(Translation of Registrant's name into English) |
(Jurisdiction of incorporation or organization) |
(Address of principal executive offices) |
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Title of each class
|
Name of each exchange on which registered
|
Common stock, $0.01 par value
|
New York Stock Exchange
|
Preferred stock purchase rights
|
New York Stock Exchange
|
Large accelerated filer
x
|
Accelerated filer
o
Non-accelerated filer
o
|
U.S. GAAP
x
|
International Financial Reporting Standards as issued Other
o
by the International Accounting Standards Board
o
|
FORWARD-LOOKING STATEMENTS
|
4
|
|
PART I
|
|
|
Item 1.
|
Identity of Directors, Senior Management and Advisers
|
5
|
Item 2.
|
Offer Statistics and Expected Timetable
|
5
|
Item 3.
|
Key Information
|
5
|
Item 4.
|
Information on the Company
|
27
|
Item 4A.
|
Unresolved Staff Comments
|
46
|
Item 5.
|
Operating and Financial Review and Prospects
|
46
|
Item 6.
|
Directors, Senior Management and Employees
|
65
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
70
|
Item 8.
|
Financial Information
|
73
|
Item 9.
|
The Offer and Listing
|
74
|
Item 10.
|
Additional Information
|
74
|
Item 11.
|
Quantitative and Qualitative Disclosures about Market Risk
|
83
|
Item 12.
|
Description of Securities Other than Equity Securities
|
84
|
PART II
|
||
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
85
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
85
|
Item 15.
|
Controls and Procedures
|
85
|
Item 16A.
|
Audit Committee Financial Expert
|
86
|
Item 16B.
|
Code of Ethics
|
86
|
Item 16C.
|
Principal Accountant Fees and Services
|
86
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
87
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
87
|
Item 16F.
|
Change in Registrant's Certifying Accountant
|
87
|
Item 16G.
|
Corporate Governance
|
87
|
PART III
|
||
Item 17.
|
Financial Statements
|
89
|
Item 18.
|
Financial Statements
|
89
|
Item 19.
|
Exhibits
|
89
|
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||
|
(in thousands of U.S. dollars,
|
|||||||||||||||||||
|
except for share and per share data and average daily results)
|
|||||||||||||||||||
Income Statement Data:
|
|
|
|
|
|
|||||||||||||||
Time charter revenues
|
$ | 275,448 | $ | 239,342 | $ | 337,391 | $ | 190,480 | $ | 116,101 | ||||||||||
Voyage expenses
|
12,392 | 11,965 | 15,003 | 8,697 | 6,059 | |||||||||||||||
Vessel operating expenses
|
52,585 | 41,369 | 39,899 | 29,332 | 22,489 | |||||||||||||||
Depreciation and amortization of deferred charges
|
53,083 | 44,686 | 43,259 | 24,443 | 16,709 | |||||||||||||||
Management fees
|
- | - | - | - | 573 | |||||||||||||||
Executive management services and rent
|
- | - | - | - | 76 | |||||||||||||||
General and administrative expenses
|
25,347 | 17,464 | 13,831 | 11,718 | 6,331 | |||||||||||||||
Gain on vessel sale
|
- | - | - | (21,504 | ) | - | ||||||||||||||
Foreign currency gains
|
(1,598 | ) | (478 | ) | (438 | ) | (144 | ) | (52 | ) | ||||||||||
|
||||||||||||||||||||
Operating income
|
133,639 | 124,336 | 225,837 | 137,938 | 63,916 | |||||||||||||||
Interest and finance costs
|
(5,213 | ) | (3,284 | ) | (5,851 | ) | (6,394 | ) | (3,886 | ) | ||||||||||
Interest income
|
920 | 951 | 768 | 2,676 | 1,033 |
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||
|
(in thousands of U.S. dollars,
|
|||||||||||||||||||
|
except for share and per share data and average daily results)
|
|||||||||||||||||||
Loss from derivative instruments
|
(1,477 | ) | (505 | ) | - | - | - | |||||||||||||
|
||||||||||||||||||||
Insurance settlements for vessel un-repaired damages
|
- | - | 945 | - | - | |||||||||||||||
|
||||||||||||||||||||
Net income
|
$ | 127,869 | $ | 121,498 | $ | 221,699 | $ | 134,220 | $ | 61,063 | ||||||||||
|
||||||||||||||||||||
Less: Preferential deemed dividend
|
$ | - | $ | - | $ | - | $ | - | $ | (20,267 | ) | |||||||||
|
||||||||||||||||||||
Loss assumed by non controlling interests
|
$ | 910 | $ | - | $ | - | $ | - | $ | - | ||||||||||
|
||||||||||||||||||||
Net income attributed to Diana Shipping Inc.
|
$ | 128,779 | $ | 121,498 | $ | 221,699 | $ | 134,220 | $ | 40,796 | ||||||||||
|
||||||||||||||||||||
Earnings per common share, basic
|
$ | 1.60 | $ | 1.55 | $ | 2.97 | $ | 2.11 | $ | 0.82 | ||||||||||
|
||||||||||||||||||||
Earnings per common share, diluted
|
$ | 1.59 | $ | 1.55 | $ | 2.97 | $ | 2.11 | $ | 0.82 | ||||||||||
|
||||||||||||||||||||
Weighted average number of common shares, basic
|
80,682,770 | 78,282,775 | 74,375,686 | 63,748,973 | 49,528,904 | |||||||||||||||
|
||||||||||||||||||||
Weighted average number of common shares, diluted
|
80,808,232 | 78,385,464 | 74,558,254 | 63,748,973 | 49,528,904 | |||||||||||||||
|
||||||||||||||||||||
Cash dividends declared and paid per share
|
$ | - | $ | - | $ | 3.31 | $ | 2.05 | $ | 1.50 |
Balance Sheet Data:
|
|
|
|
|
|
|||||||||||||||
Cash and cash equivalents
|
$ | 345,414 | $ | 282,438 | $ | 62,033 | $ | 16,726 | $ | 14,511 | ||||||||||
Total current assets
|
354,649 | 297,156 | 68,554 | 21,514 | 19,062 | |||||||||||||||
Vessels' net book value
|
1,160,850 | 979,343 | 960,431 | 867,632 | 464,439 | |||||||||||||||
Property and equipment, net
|
21,842 | 200 | 136 | 956 | 897 | |||||||||||||||
Total assets
|
1,585,389 | 1,320,425 | 1,057,206 | 944,342 | 510,675 | |||||||||||||||
Total current liabilities
|
32,510 | 32,386 | 20,012 | 20,964 | 7,636 | |||||||||||||||
Deferred revenue, non-current portion
|
4,227 | 11,244 | 22,502 | 23,965 | 146 | |||||||||||||||
Long-term debt (including current portion)
|
383,623 | 281,481 | 238,094 | 98,819 | 138,239 | |||||||||||||||
Total stockholders' equity
|
1,169,930 | 999,325 | 775,476 | 799,474 | 363,103 |
