… on the …….. day of
…….. 2009 at which Meeting all the Directors of the Company were present
in person and acted throughout and the Resolutions passed at the Meeting
were passed unanimously and have not been varied or revoked and remain in
full force and effect as of the date
hereof.
|
3.
|
Attached
hereto and marked "C" is a true and complete copy of the Minutes of the
meeting of the Shareholders of the Company held in …………………… on the …… day
of …… 2009 at which meeting bearer share certificates representing all of
the authorised and issued shares of the Company were tabled and voted
throughout by the holders thereof (or, as the case may be, the registered
shareholders of all of the authorised and issued shares of the Corporation
were present in person or by proxy and acted throughout) such meeting
having been convened and notice thereof having been duly waived by all
persons entitled thereto and the Resolutions passed at such meeting remain
in full force and effect and unamended as of the date
hereof.
|
4.
|
Attached
hereto marked "D" is a true and complete copy of the Power of Attorney
approved by the Directors and Shareholders of the Company at the Meetings
described in paragraphs, 2 and 3 above, a copy of which Power of Attorney
has been attached to the Minutes of the said
Meetings.
|
5.
|
The
Directors and Officers of the Company are, as at the date hereof, and
were, as at the date of the Meeting of the Directors, the following, being
all the Directors and Officers of the
Company:
|
Director/President
|
||
Director/Secretary
|
||
Director/Treasurer
|
6.
|
The
legal shareholder(s) of the Company is/are, as the date hereof, and
was/were, as at the date of the Meetings of the Directors and
shareholders, that referred to in the copy of the Minutes of the Meeting
of Shareholders attached hereto and marked
C.
|
7.
|
The
name, title and specimen signature of each person who has executed or will
execute any of the Security Documents (as such term is defined in the Loan
Agreement referenced in the Resolutions certified in item 2 above) and/or
any other document incidental hereto and thereto on behalf of our Company
are as set forth below, and each such person is on the date hereof and
thereunto duly authorised.
|
Name
and Title
|
Specimen
Signature
|
|
8.
|
I
confirm that I am duly authorised by the Company to execute this
certificate.
|
(f)
|
Opinions
|
(g)
|
Further
opinions
|
|
an
opinion of the legal adviser to the Borrower as to all matters of law as
the Bank shall deem relevant to the Loan Agreement as it may
require.
|
(h)
|
Borrower's
process agent
|
(j)
|
Insurance
Opinion
|
(k)
|
Arrangement
Fee
|
(a)
|
Charter
free valuation and preparation of insurance report of the Vessel as at the
date determined by the Bank prior to the drawdown prepared on the basis
specified in the Agreement.
|
(b)
|
Evidence
that the Vessel has been duly registered in the ownership of its owner
under the laws and flag of its shipping registry free from any
Encumbrances (including those on its earnings, insurances, charter rights
and requisition compensation) save for those in favour of the Bank and
that the Mortgage on the Vessel has been recorded in the respective
Registry with first priority.
|
(c)
|
Evidence
that the Vessel has been surveyed at the cost of the Borrower by surveyors
appointed and/or approved by the Bank and a copy of the surveyors' report
has been delivered to it.
|
(d)
|
Certificate
of Confirmation of Class for hull and machinery confirming that the Vessel
is classed in the highest Class of a Classification Society acceptable to
the Bank and remains free of recommendations notations affecting class.
The Bank should be notified of the Classification Society with which the
Vessel will be or is (as the case may be) classed at least fifteen days
prior to the Drawdown Date.
|
(e)
|
Due
authorisation enabling the Bank to obtain copies of class records or other
information at its discretion from the Classification Society regarding
the Vessel and a confirmation from the classification Society
that it will forward to the Bank all the quarterly listings issued in
respect with that Vessel's
condition.
|
(f)
|
Photocopies
of the Vessel's current and unexpired trading
certificates.
|
(g)
|
Evidence
that the Vessel has been or will -on drawdown- be insured in accordance
with the insurance requirements provided for in the Schedule of this
Agreement with Underwriters, Insurance Companies, P & I and War Risks
Associations which meet with the approval of the Bank. Such evidence shall
include Hull and Machinery Marine risks full cover notes, stating all
terms and conditions listing the security involved and incorporating the
Loss Payable Clause and in the case of War Risks and Protection and
Indemnity cover the Certificate of Entry and/or cover notes if
appropriate.
|
(h)
|
Letters
of Undertaking for the Vessel acceptable to the Bank and issued by Hull
and Machinery brokers and/or War Risks Associations or brokers and
Protection & Indemnity Associations approved by the Bank for the
Vessel acceptable to the Bank.
|
(i)
|
Certified
true photocopies of the Charter or any charterparty or other contract of
employment of the Vessel which will be in force on the Drawdown
Date.
|
(j)
|
Certified
true photocopies of the management agreement relating to the Vessel and
the Manager's Undertaking duly executed by the Manager confirming that it
will throughout the Facility Period manage the Vessel on behalf of its
Owner and subordinate all its rights against the Owner or the Vessel to
those of the Bank.
|
(k)
|
Evidence
that the Manager and the Vessel has obtained certification of compliance
with ISM Code and/or ISPS Code.
|
(l)
|
Documentary
evidence as to the light displacement tonnage of the
Vessel.
|
(m)
|
Photocopy
of the MOA in respect of the Vessel and any Addenda thereto certified as
true and complete by the legal counsel of the
Borrower.
|
(n)
|
Photocopy
of the Bill of Sale transferring title in the Vessel to the Borrower free
of all encumbrances, maritime liens and other debts whatsoever notarially
certified and legalized as well as a copy of the Protocol of Delivery and
acceptance of the Vessel and of the Commercial
Invoice.
|
(o)
|
Confirmations
by the Insurers of the Vessel addressed to the Bank that they will issue
letters of undertaking and endorse notices of assignment and loss payable
Clauses on the Insurances, as soon as they receive the respective notices
of assignment.
|
(p)
|
Evidence,
in the form of a certificate from the Vessel's Registry proving the
Sellers' title to the Vessel free of any Encumbrances, debts or claims of
any nature whatsoever;
|
(q)
|
Duly
certified copies of the corporate documentation of the Seller proving the
legal existence of the Seller and the due authorization of the sale of the
Vessel.
|
(r)
|
Evidence
that the ten per cent (10%) deposit in respect of the Vessel and all other
sums of money (other than the Loan) required to be paid by the Borrower to
the Seller pursuant to the M.O.A. have been duly
paid.
|
(s)
|
As
a condition subsequent authenticated copy of a Transcript of Registry
issued by the Registrar of Ships proving the registration of the Vessel in
the ownership of the Borrower and the recording of the Mortgage on first
priority. Such evidence must be produced to the Bank not later than three
(3) Banking Days after the Drawdown
Date.
|
e.
|
Pollution
Liability
|
f.
|
USA
Pollution Risk
|
g.
|
FD
& D Cover
|
(a)
|
procure
and ensure that the Approved Brokers and/or Insurers as the case may be,
shall send to the Bank a Letter of Undertaking in respect of the
Insurances in form and substance satisfactory to the Bank and a Notice of
Cancellation as per Paragraph D hereinbelow. Said Letter of
Undertaking shall be in accordance with the form recommended by Lloyd's
Insurance Brokers Committee, or any subsequent LIBC form, or any other
similar form, which is approved by the Bank and shall include a further
undertaking to give immediate notice of any insurance being subject to the
Condition Survey Warranty (J.H. 115) and/or structural Conditions Warranty
(J.H. 722) and/or the Classification Clause (Hulls) dated 29/6/89, fifteen
days prior to the attachment date of any insurance bearing any of these
warranties, or in such shorter time as the Bank may agree.
|
(b)
|
If
any of the Insurances form part of a fleet cover, procure that the Vessel
shall be considered by insurers as separately insured and further procure
that the Approved Brokers and/or Insurers as the case may be, shall
undertake to the Bank that they shall neither set off against any claims
in respect of the Vessel any premiums due in respect of other
vessels under such fleet cover or any premiums due for other insurances,
nor cancel the insurance of the Vessel for reason of non-payment of
premiums for other vessels under such fleet cover or of premiums for such
other insurances, and shall undertake to issue a separate policy in
respect of the Vessel if and when so requested by the Bank;
|
(c)
|
punctually
pay all premiums, calls, contributions or other sums payable in respect of
all Insurances and produce all relevant receipts and details or other
evidence of payment when so required by the Bank;
|
(d)
|
notify
the Bank of the names of the brokers and/or all of the Insurers proposed
to be employed by the Owners for the purposes of the renewal of such
Insurances and of the amounts and terms in which such Insurances are
proposed to be renewed and the risks to be covered at least twenty one
(21) days before the relevant policies, contracts or entries, expire, (or
in such shorter period as the Bank may agree), and, subject to compliance
with any requirements of the Bank under these Insurance Requirements,
procure that appropriate instructions for the renewal of such Insurances
on the terms so specified are given to the Approved Brokers and/or to the
approved Insurers at least fourteen (14) days before the relevant
policies, contracts or entries expire, and that the Approved Brokers
and/or the approved Insurers will at least seven (7) days before such
expiry (or within such shorter period as the Bank may from time to time
agree) confirm in writing to the Bank as and when such renewals have been
effected in accordance with the instructions so given and to procure that
a Cancellation Clause shall be endorsed on the relevant policies,
contracts or entries for a Notice of Cancellation to the Bank on the terms
set out in Paragraph D of this
Schedule.
|
(e)
|
arrange
for the execution and delivery of such guarantees or indemnities as may
from time to time be required by any protection and indemnity or war risks
association;
|
(f)
|
deposit
with the Approved Brokers (procure the deposit of) all slips, cover notes,
policies, certificates of entry or other instruments of insurance from
time to time issued and procure that the interest of the Bank shall be
endorsed thereon by incorporation of the relevant Loss Payable Clause and
by means of a Notice of Assignment (signed by the Owners) in the form set
out in Paragraph D hereinbelow or in such other form as may from time to
time be agreed in writing by the Bank, and that the Bank shall be
furnished with pro forma copies thereof.
|
(g)
|
procure
that the Insurers shall note the Bank's interest and endorse the relevant
Loss Payable Clause on the relevant certificates of entry or policies and
shall furnish the Bank with a copy of such certificates of entry or
policies;
|
(h)
|
do
all other necessary things and provide all such documents, evidence and
information, so as to enable the Bank to collect and recover any moneys
which shall at any time become due in respect of the
Insurances;
|
(i)
|
not
employ or permit the Vessel to be employed in any other way than in
conformity with the terms of the Insurances (including any warranties
express or implied therein) and with any applicable law without first
obtaining the consent of the Insurers to such employment and complying
with such requirements as to extra premium or otherwise as the Insurers
may prescribe;
|
(j)
|
apply
all sums receivable under the Insurances which are paid to the Owner in
accordance with the Loss Payable Clauses in repairing all damage and/or in
discharging the liability in respect of which such sums shall have been
received;
|
(k)
|
in
case that the Vessel is scheduled to operate or operates within or nearby
USA, make all the Protection & Indemnity Club US Voyage Quarterly
Declarations for each quarter in time and/or obtain prior to the Vessel's
arrival in US territorial waters all relevant certificates as from time to
time may be required, such as COFR, or any other similar, and forward
copies of same to the Bank;
|
(l)
|
not
without the prior consent of the Bank alter any insurance nor make,
consent or agree to any act or omission which would or might render any
insurance invalid, void, voidable or unenforceable or render any sum paid
out under any insurance repayable in whole or in part.
|
(m)
|
reimburse
the Bank for any premiums paid by the Bank or pay to the Bank the amount
of any premiums to be paid by the Bank in order to effect and maintain a
policy of Mortgagee's Interest Insurance or any other additional insurance
that the Bank decides to take at its discretion as well as reimburse the
Bank for all expenses and premiums paid by the Bank in order to effect
insurances that the Owner failed to effect.
|
Instalment
No
|
Payment
Date
|
Repayment
Instalment
|
Total
Principal Amount
|
|
|||
1
|
3
months after the Drawdown Date
|
USD
250,000
|
USD
9,750,000
|
2
|
6
months after the Drawdown Date
|
USD
250,000
|
USD
9,500,000
|
3
|
9
months after the Drawdown Date
|
USD
250,000
|
USD
9,250,000
|
4
|
12
months after the Drawdown Date
|
USD
250,000
|
USD
9,000,000
|
5
|
15
months after the Drawdown Date
|
USD
250,000
|
USD
8,750,000
|
6
|
18
months after the Drawdown Date
|
USD
250,000
|
USD
8,500,000
|
7
|
21
months after the Drawdown Date
|
USD
250,000
|
USD
8,250,000
|
8
|
24
months after the Drawdown Date
|
USD
250,000
|
USD
8,000,000
|
9
|
27
months after the Drawdown Date
|
USD
250,000
|
USD
7,750,000
|
10
|
30
months after the Drawdown Date
|
USD
250,000
|
USD
7,500,000
|
11
|
33
months after the Drawdown Date
|
USD
250,000
|
USD
7,250,000
|
12
|
36
months after the Drawdown Date
|
USD
250,000
|
USD
7,000,000
|
13
|
39
months after the Drawdown Date
|
USD
250,000
|
USD
6,750,000
|
14
|
42
months after the Drawdown Date
|
USD
250,000
|
USD
6,500,000
|
15
|
45
months after the Drawdown Date
|
USD
250,000
|
USD
6,250,000
|
16
|
48
months after the Drawdown Date
|
USD
250,000
|
USD
6,000,000
|
17
|
51
months after the Drawdown Date
|
USD
250,000
|
USD
5,750,000
|
18
|
54
months after the Drawdown Date
|
USD
250,000
|
USD
5,500,000
|
19
|
57
months after the Drawdown Date
|
USD
250,000
|
USD
5,250,000
|
20
|
60
months after the Drawdown Date
|
USD
250,000
|
USD
5,000,000
|
Plus
Balloon Payment payable together with the 20
th
Instalment
|
USD5,000,000
|
0
|
SIGNED
and
DELIVERED
|
)
|
|
by
Stefania Karmiri
|
)
|
/s/ Stefania Karmiri
|
the
duly appointed Attorney for and on
|
)
|
|
behalf
of
SAF-CONCORD SHIPPING
LTD
|
)
|
|
in
the presence of Katerina Avramidou
|
)
|
|
/s/ Katerina
Avramidou
|
SIGNED
and
DELIVERED
|
)
|
|
by
Mrs. Stavroula-Sotiria Hydreou and Mr John Tsirikos
|
)
|
/s/ Stavroula Hydreou
|
the
duly authorised attorneys
|
)
|
|
for
and on behalf of
|
)
|
/s/ John Tsirikos
|
EFG
EUROBANK ERGASIAS S.A.
|
)
|
|
in
the presence of Katerina Avramidou
|
/s/ Katerina
Avramidou
|
SCHEDULE
1 DRAWDOWN NOTICE
|
49
|
SCHEDULE
2 CONDITION PRECEDENT DOCUMENTS
|
50
|
SCHEDULE
3 DESIGNATION NOTICE
|
52
|
EXECUTION
PAGE
|
53
|
(1)
|
ELENI SHIPPING LIMITED
,
a corporation incorporated in the Republic of Liberia and having its
registered office at 80 Broad Street, Monrovia, Liberia (the "
Borrower
");
and
|
(2)
|
CALYON
, acting through
its office at 9 Quai du President Paul Doumer, 92400 Courbevoie, La
Defense, Paris, France (the "
Lender
").
|
(A)
|
The
Lender has agreed to make available to the Borrower a loan facility of the
lesser of (a) US$10,000,000, (b) 55 per cent. of the acquisition cost of
m.v. "ELENI P" (the "
Ship
") and (c) 55 per
cent. of the market value of the Ship on the Drawdown Date (determined by
the valuation of the Ship referred to at paragraph 7 of Schedule 2, Part
A) for the purpose of re-financing part of the acquisition cost of the
Ship; and
|
(B)
|
The
Borrower may, if it so wishes, from time to time hedge its exposure under
this Agreement to interest rate fluctuations by entering into interest
rate swap transactions with the Lender pursuant to the terms of the Master
Agreement.
|
1
|
INTERPRETATION
|
1.1
|
Definitions.
Subject
to Clause 1.5, in this Agreement:
|
|
(a)
|
30
April 2009 (or such later date as the Lender may agree with the Borrower);
or
|
|
(b)
|
if
earlier, the date on which the Loan is fully borrowed or the Lender's
obligation to advance the Loan is cancelled or
terminated;
|
|
(a)
|
it
is entered into by the Borrower pursuant to the Master Agreement with the
Lender;
|
|
(b)
|
its
purpose is the hedging of the Borrower's exposure under this Agreement to
fluctuations in LIBOR arising from the funding of the Loan (or any part
thereof) for a period expiring no later than the final Repayment Date;
and
|
|
(c)
|
it
is designated by the Borrowers, by delivery by the Borrower to the Lender
of a notice of designation in the form provided in Schedule 3, as a
Designated Transaction for the purposes of the Finance
Documents;
|
|
(a)
|
all
freight, hire and passage moneys, compensation payable to the Borrower in
the event of requisition of the Ship for hire, remuneration for salvage
and towage services, demurrage and detention moneys and damages for breach
(or payments for variation or termination) of any charterparty or other
contract for the employment of the
Ship;
|
|
(c)
|
all
moneys which are at any time payable under Insurances in respect of loss
of earnings; and
|
|
(d)
|
if
and whenever the Ship is employed on terms whereby any moneys falling
within paragraphs (a) or (c) above are pooled or shared with any other
person, that proportion of the net receipts of the relevant pooling or
sharing arrangement which is attributable to the
Ship;
|
|
(a)
|
any
claim by any governmental, judicial or regulatory authority which arises
out of an Environmental Law;
|
|
(b)
|
any
claim by any other person which relates to an Environmental Incident or to
an alleged Environmental Incident,
|
|
(a)
|
any
release of Environmentally Sensitive Material from the Ship;
or
|
|
(b)
|
any
incident in which Environmentally Sensitive Material is released from a
vessel other than the Ship and which involves a collision between the Ship
and such other vessel or some other incident of navigation or operation,
in either case, in connection with which the Ship is actually or
potentially liable to be arrested, attached, detained or injuncted and/or
the Ship or the Borrower and/or any operator or manager is at fault or
allegedly at fault or otherwise liable to any legal or administrative
action; or
|
|
(c)
|
any
other incident in which Environmentally Sensitive Material is released
otherwise than from the Ship and in connection with which the Ship is
actually or potentially liable to be arrested and/or where the Borrower
and/or any operator or manager of the Ship is at fault or allegedly at
fault or otherwise liable to any legal or administrative
action;
|
|
(a)
|
this
Agreement;
|
|
(b)
|
the
Master Agreement;
|
|
(c)
|
the
Master Agreement Assignment;
|
|
(d)
|
the
Corporate Guarantee;
|
|
(e)
|
any
Charter Assignment;
|
|
(f)
|
the
Mortgage;
|
|
(g)
|
the
General Assignment;
|
|
(h)
|
the
Accounts Pledge;
|
|
(i)
|
the
Negative Pledge;
|
|
(j)
|
the
Manager's Undertaking; and
|
|
(k)
|
any
other document (whether creating a Security Interest or not) which is
executed at any time by the Borrower or any other person as security for,
or to establish any form of subordination or priorities arrangement in
relation to, any amount payable to the Lender under this Agreement or any
of the documents referred to in this
definition;
|
|
(a)
|
for
principal, interest or any other sum payable in respect of any moneys
borrowed or raised by the debtor;
|
|
(b)
|
under
any loan stock, bond, note or other security issued by the
debtor;
|
|
(c)
|
under
any acceptance credit, guarantee or letter of credit facility made
available to the debtor;
|
|
(d)
|
under
a financial lease, a deferred purchase consideration arrangement or any
other agreement having the commercial effect of a borrowing or raising of
money by the debtor;
|
|
(e)
|
under
any interest or currency swap or any other kind of derivative transaction
entered into by the debtor or, if the agreement under which any such
transaction is entered into requires netting of mutual liabilities, the
liability of the debtor for the net amount;
or
|
|
(f)
|
under
a guarantee, indemnity or similar obligation entered into by the debtor in
respect of a liability of another person which would fall within (a) to
(e) if the references to the debtor referred to the other
person;
|
|
(a)
|
all
policies and contracts of insurance, including entries of the Ship in any
protection and indemnity or war risks association, which are effected in
respect of the Ship, its Earnings or otherwise in relation to the Ship;
and
|
|
(b)
|
all
rights and other assets relating to, or derived from, any of the
foregoing, including any rights to a return of a
premium;
|
|
(a)
|
'The
International Management Code for the Safe Operation of Ships and for
Pollution Prevention', currently known or referred to as the 'ISM Code',
adopted by the Assembly of the International Maritime Organisation by
Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994
into chapter IX of the International Convention for the Safety of Life at
Sea 1974 (SOLAS 1974); and
|
|
(b)
|
all
further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of
the International Maritime Organisation or any other entity with
responsibility for implementing the ISM Code, including without
limitation, the 'Guidelines on implementation or administering of the
International Safety Management (ISM) Code by Administrations' produced by
the International Maritime Organisation pursuant to Resolution A.788(19)
adopted on 25 November 1995,
|
|
(a)
|
the
document of compliance (DOC) and safety management certificate (SMC)
issued pursuant to the ISM Code in relation to the Ship within the periods
specified by the ISM Code; and
|
|
(b)
|
all
other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Lender may require;
and
|
|
(c)
|
any
other documents which are prepared or which are otherwise relevant to
establish and maintain the Ship's compliance or the compliance of the
Borrower with the ISM Code which the Lender may
require;
|
|
"
ISPS Code
Documentation
" includes:
|
|
(a)
|
the
International Ship Security Certificate issued pursuant to the ISPS Code
in relation to the Ship within the period specified in the ISPS Code;
and
|
|
(e)
|
all
other documents and data which are relevant to the ISPS Code and its
implementation and verification which the Lender may
require;
|
|
(a)
|
Calyon,
acting through its branch at 9 Quai du President Paul Doumer, 92400
Courbevoie, La Defense, Paris, France (or through another branch notified
to the Lender under Clause 25.6) or its direct or indirect
successor;
|
|
(b)
|
a
direct or indirect assignee of such bank or financial institution or of a
successor of it; or
|
|
(c)
|
a
direct or indirect successor of an assignee such as is mentioned in (b),
unless any of the foregoing has assigned all its rights, and novated all
its obligations and liabilities, under the Finance
Documents;
|
|
(a)
|
2.5
per cent. per annum in respect of that part of the Loan constituted by the
aggregate amount of the Repayment Instalments;
and
|
|
(b)
|
2.7
per cent. per annum in respect of that part of the Loan constituted by the
Balloon Instalment;
|
|
(a)
|
England
and Wales;
|
|
(b)
|
the
country under the laws of which the company is incorporated or
formed;
|
|
(c)
|
a
country in which the company's central management and control is or has
recently been exercised;
|
|
(d)
|
a
country in which the overall net income of the company is subject to
corporation tax, income tax or any similar
tax;
|
|
(e)
|
a
country in which assets of the company (other than securities issued by,
or loans to, related companies) having a substantial value are situated,
in which the company maintains a permanent place of business, or in which
a Security Interest created by the company must or should be registered in
order to ensure its validity or priority;
and
|
|
(f)
|
a
country the courts of which have jurisdiction to make a winding up,
administration or similar order in relation to the company or which would
have such jurisdiction if their assistance were requested by the courts of
a country referred to in paragraphs (b) or (c)
above;
|
|
(a)
|
a
mortgage, charge (whether fixed or floating) or pledge, any maritime or
other lien or any other security interest of any
kind;
|
|
(b)
|
the
rights of the plaintiff under an action
in rem
in which the
vessel concerned has been arrested or a writ has been issued or similar
step taken; and
|
|
(c)
|
any
arrangement entered into by a person (A) the effect of which is to place
another person (B) in a position which is similar, in economic terms, to
the position in which B would have been had he held a security interest
over an asset of A; but (c) does not apply to a right of set off or
combination of accounts conferred by the standard terms of business of a
bank or financial institution;
|
|
(a)
|
all
amounts which have become due for payment by the Borrower or any Security
Party under the Finance Documents have been
paid;
|
|
(b)
|
no
amount is owing or has accrued (without yet having become due for payment)
under any Finance Document;
|
|
(c)
|
neither
the Borrower nor any Security Party has any future or contingent liability
under Clause 19, 20 or 21 below or any other provision of this Agreement
or another Finance Document; and
|
|
(d)
|
the
Lender, in its reasonable judgement, does not consider that
there is a significant risk that any payment or transaction under a
Finance Document would be set aside, or would have to be reversed or
adjusted, in any present or possible future bankruptcy of the Borrower or
a Security Party or in any present or possible future proceeding relating
to a Finance Document or any asset covered (or previously covered) by a
Security Interest created by a Finance
Document;
|
|
(a)
|
actual,
constructive, compromised, agreed or arranged total loss of the
Ship;
|
|
(b)
|
any
expropriation, confiscation, requisition or acquisition of the Ship,
whether for full consideration, a consideration less than the Ship's
proper value, a nominal consideration or without any consideration, which
is effected by any government or official authority or by any person or
persons claiming to be or to represent a government or official authority,
excluding a requisition for hire for a fixed period not exceeding one year
without any right to an extension;
|
|
(c)
|
any
condemnation of the Ship by any tribunal or by any person or person
claiming to be a tribunal; and
|
|
(d)
|
any
arrest, capture, seizure or detention of the Ship (including any hijacking
or theft) unless she is within 45 days redelivered to the full
control of the Borrower;
|
|
(a)
|
in
the case of an actual loss of the Ship, the date on which it occurred or,
if that is unknown, the date when the Ship was last heard
of;
|
|
(b)
|
in
the case of a constructive, compromised, agreed or arranged total loss of
the Ship, the earliest of:
|
|
(ii)
|
the
date of any compromise, arrangement or agreement made by or on behalf of
the Borrower with the Ship's insurers in which the insurers agree to treat
the Ship as a total loss; and
|
|
(c)
|
in
the case of any other type of total loss, on the date (or the most likely
date) on which it appears to the Lender that the event constituting the
total loss occurred;
|
1.2
|
Construction of certain
terms.
In this
Agreement:
|
1.3
|
Meaning of
"month".
A period of one or more "
months
" ends on the day
in the relevant calendar month numerically corresponding to the day of the
calendar month on which the period started ("
the numerically corresponding
day
"), but:
|
(a)
|
on
the Business Day following the numerically corresponding day if the
numerically corresponding day is not a Business Day or, if there is no
later Business Day in the same calendar month, on the Business Day
preceding the numerically corresponding day;
or
|
(b)
|
on
the last Business Day in the relevant calendar month, if the period
started on the last Business Day in a calendar month or if the last
calendar month of the period has no numerically corresponding
day,
|
1.4
|
Meaning of "subsidiary".
A company (S) is a subsidiary of another company (P)
if:
|
(a)
|
a
majority of the issued shares in S (or a majority of the issued shares in
S which carry unlimited rights to capital and income distributions) are
directly owned by P or are indirectly attributable to P;
or
|
(b)
|
P
has direct or indirect control over a majority of the voting rights
attaching to the issued shares of S;
or
|
(c)
|
P
has the direct or indirect power to appoint or remove a majority of the
directors of S; or
|
(d)
|
P
otherwise has the direct or indirect power to ensure that the affairs of S
are conducted in accordance with the wishes of
P,
|
1.5
|
General
Interpretation.
|
(a)
|
In
this Agreement:
|
|
(i)
|
references
to, or to a provision of, a Finance Document or any other document are
references to it as amended or supplemented, whether before the date of
this Agreement or otherwise;
|
|
(ii)
|
references
to, or to a provision of, any law include any amendment, extension,
re-enactment or replacement, whether made before the date of this
Agreement or otherwise; and
|
|
(iii)
|
words
denoting the singular number shall include the plural and vice
versa;
|
(b)
|
Clauses
1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary
intention appears; and
|
(c)
|
The
clause headings shall not affect the interpretation of this
Agreement.
|
2
|
FACILITY
|
2.1
|
Amount of
facility.
Subject to the other provisions of this
Agreement, the Lender shall make available to the Borrower a loan facility
of up to the lesser of (a) $10,000,000, (b) 55 per cent. of the
acquisition cost of the Ship and (c) 55 per cent. of the Market Value of
the Ship (determined by the valuation of the Ship referred to at paragraph
7 of Schedule 2, Part A) to be drawn in a single
advance.
|
2.2
|
Purpose of the
Loan.
The Borrower undertakes with the Lender to use the
Loan only for the purpose stated in the preamble to this
Agreement.
|
3
|
DRAWDOWN
|
3.1
|
Request for the
Loan.
The Borrower may request the Loan to be advanced
by ensuring that the Lender receives the completed Drawdown Notice not
later than 11.00 a.m. (London time) 2 Business Days prior to the intended
Drawdown Date subject to the Drawdown Date being a Business Day during the
Availability Period.
|
3.2
|
Drawdown Notice
irrevocable.
A Drawdown Notice must be signed by a
director or a duly authorised attorney-in-fact of the Borrower; and once
served, a Drawdown Notice cannot be revoked without the prior consent of
the Lender.
|
3.3
|
Disbursement of the
Loan.
Subject to the provisions of this Agreement, the
Lender shall on the Drawdown Date advance the Loan to the Borrower; and
payment to the Borrower shall be made to the account which the Borrower
specifies in the Drawdown Notice.
|
4
|
INTEREST
|
4.1
|
Payment of normal
interest.
Subject to the provisions of this Agreement,
interest on the Loan in respect of each Interest Period shall be paid by
the Borrower on the last day of that Interest
Period.
|
4.2
|
Normal rate of
interest.
Subject to the provisions of this Agreement,
the rate of interest on the Loan in respect of an Interest Period shall be
the aggregate of the applicable Margin and LIBOR for that Interest
Period.
|
4.3
|
Payment of accrued
interest.
In the case of an Interest Period longer than
3 months, accrued interest shall be paid every 3 months during that
Interest Period and on the last day of that Interest
Period.
|
4.4
|
Notification of market
disruption.
The Lender shall promptly notify the
Borrower if for any reason the Lender is unable to obtain Dollars in the
London Interbank Market in order to fund the Loan (or any part of it)
during any Interest Period, stating the circumstances which have caused
such notice to be given.
|
4.5
|
Suspension of
drawdown.
If the Lender's notice under Clause 4.4
is served before the Loan is advanced, the Lender's obligation to make the
Loan available shall be suspended while the circumstances referred to in
the Lender's notice continue.
|
4.6
|
Alternative rate of
interest.
If, after the Loan has been advanced, the
Lender notifies that it is unable to obtain Dollars in the London
Interbank Market to fund the Loan (or any part of it) during any Interest
Period or adequate and fair means do not exist for ascertaining the rate
of interest, the Lender shall set an interest rate representing the cost
of funding of the Lender in Dollars or in any available currency of the
Loan plus the Margin.
|
4.7
|
Transactions
under the Master Agreement.
|
(a)
|
At
any time the Borrower may request the Lender to conclude Transactions for
the purpose of swapping its interest payment obligations under this
Agreement subject to such Transactions being entered into after the
Drawdown Date and the tenor of the same not extending beyond the final
Repayment Date. Signature of the Master Agreement does not
commit the Lender to conclude Transactions, or even to offer terms for
doing so, but does provide a contractual framework within which
Transactions may be concluded and secured, assuming that the Lender is
willing to conclude any Transaction at the relevant time and that, if that
is the case, mutually acceptable terms can then be agreed at the relevant
time.
|
(b)
|
In
relation to the Master Agreement, the Borrower hereby agrees and
undertakes with the Lender throughout the Security
Period:
|
|
(i)
|
only
to use Transactions concluded under the Master Agreement for the purpose
of swapping its interest payment obligations under this Clause 4 from
LIBOR-based funding to longer-term fixed rate funding or any other form of
hedging acceptable to the Lender;
|
|
(ii)
|
subject
to the provisions of Clauses 17.2, 17.4 and 17.6 and
Provided that
on the
date of application all Repayment Instalments and interest payments due
under this Agreement have been paid in full and no Event of Default or
Potential Event of Default has occurred, to apply relevant sums out of the
Earnings of the Ship and any other amount standing to the credit of the
Operating Account to meet its obligations under the maturing Transactions
and procure that all sums derived from such Transactions will be used to
meet its interest payment obligations under this Clause 4;
and
|
|
(iii)
|
not
to conclude Transactions which would result, at any time during the
Security Period, in the notional principal amount of all Transactions then
remaining exceeding the amount of the Loan, as reduced from time to time
under Clause 7.1.
|
(c)
|
The
Lender agrees that, to enable the obligations of the Borrower to it under
the Master Agreement to be secured, the security of the Finance Documents
shall be held by the Lender not only to secure the Borrower's obligations
under this Agreement but also the Borrower's obligations under the Master
Agreement on the terms set out in Clause
16.
|
5
|
INTEREST
PERIODS
|
5.1
|
Commencement of Interest
Periods.
The first Interest Period applicable to the
Loan shall commence on the Drawdown Date and each subsequent Interest
Period shall commence on the expiry of the preceding Interest
Period.
|
5.2
|
Duration of normal Interest
Periods.
Subject to Clauses 5.3 and 5.4, each Interest
Period shall be:
|
(a)
|
3,
6 or 12 months as notified by the Borrower to the Lender not later than
11.00 a.m. (London time) 3 Business Days before the commencement of the
Interest Period; or
|
(b)
|
3
months, if the Borrower fails to notify the Lender by the time specified
in paragraph (a) above; or
|
(c)
|
such
other period as the Lender may agree with the
Borrower.
|
5.3
|
Duration of Interest Periods
for Repayment Instalments.
In respect of an amount due
to be repaid under Clause 7 on a particular Repayment Date, an Interest
Period shall end on that Repayment
Date.
|
5.4
|
Non-availability of matching
deposits for Interest Period selected.
If, after the
Borrower has selected an Interest Period longer than 6 months, the Lender
notifies the Borrower by 11.00 a.m. (London time) on the third Business
Day before the commencement of the Interest Period that it is not
satisfied that deposits in Dollars for a period equal to the Interest
Period will be available to it in the London Interbank Market when the
Interest Period commences, the Interest Period shall be of 6
months.
|
6
|
DEFAULT
INTEREST
|
6.1
|
Payment of default interest on
overdue amounts.
The Borrower shall pay interest in
accordance with the following provisions of this Clause 6 on any amount
payable by the Borrower under any Finance Document which the Lender does
not receive on or before the relevant date, that
is:
|
(a)
|
the
date on which the Finance Documents provide that such amount is due for
payment; or
|
(b)
|
if
a Finance Document provides that such amount is payable on demand, the
date on which the demand is served;
or
|
(c)
|
if
such amount has become immediately due and payable under Clause 18.5, the
date on which it became immediately due and
payable.
|
6.2
|
Default rate of
interest.
Interest shall accrue on an overdue amount
from (and including) the relevant date until the date of actual payment
(as well after as before judgment) at the rate per annum determined by the
Lender to be 1 per cent. above the applicable Margin plus LIBOR at which
deposits in an amount equal to such overdue amount are offered on call or
for successive periods of any duration of up to 3 months, as the Lender
may determine from time to time.
|
6.3
|
Notification of interest
periods and default rates.
The Lender shall promptly
notify the Borrower of each interest rate determined by it under Clause
6.2 and of each period selected by it for the purposes of that Clause; but
this shall not be taken to imply that the Borrower is liable to pay such
interest only with effect from the date of the Lender's
notification.
|
6.4
|
Payment of accrued default
interest.
Subject to the other provisions of this
Agreement, any interest due under this Clause shall be paid on the last
day of the period by reference to which it was
determined.
|
6.5
|
Compounding of default
interest.
Any such interest which is not paid at the end
of the period by reference to which it was determined shall be compounded
every 3 months.
|
6.6
|
Application to Master
Agreement.
For the avoidance of doubt, this Clause 6
does not apply to any amount payable under the Master Agreement in respect
of any continuing Transaction as to which section 2(e) (Default Interest;
Other Amounts) of the Master Agreement shall
apply.
|
7
|
REPAYMENT
AND PREPAYMENT
|
7.1
|
Amount of repayment
instalments.
The Borrower shall repay the Loan by 10
consecutive six-monthly instalments (together, the "
Repayment Instalments
"
and each a "
Repayment
Instalment
") of (a) in the case of the first and second instalments
(inclusive), in the amount of $100,000 each, (b) in the case of the third
and fourth instalments, in the amount of $400,000 each, (c) in the case of
the fifth and sixth instalments (inclusive), in the amount of $600,000
each and (e) in the case of seventh to tenth instalments (inclusive), in
the amount of $800,000 each, together with a balloon payment of $4,600,000
(the "
Balloon
Instalment
").
|
7.2
|
Repayment
Dates.
The first Repayment Instalment shall be repaid on
the date falling 6 months after the Drawdown Date, each subsequent
Repayment Instalment shall be paid at six-monthly intervals thereafter and
the last Repayment Instalment, together with the Balloon Instalment, shall
be repaid on the date falling on the earlier of (a) the date falling on
the fifth anniversary of the Drawdown Date and (b) 30 April
2014.
|
7.3
|
Final Repayment
Date.
On the final Repayment Date, the Borrower shall
additionally pay to the Lender all other sums then accrued or owing under
any Finance Document.
|
7.4
|
Voluntary
prepayment.
Subject to the following conditions, the
Borrower may prepay the whole or any part of the Loan on the last day of
an Interest Period.
|
7.5
|
Conditions for voluntary
prepayment.
The conditions referred to in Clause 7.4 are
that:
|
(a)
|
a
partial prepayment shall be $200,000 or an integral multiple
thereof;
|
(b)
|
the
Lender has received from the Borrower at least 10 days' prior written
notice specifying the amount to be prepaid and the date on which the
prepayment is to be made;
|
(c)
|
the
Borrower has provided evidence satisfactory to the Lender that any consent
required by the Borrower or any Security Party in connection with the
prepayment has been obtained and remains in force, and that any regulation
relevant to this Agreement which affects the Borrower or any Security
Party has been complied with.
|
7.6
|
Effect of notice of
prepayment.
A prepayment notice may not be withdrawn or
amended without the consent of the Lender and the amount specified in the
prepayment notice shall become due and payable by the Borrower on the date
for prepayment specified in the prepayment
notice.
|
7.7
|
Mandatory
prepayment.
Without prejudice to the provisions of
Clause 14, the Borrower shall be obliged to prepay the whole of the Loan
if the Ship is sold or becomes a Total
Loss:
|
(a)
|
in
the case of a sale, on or before the date on which the sale is completed;
or
|
(b)
|
in
the case of Total Loss, on the earlier of the date falling 150 days after
the Total Loss Date and the date of receipt by the Lender of the proceeds
of insurance relating to such Total
Loss.
|
7.8
|
Shareholding and senior
executive management of Borrower.
If at any time Mr.
John Pittas and members of the Pittas family (either directly and/or
through companies beneficially owned by the Pittas family and/or trusts or
foundations of which the Pittas family are beneficiaries) (i) do not own
the necessary shareholding to exercise executive power of the Corporate
Guarantor or (ii) are not represented in the senior executive management
of the Corporate Guarantor, the Borrower shall promptly advise the Lender
of the occurrence of the circumstances referred to in this Clause
7.8. If the Lender does not approve (in its sole and absolute
discretion) the change in circumstances which has occurred, the Loan shall
be prepaid in full subject to the Lender giving the Borrower and the
Corporate Guarantor 60 days prior written
notice.
|
7.9
|
Amounts payable on
prepayment.
A prepayment shall be made together with
accrued interest (and any other amount payable under Clause
20 below or otherwise) in respect of the amount prepaid and, if
the prepayment is not made on the last day of an Interest Period together
with any sums payable under Clause 20.1(b) but without premium or
penalty.
|
7.10
|
Application of partial
prepayment.
Each partial prepayment shall be applied in
inverse order of maturity first in reducing the Balloon Instalment and
thereafter against each of the Repayment Instalments specified in Clause
7.1 which are outstanding at the relevant
time.
|
7.11
|
No
reborrowing.
No amount prepaid may be
reborrowed.
|
8
|
CONDITIONS
PRECEDENT
|
8.1
|
Documents, fees and no
default.
The Lender's obligation to advance the Loan is
subject to the following conditions
precedent:
|
(a)
|
that,
on or before the service of the Drawdown Notice, the Lender receives the
documents described in Part A of Schedule 2 in form and substance
satisfactory to it and its lawyers;
|
(b)
|
that,
on the Drawdown Date but prior to the advancing of the Loan, the Lender
receives the documents described in Part B of Schedule 2 in form and
substance satisfactory to it and its
lawyers;
|
(c)
|
that
the Lender has received the management fee referred to in Clause 19.1 and
has received payment of the expenses referred to in Clause
19.2;
|
(d)
|
that
both at the date of the Drawdown Notice and at the Drawdown
Date:
|
|
(i)
|
no
Event of Default or Potential Event of Default has occurred and is
continuing or would result from the borrowing of the
Loan;
|
|
(ii)
|
the
representations and warranties in Clause 9.1 and those of the Borrower or
any Security Party which are set out in the other Finance Documents would
be true and not misleading if repeated on each of those dates with
reference to the circumstances then existing;
and
|
|
(iii)
|
none
of the circumstances contemplated by Clause 4.4 has occurred and is
continuing;
|
(e)
|
that,
if the ratio set out in Clause 14.1 were applied immediately following the
advancing of the Loan, the Lender would not be entitled to oblige the
Borrower to provide additional security or prepay part of the Loan under
that Clause; and
|
(f)
|
that
the Lender has received, and found to be acceptable to it, any further
opinions, consents, agreements and documents in connection with the
Finance Documents which the Lender may reasonably request by notice to the
Borrower prior to the Drawdown
Date.
|
8.2
|
Waivers of conditions
precedent.
If the Lender, at its discretion, permits the
Loan to be borrowed before certain of the conditions referred to in Clause
8.1 are satisfied, the Borrower shall ensure that those conditions are
satisfied within 5 Business Days after the Drawdown Date (or such longer
period as the Lender may specify).
|
9
|
REPRESENTATIONS
AND WARRANTIES
|
9.1
|
General.
The
Borrower represents and warrants to the Lender as
follows.
|
9.2
|
Status.
The
Borrower is duly incorporated and validly existing and in good standing
under the laws of the Republic of
Liberia.
|
9.3
|
Share capital and
ownership.
The Borrower has an authorised share capital
of 500 bearer and/or registered shares of no par value each, all of which
shares have been issued in bearer form, and the legal title and
beneficial ownership of all the shares of the Borrower is held, free of
any Security Interest or other claim, by the Corporate
Guarantor.
|
9.4
|
Corporate
power.
The Borrower has the corporate capacity, and has
taken all corporate action and obtained all consents necessary for
it:
|
(a)
|
to
execute the Finance Documents to which it is a party;
and
|
(b)
|
to
borrow under this Agreement and to make all the payments contemplated by,
and to comply with, this Agreement and the other Finance Documents to
which it is a party.
|
9.5
|
Consents in
force.
All the consents referred to in Clause 9.4 remain
in force and nothing has occurred which makes any of them liable to
revocation.
|
9.6
|
Legal validity; effective
Security Interests.
The Finance Documents to which the
Borrower is a party do now or, as the case may be, will, upon execution
and delivery (and, where applicable, registration as provided for in the
Finance Documents):
|
(a)
|
constitute
the Borrower's legal, valid and binding obligations enforceable against
the Borrower in accordance with their respective terms;
and
|
(b)
|
create
legal, valid and binding Security Interests enforceable in accordance with
their respective terms over all the assets to which they, by their terms,
relate,
|
9.7
|
No third party Security
Interests.
Without limiting the generality of Clause
9.6, at the time of the execution and delivery of each Finance
Document:
|
(a)
|
the
Borrower will have the right to create all the Security Interests which
that Finance Document purports to create;
and
|
(b)
|
no
third party will have any Security Interest or any other interest, right
or claim over, in or in relation to any asset to which any such Security
Interest, by its terms, relates.
|
9.8
|
No
conflicts.
The execution by the Borrower of the Finance
Documents and the borrowing of the Loan, and its compliance with each
Finance Document will not involve or lead to a contravention
of:
|
(a)
|
any
law or regulation; or
|
(b)
|
the
constitutional documents of the Borrower;
or
|
(c)
|
any
contractual or other obligation or restriction which is binding on the
Borrower or any of its assets.
|
9.9
|
No withholding
taxes.
All payments which the Borrower is liable to make
under the Finance Documents may be made without deduction or
withholding for or on account of any tax payable under any law of any
Pertinent Jurisdiction.
|
9.10
|
No
default.
No Event of Default or Potential Event of
Default has occurred and is
continuing.
|
9.11
|
Information.
All
information which has been provided in writing by or on behalf of the
Borrower or any Security Party to the Lender in connection with any
Finance Document satisfied the requirements of Clause 10.5; all audited
and unaudited accounts which have been so provided satisfied the
requirements of Clause 10.7; and there has been no material adverse change
in the financial position or state of affairs of the Borrower from that
disclosed in the latest of those
accounts.
|
9.12
|
No
litigation.
No legal or administrative action involving
the Borrower (including action relating to any alleged or actual breach of
the ISM Code and the ISPS Code) has been commenced or taken or, to the
Borrower's knowledge, is likely to be commenced or taken which, in either
case, would be likely to have a material adverse effect on the Borrower's
financial position or
profitability.
|
9.13
|
Compliance with certain
undertakings.
At the date of this Agreement, the
Borrower is in compliance with Clauses 10.2, 10.4, 10.9 and
10.12.
|
9.14
|
Taxes
paid.
The Borrower has paid all taxes applicable to, or
imposed on or in relation to itself, its business or the
Ship.
|
9.15
|
ISM Code and ISPS Code
compliance.
All requirements of the ISM Code and the
ISPS Code as they relate to the Borrower, the Approved Manager and the
Ship will on or prior to the Drawdown Date has been complied
with.
|
9.16
|
No money
laundering
. Without prejudice to the generality of
Clause 2.2, in relation to the borrowing by the Borrower of the Loan, the
performance and discharge of its obligations and liabilities under the
Finance Documents, and the transactions and other arrangements effected or
contemplated by the Finance Documents to which the Borrower is a party,
the Borrower confirms (i) that it is acting for its own account, (ii) that
it will use the proceeds of the Loan for its own benefit, under its full
responsibility and exclusively for the purposes specified in this
Agreement and (iii) that the foregoing will not involve or lead to
contravention of any law, official requirement or other regulatory measure
or procedure implemented to combat "money laundering" (as defined in
Article 1 of the Directive (91/308/EEC) of the Council of the European
Communities).
|
10
|
GENERAL
UNDERTAKINGS
|
10.1
|
General.
The
Borrower undertakes with the Lender to comply with the following
provisions of this Clause 10 at all times during the Security Period,
except as the Lender may otherwise
permit.
|
10.2
|
Title; negative
pledge.
The Borrower
will:
|
(a)
|
hold
the legal title to, and own the entire beneficial interest in the Ship,
its Insurances and Earnings, free from all Security Interests and other
interests and rights of every kind, except for those created by the
Finance Documents and the effect of assignments contained in the Finance
Documents; and
|
(b)
|
not
create or permit to arise any Security Interest over any other asset,
present or future (including, but not limited to the Borrower's rights
against the Lender under the Master Agreement or all or any part of the
Borrower's interest in any amount payable to the Borrower by the Lender
under the Master Agreement).
|
10.3
|
No disposal of
assets.
The Borrower will not transfer, lease or
otherwise dispose of:
|
(a)
|
all
or a substantial part of its assets, whether by one transaction or a
number of transactions, whether related or not;
or
|
(b)
|
any
debt payable to it or any other right (present, future or contingent
right) to receive a payment, including any right to damages or
compensation.
|
10.4
|
No other liabilities or
obligations to be incurred.
The Borrower will not incur
any liability or obligation except liabilities and obligations under the
Finance Documents or under the Master Agreement (but in such case, only in
connection with Transactions) and liabilities or obligations
reasonably incurred in the ordinary course of operating and chartering the
Ship.
|
10.5
|
Information provided to be
accurate.
All financial and other information which is
provided in writing by or on behalf of the Borrower under or in connection
with any Finance Document will be true and not, misleading and will not
omit any material fact or
consideration.
|
10.6
|
Provision of financial
statements.
The Borrower will send to the
Lender:
|
(a)
|
as
soon as possible, but in no event later than 90 days after the end of each
Financial Year of the Borrower, the audited Accounting Information of the
Borrower;
|
(b)
|
as
soon as possible, but in no event later than 90 days after the end of each
Financial Year of the Corporate Guarantor, the audited Accounting
Information of the Group;
and
|
(c)
|
promptly,
when requested, such other financial information and accounts relating to
the business, undertaking, assets, liabilities, revenues, financial
condition or affairs of any Security Party and such other further general
information relating to any Security Party as the Lender from time to time
may reasonably require including (without limitation) in relation to the
Ship, its Earnings, the Group, the Approved Manager and the Corporate
Guarantor.
|
10.7
|
Form of financial
statements.
All Accounting Information delivered under
Clause 10.6 will:
|
(a)
|
be
prepared in accordance with all applicable laws and US GAAP consistently
applied and, in the case of audited financial statements, certified as to
its correctness by auditors acceptable to the
Lender;
|
(b)
|
give
a true and fair view of the state of affairs of the Borrower or the Group
(as the case may be) at the date of that Accounting Information and of the
profit of the Borrower or, as the case may be, the Group for the period to
which that Accounting Information relates;
and
|
(c)
|
fully
disclose or provide for all significant liabilities of the Borrower or, as
the case may be, of
the Group.
|
10.8
|
Creditor
notices.
The Borrower will send the Lender, at the same
time as they are despatched, copies of all communications which are
despatched to all the Borrower's creditors or any class of
them.
|
10.9
|
Consents.
The
Borrower will maintain in force and promptly obtain or renew, and will
promptly send certified copies to the Lender of, all consents
required:
|
(a)
|
to
perform its obligations under any Finance
Document;
|
(b)
|
for
the validity or enforceability of any Finance Document to which it is a
party;
|
(c)
|
for
the Borrower to continue to own and operate the
Ship,
|
10.10
|
Maintenance of Security
Interests.
The Borrower
will:
|
(a)
|
at
its own cost, do all that it reasonably can to ensure that any Finance
Document validly creates the obligations and the Security Interests which
it purports to create; and
|
(b)
|
without
limiting the generality of paragraph (a) above, at its own cost, promptly
register, file, record or enrol any Finance Document with any court or
authority in all Pertinent Jurisdictions, pay any stamp, registration or
similar tax in all Pertinent Jurisdictions in respect of any Finance
Document, give any notice or take any other step which may be or has
become necessary or desirable for any Finance Document to be valid,
enforceable or admissible in evidence or to ensure or protect the priority
of any Security Interest which it
creates.
|
10.11
|
Notification of
litigation.
The Borrower will provide the Lender with
details of any legal or administrative action involving the Borrower, any
Security Party, either Approved Manager, the Ship, the Earnings or the
Insurances as soon as such action is instituted or it becomes apparent to
the Borrower that it is likely to be instituted, unless it is clear that
the legal or administrative action cannot be considered material in the
context of any Finance Document.
|
10.12
|
No amendment to Master
Agreement; Transactions.
The Borrower will
not:
|
(a)
|
agree
to any amendment or supplement to, or waive or fail to enforce, the Master
Agreement or any of its provisions;
or
|
(b)
|
enter
into any Transaction pursuant to the Master Agreement except Designated
Transactions.
|
10.13
|
Principal place of
business.
The Borrower will maintain its place of
business, and keep its corporate documents and records, at the address
referred to in Clause 27.2(a); and will not establish, or do anything as a
result of which it would be deemed to have, a place of business in the
United Kingdom or the United States of
America.
|
10.14
|
Confirmation of no
default.
The Borrower will, within 2 Business Days after
service by the Lender of a written request, serve on the Lender a notice
which is signed by 2 directors of the Borrower and
which:
|
(a)
|
states
that no Event of Default or Potential Event of Default has occurred;
or
|
(b)
|
states
that no Event of Default or Potential Event of Default has occurred,
except for a specified event or matter, of which all material details are
given.
|
10.15
|
Notification of
default.
The Borrower will notify the Lender as soon as
the Borrower becomes aware of:
|
(a)
|
the
occurrence of an Event of Default or a Potential Event of Default;
or
|
(b)
|
any
matter which indicates that an Event of Default or a Potential Event of
Default may have occurred,
|
10.16
|
Provision of further
information.
The Borrower will, as soon as practicable
after receiving the request, provide the Lender with any additional
financial or other information
relating:
|
(a)
|
to
the Borrower, the Ship, the Approved Manager, the Corporate Guarantor, the
Insurances, the Earnings; or
|
(b)
|
to
any other matter relevant to, or to any provision of, a Finance
Document,
|
10.17
|
"
Know your
customer
". If:
|
(a)
|
the
introduction of or any change in (or in the interpretation, administration
or application of) any law or regulation made after the date of this
Agreement;
|
(b)
|
any
change in the status of the Borrower or any Security Party after the date
of this Agreement; or
|
(c)
|
a
proposed assignment or transfer by the Lender of any of its rights and
obligations under this Agreement to a party that is not a Lender prior to
such assignment or transfer,
|
10.18
|
Minimum
liquidity.
At all times during the Security Period, the
Borrower will ensure that an amount of not less than $300,000 is standing
to the credit of the Operating
Account.
|
11
|
CORPORATE
UNDERTAKINGS
|
11.1
|
General.
The
Borrower also undertakes with the Lender to comply with the following
provisions of this Clause 11 at all times during the Security Period
except as the Lender may otherwise
permit.
|
11.2
|
Maintenance of
status.
The Borrower will maintain its separate
corporate existence and remain in good standing under the laws of the
Republic of Liberia.
|
11.3
|
Negative
undertakings.
The Borrower will not:
|
(a)
|
carry
on any business other than the ownership, chartering and operation of the
Ship; or
|
(b)
|
pay
any dividend or make any other form of distribution or effect any form of
redemption, purchase or return of share capital
Provided that
(i) the
Borrower may pay in any Financial Year (no more frequently than on a
quarterly basis during that Financial Year) dividends in an aggregate
amount not exceeding 60 per cent. of the Net Income in that Financial Year
if at the relevant time no Event of Default has occurred or is continuing
or would result from the payment of such dividend and (ii) with the prior
written consent of the Lender (to be given or withheld in its sole and
absolute discretion), the Borrower may pay dividends in any Financial Year
in excess of the amount referred to in sub-paragraph
(i);
|
(c)
|
repay
any shareholder loans or any other loans advanced to it by any person (or,
in either case, any interest thereon), nor make nay loans or advances to
any person; or
|
(d)
|
provide
any form of credit or financial assistance
to:
|
|
(i)
|
a
person who is directly or indirectly interested in the Borrower's share or
loan capital; or
|
|
(ii)
|
any
company in or with which such a person is directly or indirectly
interested or connected,
|
(e)
|
open
or maintain any account with any bank or financial institution except the
Operating Account and the Retention Account and any other account opened
or to be opened with the Lender for the purposes of the Finance Documents;
or
|
(f)
|
issue,
allot or grant any person a right to any shares in its capital or
repurchase or reduce its issued share capital;
or
|
(g)
|
acquire
any shares or other securities other than US or UK Treasury bills and
certificates of deposit issued by major North American or European banks,
or enter into any transaction in a derivative;
or
|
(h)
|
enter
into any form of amalgamation, merger or de-merger or any form of
reconstruction or reorganisation.
|
12
|
INSURANCE
|
12.1
|
General.
The
Borrower also undertakes with the Lender to comply with the following
provisions of this Clause 12 at all times during the Security Period
except as the Lender may otherwise
permit.
|
12.2
|
Maintenance of obligatory
insurances.
The Borrower shall keep the Ship insured at
the expense of the Borrower
against:
|
(a)
|
fire
and usual marine risks (including hull and machinery and excess
risks);
|
(b)
|
war
risks;
|
(c)
|
protection
and indemnity risks (all classes);
and
|
(d)
|
any
other risks against which the Lender considers, having regard to practices
and other circumstances prevailing at the relevant time, it would in the
opinion of the Lender be reasonable for the Borrower to insure and which
are specified by the Lender by notice to the
Borrower.
|
12.3
|
Terms of obligatory
insurances.
The Borrower shall effect such
insurances:
|
(a)
|
in
Dollars;
|
(b)
|
in
the case of fire and usual marine risks and war risks, in an amount on an
agreed value basis at least the greater of (i) the Market Value of the
Ship and (ii) 125 per cent. of the aggregate of the Loan and the Swap
Exposure and upon such terms as shall from time to time be approved in
writing by the Lender;
|
(c)
|
in
the case of oil pollution liability risks, for an aggregate amount equal
to the highest level of cover from time to time available under basic
protection and indemnity club entry and the international marine insurance
market for vessels of the same type and age as the
Ship;
|
(d)
|
in
relation to protection and indemnity risks, in respect of the full tonnage
of the Ship;
|
(e)
|
on
approved terms; and
|
(f)
|
through
approved brokers and with approved insurance companies and/or underwriters
or, in the case of war risks and protection and indemnity risks, in
approved war risks and protection and indemnity risks
associations.
|
12.4
|
Further protections for the
Lender.
In addition to the terms set out in Clause 12.3,
the Borrower shall procure that the obligatory insurances
shall:
|
(a)
|
whenever
the Lender requires name (or be amended to name) the Lender as additional
named assured for its rights and interests, warranted no operational
interest and with full waiver of rights of subrogation against the Lender,
but without the Lender thereby being liable to pay (but having the right
to pay) premiums, calls or other assessments in respect of such
insurance;
|
(b)
|
name
the Lender as sole loss payee with such directions for payment as the
Lender may specify;
|
(c)
|
provide
that all payments by or on behalf of the insurers under the obligatory
insurances to the Lender shall be made without set-off, counterclaim or
deductions or condition whatsoever;
|
(d)
|
provide
that the insurers shall waive, to the fullest extent permitted by English
law, their entitlement (if any) (whether by statute, common law, equity,
or otherwise) to be subrogated to the rights and remedies of the Lender in
respect of any rights or interests (secured or not) held by or available
to the Lender in respect of the Secured Liabilities, until the Secured
Liabilities shall have been fully repaid and discharged, except that the
insurers shall not be restricted by the terms of this paragraph (d) from
making personal claims against persons (other than the Lender, the
Borrower or any other Security Party) in circumstances where the insurers
have fully discharged their liabilities and obligations under the relevant
obligatory insurances;
|
(e)
|
provide
that such obligatory insurances shall be primary without right of
contribution from other insurances which may be carried by the
Lender;
|
(f)
|
provide
that the Lender may make proof of loss if the Borrower fails to do so;
and
|
(g)
|
provide
that if any obligatory insurance is cancelled, or if any substantial
change is made in the coverage which adversely affects the interest of the
Lender, or if any obligatory insurance is allowed to lapse for non-payment
of premium, such cancellation, charge or lapse shall not be effective with
respect to the Lender for 30 days (or 7 days in the case of war risks)
after receipt by the Lender of prior written notice from the insurers of
such cancellation, change or lapse.
|
12.5
|
Renewal of obligatory
insurances.
The Borrower
shall:
|
(a)
|
at
least 14 days before the expiry of any obligatory insurance effected by
it:
|
|
(i)
|
notify
the Lender of the brokers (or other insurers) and any protection and
indemnity or war risks association through or with whom the Borrower
proposes to renew that insurance and of the proposed terms of renewal;
and
|
|
(ii)
|
obtain
the Lender's approval to the matters referred to in paragraph (i)
above;
|
(b)
|
at
least 7 days before the expiry of any obligatory insurance effected by it,
renew the insurance in accordance with the Lender's approval pursuant to
paragraph (a) above; and
|
(c)
|
procure
that the approved brokers and/or the war risks and protection and
indemnity associations with which such a renewal is effected shall
promptly after the renewal notify the Lender in writing of the terms and
conditions of the renewal.
|
12.6
|
Copies of policies; letters of
undertaking.
The Borrower shall ensure that all approved
brokers provide the Lender with pro forma copies of all policies relating
to the obligatory insurances which they are to effect or renew and of a
letter or letters of undertaking in a form required by the Lender and
including undertakings by the approved brokers
that:
|
(a)
|
they
will have endorsed on each policy, immediately upon issue, a loss payable
clause and a notice of assignment complying with the provisions of Clause
12.4;
|
(b)
|
they
will hold such policies, and the benefit of such insurances, to the order
of the Lender in accordance with the said loss payable
clause;
|
(c)
|
they
will advise the Lender immediately of any material change to the terms of
the obligatory insurances;
|
(d)
|
they
will notify the Lender, not less than 14 days before the expiry of the
obligatory insurances, in the event of their not having received notice of
renewal instructions from the Borrower or its agents and, in the event of
their receiving instructions to renew, they will promptly notify the
Lender of the terms of the instructions;
and
|
(e)
|
they
will not set off against any sum recoverable in respect of a claim
relating to the Ship under such obligatory insurances any premiums or
other amounts due to them or any other person whether in respect of the
Ship or otherwise, they waive any lien on the policies or, any sums
received under them, which they might have in respect of such premiums or
other amounts, and they will not cancel such obligatory insurances by
reason of non-payment of such premiums or other amounts, and will arrange
for a separate policy to be issued in respect of the Ship forthwith upon
being so requested by the Lender.
|
12.7
|
Copies of certificates of
entry.
The Borrower shall ensure that any protection and
indemnity and/or war risks associations in which the Ship is entered
provides the Lender with:
|
(a)
|
a
certified copy of the certificate of entry for the
Ship;
|
(b)
|
a
letter or letters of undertaking in such form as may be required by the
Lender; and
|
(c)
|
where
required to be issued under the terms of insurance/indemnity provided by
the Borrower's protection and indemnity association, a certified copy of
each United States of America voyage quarterly declaration (or other
similar document or documents) made by the Borrower in relation to the
Ship in accordance with the requirements of such protection and indemnity
association; and
|
(d)
|
a
certified copy of each certificate of financial responsibility for
pollution by oil or other Environmentally Sensitive Material issued by the
relevant certifying authority in relation to the
Ship.
|
12.8
|
Deposit of original
policies.
The Borrower shall ensure that all policies
relating to obligatory insurances effected by it are deposited with the
approved brokers through which the insurances are effected or
renewed.
|
12.9
|
Payment of
premiums.
The Borrower shall punctually pay all premiums
or other sums payable in respect of the obligatory insurances effected by
it and produce all relevant receipts when so required by the
Lender.
|
12.10
|
Guarantees.
The
Borrower shall ensure that any guarantees required by a protection and
indemnity or war risks association are promptly issued and remain in full
force and effect.
|
12.11
|
Restrictions on
employment.
The Borrower shall not employ the Ship, nor
permit the Ship to be employed, outside the cover provided by any
obligatory insurances.
|
12.12
|
Compliance with terms of
insurances.
The Borrower shall not do nor omit to do
(nor permit to be done or not to be done) any act or thing which would or
might render any obligatory insurance invalid, void, voidable or
unenforceable or render any sum payable thereunder repayable in whole or
in part; and, in particular:
|
(a)
|
the
Borrower shall take all necessary action and comply with all requirements
which may from time to time be applicable to the obligatory insurances,
and (without limiting the obligation contained in Clause 12.7(c) above)
ensure that the obligatory insurances are not made subject to any
exclusions or qualifications to which the Lender has not given its prior
approval;
|
(b)
|
the
Borrower shall not make any changes relating to the classification or
classification society or manager or operator of the Ship unless approved
by the underwriters of the obligatory
insurances;
|
(c)
|
the
Borrower shall make (and promptly supply copies to the Lender of) all
quarterly or other voyage declarations which may be required by the
protection and indemnity risks association in which the Ship is entered to
maintain cover for trading to the United States of America and Exclusive
Economic Zone (as defined in the United States Oil Pollution Act 1990 or
any other applicable legislation);
and
|
(d)
|
the
Borrower shall not employ the Ship, nor allow it to be employed, otherwise
than in conformity with the terms and conditions of the obligatory
insurances, without first obtaining the consent of the insurers and
complying with any requirements (as to extra premium or otherwise) which
the insurers specify.
|
12.13
|
Alteration to terms of
insurances.
The Borrower shall neither make or agree to
any alteration to theterms of any obligatory insurance nor
waive any right relating to any obligatory
insurance.
|
12.14
|
Settlement of
claims.
The Borrower shall not settle, compromise or
abandon any claim under any obligatory insurance for Total Loss or for a
Major Casualty, and shall do all things necessary and provide all
documents, evidence and information to enable the Lender to collect or
recover any moneys which at any time become payable in respect of the
obligatory insurances.
|
12.15
|
Provision of copies of
communications.
The Borrower shall provide the Lender,
at the time of each such communication, copies of all major written
communications between itself and:
|
(a)
|
the
approved brokers; and
|
(b)
|
the
approved protection and indemnity and/or war risks associations;
and
|
(c)
|
the
approved insurance companies and/or underwriters, which relate directly or
indirectly to:
|
|
(i)
|
the
Borrower's obligations relating to the obligatory insurances including,
without limitation, all requisite declarations and payments of additional
premiums or calls; and
|
|
(ii)
|
any
credit arrangements made between the Borrower and any of the persons
referred to in paragraphs (a) or (b) above relating wholly or partly to
the effecting or maintenance of the obligatory
insurances.
|
12.16
|
Provision of
information.
In addition, the Borrower shall promptly
provide the Lender (or any persons which it may designate) with any
information which the Lender (or any such designated person) requests for
the purpose of:
|
(a)
|
obtaining
or preparing any report from an independent marine insurance broker as to
the adequacy of the obligatory insurances effected or proposed to be
effected; and/or
|
(b)
|
effecting,
maintaining or renewing any such insurances as are referred to in Clause
12.17 below or dealing with or considering any matters relating to any
such insurances,
|
12.17
|
Mortgagee's interest and
additional perils insurances.
The Lender shall be
entitled from time to time to effect, maintain and renew a mortgagee's
interest insurance policy and, at the discretion of the Lender,a
mortgagee's interest additional perils policy in respect of the Ship, each
in such amount and otherwise on such terms, through such insurers and
generally in such manner as the Lender may from time to time consider
appropriate and the Borrower shall upon demand fully indemnify the Lender
in respect of all premiums and other expenses which are incurred in
connection with or with a view to effecting, maintaining or renewing such
insurance or dealing with, or considering, any matter arising out of such
insurance.
|
12.18
|
Review of insurance
requirements.
The Lender shall be entitled to review the
requirements of this Clause 12 from time to time in order to
take account of any changes in circumstances after the date of this
Agreement which are, in the opinion of the Lender, significant and capable
of affecting the Borrower or the Ship and its insurance (including,
without limitation, changes in the availability or the cost of insurance
coverage or the risks to which the Borrower may be subject.) and may
appoint insurance consultants in relation to this review at the cost of
the Borrower.
|
12.19
|
Modification of insurance
requirements.
The Lender shall notify the Borrower of
any proposed modification under Clause 12.18 to the requirements of this
Clause 12 which the Lender considers appropriate in the circumstances, and
such modification shall take effect on and from the date it is notified in
writing to the Borrower as an amendment to this Clause 12 and shall bind
the Borrower accordingly.
|
12.20
|
Compliance with mortgagee's
instructions.
The Lender shall be entitled (without
prejudice to or limitation of any other rights which it may have or
acquire under any Finance Document) to require the Ship to remain at any
safe port or to proceed to and remain at any safe port designated by the
Lender until the Borrower implements any amendments to the terms of the
obligatory insurances and any operational changes required as a result of
a notice served under Clause 12.19.
|
13
|
SHIP
COVENANTS
|
13.1
|
General.
The
Borrower also undertakes with the Lender to comply with the following
provisions of this Clause 13 at all times during the Security Period
except as the Lender may otherwise
permit.
|
13.2
|
Ship's name and
registration.
The Borrower shall keep the Ship
registered in its name as a Liberian flag ship; shall not do or allow to
be done anything as a result of which such registration might be cancelled
or imperilled; and shall not change the name or port of registry of the
Ship.
|
13.3
|
Repair and
classification.
The Borrower shall keep the Ship in a
good and safe condition and state of
repair:
|
(a)
|
consistent
with first-class ship ownership and management
practice;
|
(b)
|
so
as to maintain the Ship's present class (namely, the highest class
available for vessels of the same type, age and specification as the Ship
with a classification society which is a member of the International
Association of Classification Societies acceptable to the Lender) free of
all overdue recommendations and conditions affecting the Ship's class;
and
|
(c)
|
so
as to comply with all laws and regulations applicable to vessels
registered at ports in Liberia or to vessels trading to any jurisdiction
to which the Ship may trade from time to time, including but not limited
to the ISM Code and the ISPS Code.
|
13.4
|
Modification.
The
Borrower shall not make any modification or repairs to, or replacement of,
the Ship or equipment installed on the Ship which would or might
materially alter its structure, type or performance characteristics or
materially reduce the Ship's value.
|
13.5
|
Removal of
parts.
The Borrower shall not remove any material part
of the Ship, or any item of equipment installed on it, unless the part or
item so removed is forthwith replaced by a suitable part or item which is
in the same condition as or better condition than the part or item
removed, is free from any Security Interest or any right in favour of any
person other than the Lender and becomes on installation on the Ship the
property of the Borrower and subject to the security constituted by the
Mortgage
Provided that
the
Borrower may install equipment owned by a third party if the equipment can
be removed without any risk of damage to the
Ship.
|
13.6
|
Surveys.
The
Borrower shall submit the Ship regularly to all periodical or other
surveys which may be required for classification purposes and, if so
required by the Lender provide the Lender, with copies of all survey
reports.
|
13.7
|
Inspection
. The
Borrower shall permit the Lender (by surveyors or other persons appointed
by it for that purpose at the Borrower's expense) to board the Ship at all
reasonable times to inspect its condition or to satisfy themselves about
proposed or executed repairs and shall afford all proper facilities for
such inspections.
|
13.8
|
Prevention of and release from
arrest.
The Borrower shall promptly
discharge:
|
(a)
|
all
liabilities which give or may give rise to maritime or possessory liens on
or claims enforceable against the Ship, the Earnings or the
Insurances;
|
(b)
|
all
taxes, dues and other amounts charged in respect of the Ship, the Earnings
or the Insurances; and
|
(c)
|
all
other outgoings whatsoever in respect of the Ship, the Earnings or the
Insurances,
|
13.9
|
Compliance with laws
etc.
The Borrower
shall:
|
(a)
|
comply,
or procure compliance with the ISM Code, the ISPS Code, all Environmental
Laws and all other laws or regulations relating to the Ship, its
ownership, operation and management or to the business of the
Borrower;
|
(b)
|
not
employ the Ship nor allow its employment in any manner contrary to any law
or regulation in any relevant jurisdiction including but not limited to
the ISM Code and the ISPS Code; and
|
(c)
|
in
the event of hostilities in any part of the world (whether war is declared
or not), not cause or permit the Ship to enter or trade to any zone which
is declared a war zone by any government or by the Ship's war risks
insurers unless the prior written consent of the Lender has been given and
the Borrower has (at its expense) effected any special, additional or
modified insurance cover which the Lender may
require.
|
13.10
|
Provision of
information.
The Borrower shall promptly provide the
Lender with any information which it requests
regarding:
|
(a)
|
the
Ship, its employment, position and
engagements;
|
(b)
|
the
Earnings and payments and amounts due to the master and crew of the
Ship;
|
(c)
|
any
expenses incurred, or likely to be incurred, in connection with the
operation, maintenance or repair of the Ship and any payments made in
respect of the Ship;
|
(d)
|
any
towages and salvages;
|
(e)
|
its
compliance, the Approved Manager's compliance or the compliance of the
Ship with the ISM Code and the ISPS
Code,
|
13.11
|
Notification of certain
events.
The Borrower shall immediately notify the Lender
by fax, confirmed forthwith by letter
of:
|
(a)
|
any
casualty which is or is likely to be or to become a Major
Casualty;
|
(b)
|
any
occurrence as a result of which the Ship has become or is, by the passing
of time or otherwise, likely to become a Total
Loss;
|
(c)
|
any
requirement or recommendation made by any insurer or classification
society or by any competent authority which is not immediately complied
with;
|
(d)
|
any
arrest or detention of the Ship, any exercise or purported exercise of any
lien on the Ship or its Earnings or any requisition of the Ship for
hire;
|
(e)
|
any
intended dry docking of the Ship;
|
(f)
|
any
Environmental Claim made against the Borrower or in connection with the
Ship, or any Environmental
Incident;
|
(g)
|
any
claim for breach of the ISM Code or the ISPS Code being made against the
Borrower, either of the Approved Managers or otherwise in connection with
the Ship; or
|
(h)
|
any
other matter, event or incident, actual or threatened, the effect of which
will or could lead to the ISM Code or the ISPS Code not being complied
with,
|
|
and
the Borrower shall keep the Lender advised in writing on a regular basis
and in such detail as the Lender shall require of the Borrower's and the
Approved Managers' or any other person's response to any of those events
or matters.
|
13.12
|
Restrictions on chartering,
appointment of managers etc.
The Borrower shall
not:
|
(a)
|
let
the Ship on demise charter for any
period;
|
(b)
|
enter
into any time or consecutive voyage charter in respect of the Ship for a
term which exceeds, or which by virtue of any optional extensions may
exceed, 12 months;
|
(c)
|
enter
into any charter in relation to the Ship under which more than 2 months'
hire (or the equivalent) is payable in
advance;
|
(d)
|
charter
the Ship otherwise than on bona fide arm's length terms at the time when
the Ship is fixed;
|
(e)
|
appoint
a manager of the Ship other than the Approved Manager's or agree to any
alteration to the terms of each of the Approved Managers' respective
appointments;
|
(f)
|
de-activate
or lay up that Ship; or
|
(g)
|
put
the Ship into the possession of any person for the purpose of work being
done upon the Ship in an amount exceeding or likely to exceed $350,000 (or
the equivalent in any other currency) unless that person has first given
to the Lender and in terms satisfactory to it a written undertaking not to
exercise any lien on the Ship or its Earnings for the cost of such work or
any other reason.
|
13.13
|
Notice of
Mortgage.
The Borrower shall keep the Mortgage
registered against the Ship as a valid first priority mortgage, carry on
board the Ship a certified copy of the Mortgage and place and maintain in
a conspicuous place in the navigation room and the Master's cabin of that
Ship a framed printed notice stating that the Ship is mortgaged by the
Borrower to the Lender.
|
13.14
|
Time Charter
Assignment.
If the Borrower enters into any Charter
(subject to (if applicable) obtaining the consent of the Lender in
accordance with Clause 13.12(b)), the Borrower shall, at the request of
the Lender, execute in favour of the Lender a Charter Assignment in
relation to such Charter, and shall deliver to the Lender such other
documents equivalent to those referred to at paragraphs 3, 4 and 5 of Part
A of Schedule 2 as the Lender may
require.
|
14
|
SECURITY
COVER
|
14.1
|
Minimum required security
cover
. Clause 14.2 applies if the Lender notifies the
Borrower that:
|
(a)
|
the
Market Value of the Ship; plus
|
(b)
|
the
net realisable value of any additional security previously provided under
this Clause 14,
|
14.2
|
Provision of additional
security cover; prepayment of Loan.
The Borrower
undertakes with the Lender that, if the Lender notifies the Borrower that
the aggregate of:
|
(a)
|
the
Market Value; plus
|
(b)
|
the
net realisable value of any additional security previously provided under
this Clause 14,
|
|
(i)
|
provide,
or ensure that a third party provides, additional security which, in the
opinion of the Lender, has a net realisable value at least equal to the
shortfall and which, if it consists of or includes a Security Interest,
covers such asset or assets and is documented in such terms as the Lender
may approve or require; or
|
|
(ii)
|
prepay
in accordance with Clause 7 such part (at least) of the Loan as will
eliminate the shortfall.
|
(a)
|
120
per cent. during the period ending on the date falling on the second
anniversary of the Drawdown Date;
and
|
(b)
|
130
per cent. at any other time.
|
14.3
|
Meaning of additional
security.
In Clause 14.2 "
security
" means a
Security Interest over an asset or assets (whether securing the Borrower's
liabilities under the Finance Documents or a guarantee in respect of those
liabilities), or a guarantee, letter of credit or other security in
respect of the Borrower's liabilities under the Finance
Documents.
|
14.4
|
Requirement for additional
documents.
The Borrower shall not be deemed to have
complied with sub-paragraph (i) of Clause 14.2 above until the Lender has
received in connection with the additional security certified copies of
documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 2,
Part A below and such legal opinions in terms acceptable to the Lender
from such lawyers as it may select.
|
14.5
|
Valuation of
Ship.
The Market Value of the Ship at any date is that
shown by the valuation prepared:
|
(a)
|
as
at a date not more than 14 days
previously;
|
(b)
|
by
one independent sale and purchase shipbroker which the Lender has approved
or appointed for the purpose;
|
(c)
|
with
or without physical inspection of the Ship (as the Lender may
require);
|
(d)
|
on
the basis of a sale for prompt delivery for cash on normal arm's length
commercial terms as between a willing seller and a willing buyer free of
any existing charter or any other contract of employment in respect of the
Ship; and
|
(e)
|
after
deducting the estimated amount of the usual and reasonable expenses which
would be incurred in connection with the
sale.
|
14.6
|
Valuation of additional
security.
The net realisable value of any additional
security which is provided under Clause 14.2 and which consists of a
Security Interest over a vessel shall be that shown by a valuation
complying with the requirements of Clause
14.5.
|
14.7
|
Valuations
binding.
Any valuation under Clause 14.2, 14.5 or 14.6
shall be binding and conclusive as regards the Borrower, as shall be any
valuation which the Lender makes of a security which does not consist of
or include a Security Interest.
|
14.8
|
Provision of
information.
The Borrower shall promptly provide the
Lender and any shipbroker or expert acting under Clause 14.5 or 14.6 with
any information which the Lender or the shipbroker or expert may request
for the purposes of the valuation; and, if the Borrower fails to provide
the information by the date specified in the request, the valuation may be
made on any basis and assumptions which the shipbroker or the Lender (or
the expert appointed by it) consider
prudent.
|
14.9
|
Payment of valuation
expenses.
Without prejudice to the generality of the
Borrower's obligations under Clauses 19.3 and 20.3, the Borrower shall, on
demand, pay the Lender the amount of the fees and expenses of any
shipbroker or expert instructed by the Lender under this Clause and all
legal and other expenses incurred by the Lender in connection with any
matter arising out of this Clause.
|
14.10
|
Application of
prepayment.
Clause 7 shall apply in relation to any
prepayment pursuant to Clause
14.2(b).
|
15
|
PAYMENTS
AND CALCULATIONS
|
15.1
|
Currency and method of
payments.
All payments to be made by the Borrower to the
Lender under a Finance Document shall be made to the
Lender:
|
(a)
|
by
not later than 11.00 a.m. (London time) on the due
date;
|
(b)
|
in
same day Dollar funds settled through the New York Clearing House
Interbank Payments System (or in such other Dollar funds and/or settled in
such other manner as the Lender shall specify as being customary at the
time for the settlement of international transactions of the type
contemplated by this Agreement);
and
|
(c)
|
to
the account of the Lender at JPMorgan Chase Bank New York (Account No
786419036, Swift Code CHASUS33) or to such other account with such other
bank as the Lender may from time to time notify to the
Borrower.
|
15.2
|
Payment on non-Business
Day.
If any payment by the Borrower under a Finance
Document would otherwise fall due on a day which is not a Business
Day:
|
(a)
|
the
due date shall be extended to the next succeeding Business Day;
or
|
(b)
|
if
the next succeeding Business Day falls in the next calendar month, the due
date shall be brought forward to the immediately preceding Business
Day,
|
15.3
|
Basis for calculation of
periodic payments.
All interest and any other payments
under any Finance Document which are of an annual or periodic nature shall
accrue from day to day and shall be calculated on the basis of the actual
number of days elapsed and a 360 day
year.
|
15.4
|
Lender
accounts.
The Lender shall maintain an account showing
the amounts advanced by the Lender and all other sums owing to the Lender
from the Borrower and each Security Party under the Finance Documents and
all payments in respect of those amounts made by the Borrower and any
Security Party.
|
15.5
|
Accounts prima facie
evidence.
If the account maintained under Clauses 15.4
shows an amount to be owing by the Borrower or a Security Party to the
Lender, that account shall be prima facie evidence that that amount is
owing to the Lender.
|
16
|
APPLICATION
OF RECEIPTS
|
16.1
|
Normal order of
application.
Except as any Finance Document may
otherwise provide, any sums which are received or recovered by the Lender
under or by virtue of any Finance Document shall be
applied:
|
(a)
|
FIRST:
in or towards satisfaction of any amounts then due and payable under the
Finance Documents and the Master Agreement in the following
proportions:
|
|
(i)
|
first,
in or towards satisfaction pro rata of all amounts then due and payable to
the Lender under the Finance Documents and the Master
Agreement (in respect of any Designated Transactions) other than those
amounts referred to at (ii) and (iii) below (including, but without
limitation, all amounts payable by the Borrower under Clauses 19, 20 and
21 of this Agreement or by the Borrower or any Security Party under any
corresponding or similar provision in any other Finance Document or in the
Master Agreement);
|
|
(ii)
|
secondly,
in or towards satisfaction pro rata of any and all amounts of interest or
default interest payable to the Lender under the Finance Document and the
Master Agreement (in respect of any Designated Transactions) (and, for
this purpose, the expression "interest" shall include any net amount which
the Borrower shall have become liable to pay or deliver under section 2(e)
(Obligations) of the Master Agreement (in respect of any Designated
Transactions) but shall have failed to pay or deliver to the Lender at the
time of application or distribution under this Clause 16);
and
|
|
(iii)
|
thirdly,
in or towards satisfaction pro rata of the Loan and the Swap Exposure (in
the case of the latter, calculated as at the actual Early Termination Date
applying to each particular Designated Transaction, or if no such Early
Termination Date shall have occurred, calculated as if an Early
Termination Date occurred on the date of application or distribution
hereunder);
|
(b)
|
SECONDLY:
(if at the relevant time an Event of Default or Potential Event of Default
has occurred) in retention of an amount equal to any amount not then due
and payable under any Finance Document or the Master Agreement (in respect
of any Transactions) but which the Lender, by notice to the Borrower and
the Security Parties, states in its opinion will or may become due and
payable in the future and, upon those amounts becoming due and payable, in
or towards satisfaction of them in accordance with the foregoing
provisions of this Clause 16.1; and
|
(c)
|
THIRDLY:
any surplus shall be paid to the Borrower or to any other person appearing
to be entitled to it.
|
16.2
|
Variation of order of
application.
The Lender may, by notice to the Borrower
and the Security Parties, provide for a different manner of application
from that set out in Clause 16.1 either as regards a specified sum or
sums or as regards sums in a specified category or
categories.
|
16.3
|
Notice of variation of order of
application.
The Lender may give notices under
Clause 16.2 from time to time; and such a notice may be stated to
apply not only to sums which may be received or recovered in the future,
but also to any sum which has been received or recovered on or after the
third Business Day before the date on which the notice is
served.
|
16.4
|
Appropriation rights
overridden.
This Clause 16 and any notice which the
Lender gives under Clause 16.2 shall override any right of appropriation
possessed, and any appropriation made, by the Borrower or any Security
Party.
|
17
|
APPLICATION
OF EARNINGS AND SWAP PAYMENTS
|
17.1
|
Payment of
Earnings.
The Borrower undertakes with the Lender to
ensure that, throughout the Security
Period:
|
(a)
|
subject
only to the provisions of this Agreement and the General Assignment, all
the Earnings of the Ship are paid to the Operating Account and that
payments made in relation to the Ship are paid from the Operating Account;
and
|
(b)
|
all
payments by the Lender to the Borrower under each Designated Transaction
are paid to the Retention Account.
|
17.2
|
Monthly
retentions.
The Borrower undertakes with the Lender to
ensure that, in each calendar month of the Security Period after the
Drawdown Notice is served, on such dates as the Lender may from time to
time specify, there is transferred to the Retention Account out of the
Earnings received in the Operating Account during the preceding calendar
month:
|
(a)
|
one-sixth
of the amount of the repayment instalment falling due under Clause 7
on the next Repayment Date; and
|
(b)
|
the
relevant fraction of the aggregate amount of interest on the Loan which is
payable on the next due date for payment of interest under this
Agreement.
|
17.3
|
Shortfall in
Earnings.
If the aggregate Earnings received in the
Operating Account are insufficient in any month for the required amount to
be transferred to the Retention Account under Clause 17.2, the Borrower
shall make up the amount of the insufficiency on demand from the Lender;
but, without thereby prejudicing the Lender's right to make such demand at
any time, the Lender may permit the Borrower to make up all or part of the
insufficiency by increasing the amount of any transfer under Clause 17.2
from the Earnings received in the next or subsequent
months.
|
17.4
|
Application of
retentions.
Until an Event of Default or a Potential
Event of Default occurs, the Lender shall on each Repayment Date and on
each due date for the payment of interest under this Agreement apply in
accordance with Clause 15.1 so much of the balance on the Retention
Account as equals:
|
(a)
|
the
Repayment Instalment due on that Repayment Date;
or
|
(b)
|
the
amount of interest payable on that interest payment
date,
|
17.5
|
Interest accrued on the
Operating Account and the Retention Account.
Any credit
balance on both the Operating Account and the Retention Account shall bear
interest at the rate from time to time offered by the Lender to its
customers for Dollar deposits of similar amounts and for periods similar
to those for which such balances appear to the Lender likely to remain on
the Operating Account and the Retention
Account.
|
17.6
|
Release of accrued
interest.
Interest accruing under Clause 17.5 shall be
released to the Borrower on each Repayment Date unless an Event of Default
or a Potential Event of Default has occurred or the then credit balance on
the Retention Account is less than what would have been the balance had
the full amount required by Clause 17.1 (and Clause 17.3, if applicable)
been transferred in that and each previous
month.
|
17.7
|
Location of
accounts.
The Borrower shall
promptly:
|
(a)
|
comply
with any requirement of the Lender as to the location or re-location of
the Operating Account and the Retention Account (or either of them);
and
|
(b)
|
execute
any documents which the Lender specifies to create or maintain in favour
of the Lender a Security Interest over (and/or rights of set-off,
consolidation or other rights in relation to) the Operating Account and
the Retention Account.
|
17.8
|
Debits for expenses
etc.
The Lender shall be entitled (but not obliged) from
time to time to debit the Operating Account without prior notice in order
to discharge any amount due and payable to it under Clause 19 or 20 or
payment of which it has become entitled to demand under Clause 19 or
20.
|
17.9
|
Borrower's obligations
unaffected.
The provisions of this Clause 17 (as
distinct from a distribution effected under Clause 17.4) do not
affect:
|
(a)
|
the
liability of the Borrower to make payments of principal and interest on
the due dates; or
|
(b)
|
any
other liability or obligation of the Borrower or any Security Party under
any Finance Document.
|
18
|
EVENTS
OF DEFAULT
|
18.1
|
Events of
Default.
An Event of Default occurs
if:
|
(a)
|
the
Borrower or any Security Party fails to pay when due or (if so payable) on
demand any sum payable under a Finance Document or under any document
relating to a Finance Document; or
|
(b)
|
any
breach occurs of Clause 8.2, 10.2, 10.3, 10.16, 11.2 or 11.3;
or
|
(c)
|
any
breach by the Borrower or any Security Party occurs of any provision of a
Finance Document (other than a breach covered by paragraph (a) or (b)
above) if, in the opinion of the Lender, such default is capable of remedy
and such default continues unremedied 10 days after written notice from
the Lender requesting action to remedy the same;
or
|
(d)
|
(subject
to any applicable grace period specified in any Finance Document) any
breach by the Borrower or any Security Party occurs of any provision of a
Finance Document (other than a breach caused by paragraph (a), (b) or (c)
above); or
|
(e)
|
any
representation, warranty or statement made by, or by an officer of, the
Borrower or a Security Party in a Finance Document or in the Drawdown
Notice or any other notice or document relating to a Finance Document is
untrue or misleading when it is made;
or
|
(f)
|
any
of the following occurs in relation to any Financial Indebtedness of a
Relevant Person:
|
|
(i)
|
any
Financial Indebtedness of a Relevant Person is not paid when due or, if so
payable, on demand; or
|
|
(ii)
|
any
Financial Indebtedness of a Relevant Person becomes due and payable or
capable of being declared due and payable prior to its stated maturity
date as a consequence of any event of default;
or
|
|
(iii)
|
a
lease, hire purchase agreement or charter creating any Financial
Indebtedness of a Relevant Person is terminated by the lessor or owner or
becomes capable of being terminated as a consequence of any termination
event; or
|
|
(iv)
|
any
overdraft, loan, note issuance, acceptance credit, letter of credit,
guarantee, foreign exchange or other facility, or any swap or other
derivative contract or transaction, relating to any Financial Indebtedness
of a Relevant Person ceases to be available or becomes capable of being
terminated as a result of any event of default, or cash cover is required,
or becomes capable of being required, in respect of such a facility as a
result of any event of default; or
|
|
(v)
|
any
Security Interest securing any Financial Indebtedness of a Relevant Person
becomes enforceable; or
|
(g)
|
any
of the following occurs in relation to a Relevant
Person:
|
|
(i)
|
a
Relevant Person becomes, in the opinion of the Lender, unable to pay its
debts as they fall due; or
|
|
(ii)
|
any
assets of a Relevant Person are subject to any form of execution,
attachment, arrest, sequestration or distress in respect of a sum of, or
sums aggregating, $500,000 or more or the equivalent in another currency;
or
|
|
(iii)
|
any
administrative or other receiver is appointed over any asset of a Relevant
Person; or
|
|
(iv)
|
a
Relevant Person makes any formal declaration of bankruptcy or any formal
statement to the effect that it is insolvent or likely to become
insolvent, or a winding up or administration order is made in relation to
a Relevant Person, or the members or directors of a Relevant Person pass a
resolution to the effect that it should be wound up, placed in
administration or cease to carry on business, save that this paragraph
does not apply to a fully solvent winding up of a Relevant Person other
than the Borrower which is, or is to be, effected for the purposes of an
amalgamation or reconstruction previously approved by the Lender and
effected not later than 3 months after the commencement of the winding up;
or
|
|
(v)
|
a
petition is presented in any Pertinent Jurisdiction for the winding up or
administration, or the appointment of a provisional liquidator, of a
Relevant Person unless the petition is being contested in good faith and
on substantial grounds and is dismissed or withdrawn within 30 days of the
presentation of the petition; or
|
|
(vi)
|
a
Relevant Person petitions a court, or presents any proposal for, any form
of judicial or non-judicial suspension or deferral of payments,
reorganisation of its debt (or certain of its debt) or arrangement with
all or a substantial proportion (by number or value) of its creditors or
of any class of them or any such suspension or deferral of payments,
reorganisation or arrangement is effected by court order, contract or
otherwise; or
|
|
(vii)
|
any
meeting of the members or directors of a Relevant Person is summoned for
the purpose of considering a resolution or proposal to authorise or take
any action of a type described in paragraphs (iii), (iv), (v) or (vi)
above; or
|
(viii)
|
in
a Pertinent Jurisdiction other than England, any event occurs or any
procedure is commenced which, in the opinion of the Lender, is similar to
any of the foregoing; or
|
(h)
|
the
Borrower ceases or suspends carrying on its business or a part of its
business which, in the opinion of the Lender, is material in the context
of this Agreement; or
|
(i)
|
it
becomes unlawful in any Pertinent Jurisdiction or
impossible:
|
|
(i)
|
for
the Borrower or any Security Party to discharge any liability under a
Finance Document or to comply with any other obligation which the Lender
considers material under a Finance Document;
or
|
|
(ii)
|
for
the Lender to exercise or enforce any right under, or to enforce any
Security Interest created by, a Finance Document;
or
|
(j)
|
any
consent necessary to enable the Borrower to own, operate or charter the
Ship or to enable the Borrower or any Security Party to comply with any
provision which the Lender considers material of a Finance Document is not
granted, expires without being renewed, is revoked or becomes liable to
revocation or any condition of such a consent is not fulfilled;
or
|
(k)
|
it
appears to the Lender that, without its prior consent, a change has
occurred or probably has occurred after the date of this Agreement in the
ultimate beneficial ownership of any of the shares in the Borrower or the
Approved Manager or in the ultimate control of the voting rights attaching
to any of those shares; or
|
(l)
|
any
provision which the Lender considers material of a Finance Document proves
to have been or becomes invalid or unenforceable, or a Security Interest
created by a Finance Document proves to have been or becomes invalid or
unenforceable or such a Security Interest proves to have ranked after, or
loses its priority to, another Security Interest or any other third party
claim or interest; or
|
(m)
|
the
security constituted by a Finance Document is in any way imperilled or in
jeopardy; or
|
(n)
|
the
Ship ceases to be managed by the Approved Manager on the terms of the
Management Agreement, unless prior to such cessation, the Borrower has
appointed a substitute manager or managers acceptable to the Lender in all
respects; or
|
(o)
|
any
of the following occurs in relation to the Master
Agreement:
|
|
(i)
|
notice
of an Early Termination Date is given by the Lender under Section 6(a) of
the Master Agreement; or
|
|
(ii)
|
an
Event of Default (as defined in Section 14 of the Master Agreement)
occurs; or
|
|
(iii)
|
the
Master Agreement is terminated, cancelled, suspended, rescinded or revoked
or otherwise ceases to remain in full force and effect for any reason
except with the consent of the Lender;
or
|
(p)
|
any
other event occurs or any other circumstances arise or develop including,
without limitation:
|
|
(i)
|
a
change in the financial position, state of affairs or prospects of the
Borrower, the Approved Manager or the Corporate Guarantor;
or
|
|
(ii)
|
any
accident or other event involving the Ship or another vessel owned,
chartered or operated by a Relevant
Person,
|
18.2
|
Actions following an Event of
Default.
On, or at any time after, the occurrence of an
Event of Default the Lender may:
|
(a)
|
serve
on the Borrower a notice stating that all obligations of the Lender to the
Borrower under this Agreement are terminated;
and/or
|
(b)
|
serve
on the Borrower a notice stating that the Loan, all accrued interest and
all other amounts accrued or owing under this Agreement are immediately
due and payable or are due and payable on demand;
and/or
|
(c)
|
take
any other action which, as a result of the Event of Default or any notice
served under paragraph (i) or (ii) above, the Lender is entitled to take
under any Finance Document or any applicable
law.
|
18.3
|
Existing rights
unaffected.
The Lender shall not be obliged to exercise
any of its rights under Clause 18.2; and those rights shall be without
prejudice and in addition to any other right or remedy to which the Lender
is entitled (whether under the general law or any
document).
|
18.4
|
Termination of
Loan.
On the service of a notice under paragraph (a) of
Clause 18.2 all other obligations of the Lender to the Borrower under
this Agreement, shall terminate.
|
18.5
|
Acceleration of
Loan.
On the service of a notice under paragraph (b) of
Clause 18.2, the Loan, all accrued interest and all other amounts
accrued or owing from the Borrower or any Security Party under this
Agreement and every other Finance Document shall become immediately due
and payable or, as the case may be, payable on
demand.
|
18.6
|
Multiple notices; action
without notice.
The Lender may serve notices under
paragraphs (a) and (b) of Clause 18.2 simultaneously or on different dates
and it may take any action referred to in that Clause if no such notice is
served or simultaneously with or at any time after the service of both or
either of such notices.
|
18.7
|
Exclusion of Lender
liability.
Neither the Lender nor any receiver or
manager appointed by the Lender, shall have any liability to the Borrower
or a Security Party:
|
(a)
|
for
any loss caused by an exercise of rights under, or enforcement of a
Security Interest created by, a Finance Document or by any failure or
delay to exercise such a right or to enforce such a Security Interest;
or
|
(b)
|
as
mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in
such a Security Interest or for any reduction (however caused) in the
value of such an asset,
|
18.8
|
Relevant
Persons.
In this Clause 18 "
a Relevant Person
" means
the Borrower and the Corporate
Guarantor.
|
18.9
|
Interpretation.
In
Clause 18.1(f) references to an event of default or a termination event
include any event, howsoever described, which is similar to an event of
default in a facility agreement or a termination event in a finance lease;
and in Clause 18.1(g) "
petition
" includes an
application.
|
19
|
FEES
AND EXPENSES
|
19.1
|
Management
fee.
The Borrower shall pay to the Lender a
non-refundable management fee of $75,000 on the earlier of (i) the
Drawdown Date and (ii) the last day of the Availability
Period.
|
19.2
|
Costs of negotiation,
preparation etc.
The Borrower shall pay to the Lender on
its demand the amount of all expenses incurred by the Lender in connection
with the negotiation, preparation, execution or registration of any
Finance Document or any related document or with any transaction
contemplated by a Finance Document or a related
document.
|
19.3
|
Costs of variations,
amendments, enforcement etc.
The Borrower shall pay to
the Lender, on the Lender's demand, the amount of all expenses incurred by
the Lender in connection with:
|
(a)
|
any
amendment or supplement to a Finance Document, or any proposal for such an
amendment to be made;
|
(b)
|
any
consent or waiver by the Lender concerned under or in connection with a
Finance Document, or any request for such a consent or
waiver;
|
(c)
|
the
valuation of any security provided or offered under Clause 14 or any other
matter relating to such security;
or
|
(d)
|
any
step taken by the Lender with a view to the protection, exercise or
enforcement of any right or Security Interest created by a Finance
Document or for any similar
purpose.
|
19.4
|
Documentary
taxes.
The Borrower shall promptly pay any tax payable
on or by reference to any Finance Document, and shall, on the Lender's
demand, fully indemnify the Lender against any liabilities and expenses
resulting from any failure or delay by the Borrower to pay such a
tax.
|
19.5
|
Certification of
amounts.
A notice which is signed by two officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 19 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of
which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is
due.
|
20
|
INDEMNITIES
|
20.1
|
Indemnities regarding borrowing
and repayment of Loan.
The Borrower shall fully
indemnify the Lender on its demand in respect of all expenses, liabilities
and losses which are incurred by the Lender, or which the Lender
reasonably and with due diligence estimates that it will incur, as a
result of or in connection with:
|
(a)
|
the
Loan not being borrowed on the date specified in the Drawdown Notice for
any reason other than a default by the
Lender;
|
(b)
|
the
receipt or recovery of all or any part of the Loan or an overdue sum
otherwise than on the last day of an Interest Period or other relevant
period;
|
(c)
|
any
failure (for whatever reason) by the Borrower to make payment of any
amount due under a Finance Document on the due date or, if so payable, on
demand (after giving credit for any default interest paid by the Borrower
on the amount concerned under Clause
6);
|
(d)
|
the
occurrence and/or continuance of an Event of Default or a Potential Event
of Default and/or the acceleration of repayment of the Loan under Clause
18;
|
20.2
|
Breakage
costs.
Without limiting its generality, Clause 20.1
covers any liability, expense or loss, incurred by the
Lender:
|
(a)
|
in
liquidating or employing deposits from third parties acquired or arranged
to fund or maintain all or any part of the Loan and/or any overdue amount
(or an aggregate amount which includes the Loan or any overdue amount);
and
|
(b)
|
in
terminating, or otherwise in connection with, any interest and/or currency
swap or any other transaction entered into (whether with another legal
entity or with another office or department of the Lender) to hedge any
exposure arising under this Agreement or a number of transactions of which
this Agreement is one.
|
20.3
|
Miscellaneous
indemnities.
The Borrower shall fully indemnify the
Lender on its demand in respect of all claims, demands, proceedings,
liabilities, taxes, losses and expenses of every kind ("
liability items
") which
may be made or brought against, or incurred by, the Lender, in any
country, in relation to:
|
(a)
|
any
action taken, or omitted or neglected to be taken, under or in connection
with any Finance Document by the Lender or by any receiver appointed under
a Finance Document; and
|
(b)
|
any
other event, matter or question which occurs or arises at any time during
the Security Period and which has any connection with, or any bearing on,
any Finance Document, any payment or other transaction relating to a
Finance Document or any asset covered (or previously covered) by a
Security Interest created (or intended to be created) by a Finance
Document,
|
20.4
|
Environmental
indemnity.
Without prejudice to its generality, Clause
20.3 covers any liability items which arise, or are asserted, under or in
connection with any law relating to safety at sea, the ISM Code or any
Environmental Law.
|
20.5
|
Currency
indemnity.
If any sum due from the Borrower or any
Security Party to the Lender under a Finance Document or under any order
or judgment relating to a Finance Document has to be converted from the
currency in which the Finance Document provided for the sum to be paid
(the "
Contractual
Currency
") into another currency (the "
Payment Currency
") for
the purpose of:
|
(a)
|
making
or lodging any claim or proof against the Borrower or any Security Party,
whether in its liquidation, any arrangement involving it or otherwise;
or
|
(b)
|
obtaining
an order or judgment from any court or other tribunal;
or
|
(c)
|
enforcing
any such order or judgment,
|
20.6
|
Certification of
amounts.
A notice which is signed by 2 officers of the
Lender, which states that a specified amount, or aggregate amount, is due
to the Lender under this Clause 20 and which indicates (without
necessarily specifying a detailed breakdown) the matters in respect of
which the amount, or aggregate amount, is due shall be prima facie
evidence that the amount, or aggregate amount, is
due.
|
20.7
|
Application to Master
Agreement.
For the avoidance of doubt, Clause 20.5 does
not apply in respect of sums due from the Borrower to the Lender under or
in connection with the Master Agreement as to which sums the provisions of
section 8 (Contractual Currency) of that Master Agreement shall
apply.
|
21
|
NO
SET-OFF OR TAX DEDUCTION
|
21.1
|
No
deductions.
All amounts due from the Borrower under a
Finance Document shall be paid:
|
(a)
|
without
any form of set-off, cross-claim or condition;
and
|
(b)
|
free
and clear of any tax deduction except a tax deduction which the Borrower
is required by law to make.
|
21.2
|
Grossing-up for
taxes.
If the Borrower is required by law to make a tax
deduction from any payment:
|
(a)
|
the
Borrower shall notify the Lender as soon as it becomes aware of the
requirement;
|
(b)
|
the
Borrower shall pay the tax deducted to the appropriate taxation authority
promptly, and in any event before any fine or penalty arises;
and
|
(c)
|
the
amount due in respect of the payment shall be increased by the amount
necessary to ensure that the Lender receives and retains (free from any
liability relating to the tax deduction) a net amount which, after the tax
deduction, is equal to the full amount which it would otherwise have
received.
|
21.3
|
Evidence of payment of
taxes.
Within one month after making any tax deduction,
the Borrower shall deliver to the Lender documentary evidence satisfactory
to the Lender that the tax had been paid to the appropriate taxation
authority.
|
21.4
|
Exclusion of tax on overall net
income.
In this Clause 21 "
tax deduction
" means any
deduction or withholding for or on account of any present or future tax
except tax on the Lender's overall net
income.
|
21.5
|
Application to Master
Agreement.
For the avoidance of doubt, Clause 21 does
not apply in respect of sums due from the Borrowers to the Lender under or
in connection with the Master Agreement which sums the provisions of
section 2(d) (Deduction or Withholding for Tax) of that Master Agreement
shall apply.
|
22
|
ILLEGALITY,
ETC
|
22.1
|
Illegality.
This
Clause 22 applies if the Lender notifies the Borrower that it has become,
or will with effect from a specified date,
become:
|
(a)
|
unlawful
or prohibited as a result of the introduction of a new law, an amendment
to an existing law or a change in the manner in which an existing law is
or will be interpreted or applied;
or
|
(b)
|
contrary
to, or inconsistent with, any
regulation,
|
22.2
|
Notification and effect of
illegality.
On the Lender notifying the Borrower under
Clause 22.1, the Lender's obligation to make the Loan available shall
terminate; and thereupon or, if later, on the date specified in the
Lender's notice under Clause 22.1 as the date on which the notified event
would become effective the Borrower shall prepay the Loan in full in
accordance with Clause 7.
|
22.3
|
Mitigation
. If
circumstances arise which would result in a notification under
Clause 22.1 then, without in any way limiting the rights of the
Lender under Clause 22.3, the Lender shall use reasonable endeavours
to transfer its obligations, liabilities and rights under this Agreement
and the Finance Documents to another office or financial institution not
affected by the circumstances but the Lender shall not be under any
obligation to take any such action if, in its opinion, to do would or
might:
|
(a)
|
have
an adverse effect on its business, operations or financial condition;
or
|
(b)
|
involve
it in any activity which is unlawful or prohibited or any activity that is
contrary to, or inconsistent with, any regulation;
or
|
(c)
|
involve
it in any expense (unless indemnified to its satisfaction) or tax
disadvantage.
|
23
|
INCREASED
COSTS
|
23.1
|
Increased
costs.
This Clause 23 applies if the Lender notifies the
Borrower that it considers that as a result
of:
|
(a)
|
the
introduction or alteration after the date of this Agreement of a law, or
an alteration after the date of this Agreement in the manner in which a
law is interpreted or applied (disregarding any effect which relates to
the application to payments under this Agreement of a tax on the Lender's
overall net income); or
|
(b)
|
complying
with any regulation (including any which relates to capital adequacy or
liquidity controls or which affects the manner in which the Lender
allocates capital resources to its obligations under this Agreement) which
is introduced, or altered, or the interpretation or application of which
is altered, after the date of this
Agreement,
|
23.2
|
Meaning of "increased
costs".
In this Clause 23, "
increased costs
"
means:
|
(a)
|
an
additional or increased cost incurred as a result of, or in connection
with, the Lender having entered into, or being a party to, this Agreement
or having taken an assignment of rights under this Agreement, of funding
or maintaining the Loan or performing its obligations under this
Agreement, or of having outstanding all or any part of the Loan or other
unpaid sums; or
|
(b)
|
a
reduction in the amount of any payment to the Lender under this Agreement
or in the effective return which such a payment represents to the Lender
or on its capital;
|
(c)
|
an
additional or increased cost of funding all or maintaining all or any of
the advances comprised in a class of advances formed by or including the
Loan or (as the case may require) the proportion of that cost attributable
to the Loan; or
|
(d)
|
a
liability to make a payment, or a return foregone, which is calculated by
reference to any amounts received or receivable by the Lender under this
Agreement,
|
23.3
|
Payment of increased
costs.
The Borrower shall pay to the Lender, on its
demand, the amounts which the Lender from time to time notifies the
Borrower that it has specified to be necessary to compensate it for the
increased cost.
|
23.4
|
Notice of
prepayment.
If the Borrower is not willing to continue
to compensate the Lender for the increased cost under Clause 23.2,
the Borrower may give the Lender not less than 14 days' notice of its
intention to prepay the Loan at the end of an Interest
Period.
|
23.5
|
Prepayment
A
notice under Clause 23.4 shall be irrevocable; and on the date
specified in the Borrower's notice of intended prepayment, the Loan shall
terminate and the Borrower shall prepay (without premium or penalty) the
Loan, together with accrued interest thereon at the applicable rate plus
the applicable Margin.
|
23.6
|
Application of
prepayment.
Clause 7 shall apply in relation to the
prepayment.
|
24
|
SET-OFF
|
24.1
|
Application of credit
balances.
The Lender may without prior
notice:
|
(a)
|
apply
any balance (whether or not then due) which at any time stands to the
credit of any account in the name of the Borrower at any office in any
country of the Lender in or towards satisfaction of any sum then due from
the Borrower to the Lender under any of the Finance Documents;
and
|
(b)
|
for
that purpose:
|
|
(i)
|
break,
or alter the maturity of, all or any part of a deposit of the
Borrower;
|
|
(ii)
|
convert
or translate all or any part of a deposit or other credit balance into
Dollars; and
|
|
(iii)
|
enter
into any other transaction or make any entry with regard to the credit
balance which the Lender considers
appropriate.
|
24.2
|
Existing rights
unaffected.
The Lender shall not be obliged to exercise
any of its rights under Clause 24.1; and those rights shall be without
prejudice and in addition to any right of set-off, combination of
accounts, charge, lien or other right or remedy to which the Lender is
entitled (whether under the general law or any
document).
|
24.3
|
No Security
Interest.
This Clause 24 give the Lender a contractual
right of set-off only, and does not create any equitable charge or other
Security Interest over any credit balance of the
Borrower.
|
25
|
TRANSFERS
AND CHANGES IN LENDING OFFICE
|
25.1
|
Transfer by
Borrower.
The Borrower may not, without the consent of
the Lender:
|
(a)
|
transfer
any of its rights or obligations under any Finance Document;
or
|
(b)
|
enter
into any merger, de-merger or other reorganisation, or carry out any other
act, as a result of which any of its rights or liabilities would vest in,
or pass to, another person.
|
25.2
|
Assignment by
Lender.
The Lender may assign all or any of the rights
and interests which it has under or by virtue of the Finance Documents
without the consent of the
Borrower.
|
25.3
|
Rights of
assignee.
In respect of any breach of a warranty,
undertaking, condition or other provision of a Finance Document, or any
misrepresentation made in or in connection with a Finance Document, a
direct or indirect assignee of any of the Lender's rights or interests
under or by virtue of the Finance Documents shall be entitled to recover
damages by reference to the loss incurred by that assignee as a result of
the breach or misrepresentation irrespective of whether the Lender would
have incurred a loss of that kind or
amount.
|
25.4
|
Sub-participation; subrogation
assignment.
The Lender may sub-participate all or any
part of its rights and/or obligations under or in connection with the
Finance Documents without the consent of, or any notice to, the Borrower;
and the Lender may assign, in any manner and terms agreed by it, all or
any part of those rights to an insurer or surety who has become subrogated
to them.
|
25.5
|
Disclosure of
information.
The Lender may disclose to a potential
assignee or sub-participant any information which the Lender has received
in relation to the Borrower, any Security Party or their affairs under or
in connection with any Finance Document, unless the information is clearly
of a confidential nature.
|
25.6
|
Change of lending
office.
The Lender may change its lending office by
giving notice to the Borrower and the change shall become effective on the
later of:
|
(a)
|
the
date on which the Borrower receives the notice;
and
|
(b)
|
the
date, if any, specified in the notice as the date on which the change will
come into effect.
|
26
|
VARIATIONS
AND WAIVERS
|
26.1
|
Variations, waivers etc. by
Lender.
A document shall be effective to vary, waive,
suspend or limit any provision of a Finance Document, or the Lender's
rights or remedies under such a provision or the general law, only if the
document is signed, or specifically agreed to by fax by the Borrower and
the Lender and, if the document relates to a Finance Document to which a
Security Party is party, by that Security
Party.
|
26.2
|
Exclusion of other or implied
variations.
Except for a document which satisfies the
requirements of Clause 26.1, no document, and no act, course of conduct,
failure or neglect to act, delay or acquiescence on the part of the Lender
(or any person acting on its behalf) shall result in the Lender (or any
person acting on its behalf) being taken to have varied, waived, suspended
or limited, or being precluded (permanently or temporarily) from
enforcing, relying on or
exercising:
|
(a)
|
a
provision of this Agreement or another Finance Document;
or
|
(b)
|
an
Event of Default; or
|
(c)
|
a
breach by the Borrower or a Security Party of an obligation under a
Finance Document or the general law;
or
|
(d)
|
any
right or remedy conferred by any Finance Document or by the general
law,
|
27
|
NOTICES
|
27.1
|
General.
Unless
otherwise specifically provided, any notice under or in connection with
any Finance Document shall be given by letter or fax; and references in
the Finance Documents to written notices, notices in writing and notices
signed by particular persons shall be construed
accordingly.
|
27.2
|
Addresses for
communications.
A notice shall be
sent:
|
(a) to
the Borrower:
|
Eurobulk
S.A.
|
|
Aethrion
Center
|
||
40,
Ag. Konstantinou Street
|
||
Maroussi
|
||
Athens
151 24
|
||
Greece
|
||
Fax
No: +30 210 610 5111
|
(b)
|
to
the Lender:
|
9
Quai du President Paul Doumer
|
92400
Courbevoie
|
||
La
Defense, Paris
|
||
France
|
||
Fax
No: +331 4189 2987
|
||
Attn:
Shipping Department
|
27.3
|
Effective date of
notices.
Subject to Clauses 27.4 and
27.5:
|
(a)
|
a
notice which is delivered personally or posted shall be deemed to be
served, and shall take effect, at the time when it is delivered;
and
|
(b)
|
a
notice which is sent by fax shall be deemed to be served, and shall take
effect, 2 hours after its transmission is
completed.
|
27.4
|
Service outside business
hours.
However, if under Clause 27.3 a notice would be
deemed to be served:
|
(a)
|
on
a day which is not a business day in the place of receipt;
or
|
(b)
|
on
such a business day, but after 5 p.m. local
time,
|
27.5
|
Illegible
notices.
Clauses 27.3 and 27.4 do not apply if the
recipient of a notice notifies the sender within one hour after the time
at which the notice would otherwise be deemed to be served that the notice
has been received in a form which is illegible in a material
respect.
|
27.6
|
English
language.
Any notice under or in connection with a
Finance Document shall be in
English.
|
27.7
|
Valid
notices.
A notice under or in connection with a Finance
Document shall not be invalid by reason that its contents or the manner of
serving it do not comply with the requirements of this Agreement or, where
appropriate, any other Finance Document under which it is served
if:
|
(a)
|
the
failure to serve it in accordance with the requirements of this Agreement
or other Finance Document, as the case may be, has not caused any party to
suffer any significant loss or prejudice;
or
|
(b)
|
in
the case of incorrect and/or incomplete contents, it should have been
reasonably clear to the party on which the notice was served what the
correct or missing particulars should have
been.
|
27.8
|
Meaning of
"notice".
In this Clause "
notice
" includes any
demand, consent, authorisation, approval, instruction, waiver or other
communication.
|
28
|
SUPPLEMENTAL
|
28.1
|
Rights cumulative,
non-exclusive.
The rights and remedies which the Finance
Documents give to the Lender are:
|
(a)
|
cumulative;
|
(b)
|
may
be exercised as often as appears expedient;
and
|
(c)
|
shall
not, unless a Finance Document explicitly and specifically states so, be
taken to exclude or limit any right or remedy conferred by any
law.
|
28.2
|
Severability of
provisions.
If any provision of a Finance Document is or
subsequently becomes void, unenforceable or illegal, that shall not affect
the validity, enforceability or legality of the other provisions of that
Finance Document or of the provisions of any other Finance
Document.
|
28.3
|
Counterparts.
A
Finance Document may be executed in any number of
counterparts.
|
28.4
|
Third party
rights.
A person who is not a party to this Agreement
has no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce or to enjoy the benefit of any term of this
Agreement.
|
29
|
LAW
AND JURISDICTION
|
29.1
|
English
law.
This Agreement and any non-contractual obligations
arising out of or in connection with it shall be governed by, and
construed in accordance with, English
law.
|
29.2
|
Exclusive English
jurisdiction.
Subject to Clause 29.3, the courts of
England shall have exclusive jurisdiction to settle any
Dispute.
|
29.3
|
Choice of forum for the
exclusive benefit of the Lender.
Clause 29.2 is for the
exclusive benefit of the Lender, which reserves the
rights:
|
(a)
|
to
commence proceedings in relation to any Dispute in the courts of any
country other than England and which have or claim jurisdiction to
Dispute; and
|
(b)
|
to
commence such proceedings in the courts of any such country or countries
concurrently with or in addition to proceedings in England or without
commencing proceedings in England.
|
29.4
|
Process
agent.
The Borrower irrevocably appoints Hill Dickinson
Services Limited at their office for the time being, presently at Irongate
House, Duke's Place, London EC3A 7LP, England, to act as its agent to
receive and accept on its behalf any process or other document relating to
any proceedings in the English courts which are connected with this
Agreement.
|
29.5
|
Lender's rights
unaffected.
Nothing in this Clause 29 shall exclude or
limit any right which the Lender may have (whether under the law of any
country, an international convention or otherwise) with regard to the
bringing of proceedings, the service of process, the recognition or
enforcement of a judgment or any similar or related matter in any
jurisdiction.
|
29.6
|
Meaning of
"proceedings".
In this Clause 29, "
proceedings
" means
proceedings of any kind, including an application for a provisional or
protective measure and a "
Dispute
" means any
dispute arising out of or in connection with this Agreement (including a
dispute relating to the existence, validity or termination of this
Agreement) or any non-contractual obligations arising out of or in
connection with this Agreement.
|
1
|
We
refer to the loan agreement (the "
Loan Agreement
")
dated April
2009 and made between us, as Borrower, and you, as Lender, in connection
with a facility of up to US$10,000,000. Terms defined in the
Loan Agreement have their defined meanings when used in this Drawdown
Notice.
|
2
|
We
request to borrow as follows:
|
(a)
|
Amount:
US$10,000,000;
|
(b)
|
Drawdown
Date: 30 April 2009;
|
(c)
|
Duration
of the first Interest Period shall be
[ ]
months;
|
(d)
|
Payment
instructions : account in our name and numbered
[ ]
with
[ ]
of
[ ].
|
3
|
We
represent and warrant that:
|
(a)
|
the
representations and warranties in Clause 9 of the Loan Agreement would
remain true and not misleading if repeated on the date of this notice with
reference to the circumstances now
existing;
|
(b)
|
no
Event of Default or Potential Event of Default has occurred or will result
from the borrowing of the Loan.
|
4
|
This
notice cannot be revoked without the prior consent of the
Lender.
|
1
|
A
duly executed original of each Finance Document (and of each document
required to be delivered by each Finance Document) other than those
referred to in Part B.
|
2
|
Copies
of the certificate of incorporation and constitutional documents of each
of the Borrower and the Corporate
Guarantor.
|
3
|
Copies
of resolutions of the shareholders and directors of the Borrower and the
Corporate Guarantor authorising the execution of each of the Finance
Documents to which the Borrower or the Corporate Guarantor is a party and,
in the case of the Borrower, authorising named officers or
attorneys-in-fact to give the Drawdown Notice and other notices under this
Agreement.
|
4
|
The
original of any power of attorney under which any Finance Document is
executed on behalf of the Borrower or the Corporate
Guarantor.
|
5
|
Copies
of all consents which the Borrower or any Security Party requires to enter
into, or make any payment under, any Finance
Document.
|
6
|
The
originals of any mandates or other documents required in connection with
the opening or operation of the Operating Account and the Retention
Account.
|
7
|
A
valuation of the Ship, addressed to the Lender, stated to be for the
purposes of this Agreement and dated not earlier than 30 days before the
Drawdown Date, from an independent sale and purchase shipbroker selected
by the Lender.
|
8
|
Documentary
evidence that the agent for service of process named in Clause 29 has
accepted its appointment.
|
9
|
Favourable
legal opinions from lawyers appointed by the Lender on such matters
concerning the laws of Liberia and such other relevant jurisdictions as
the Lender may require.
|
10
|
If
the Lender so requires, in respect of any of the documents referred to
above, a certified English translation prepared by a translator approved
by the Lender.
|
1
|
A
duly executed original of the Mortgage, the General Assignment and the
Charter Assignment in respect of the Charter (and of each document
required to be delivered under each such Finance
Document).
|
2
|
Documentary
evidence that:
|
(a)
|
the
Ship is definitively and permanently registered in the name
of the Borrower under Liberian
flag;
|
(b)
|
the
Ship is in the absolute and unencumbered ownership of the Borrower save as
contemplated by the Finance
Documents;
|
(c)
|
the
Ship maintains the highest classification available for vessels of the
same age, type and specification as the Ship free of all recommendations
and conditions of such classification society affecting
class;
|
(d)
|
the
Mortgage has been duly registered against the Ship as a valid first
preferred Liberian ship mortgage in accordance with the laws of the
Republic of Liberia; and
|
(e)
|
the
Ship is insured in accordance with the provisions of this Agreement and
all requirements therein in respect of insurances have been complied
with.
|
3
|
Documents
establishing that the Ship will, as from the Drawdown Date, be managed by
the Approved Manager on terms acceptable to the Lender, together
with:
|
(a)
|
the
Manager's Undertaking;
|
(b)
|
a
copy of the Management Agreement;
|
(c)
|
copies
of the Approved Manager's Document of Compliance and the Safety Management
Certificate for the Ship; and
|
(d)
|
copies
of the ISPS Code Documentation in respect of the
Ship.
|
4
|
A
favourable opinion from an independent insurance consultant acceptable to
the Lender on such matters relating to the insurances for the Ship as the
Lender may require.
|
1.
|
the
Loan Agreement;
|
2.
|
the
Master Agreement made between ourselves and yourselves;
and
|
3.
|
a
Confirmation delivered pursuant to the said Master Agreement dated 30
April 2009 and addressed by yourselves to
us.
|
SIGNED
by Stephania Karmiri
|
)
/s/ Stefania
Karmiri
|
)
|
|
for
and on behalf of
|
)
|
ELENI
SHIPPING LIMITED
|
)
|
in
the presence of:
|
)
/s/ Vassiliki
Georgopoulos
|
SIGNED
by Maria Chryssoula Kappida
|
)
/s/ Maria
Chryssoula Kappida
|
)
|
|
attorney-in-fact
|
)
|
for
and on behalf of
|
)
|
CALYON
|
)
|
in
the presence of:
|
)
/s/ Vassiliki
Georgopoulos
|
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the Company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the Company’s internal control over financial
reporting that occurred during the period covered by this annual report
that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial
reporting.
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control
over financial reporting.
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the Company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the Company’s internal control over financial
reporting that occurred during the period covered by this annual report
that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial
reporting.
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control
over financial reporting.
|
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|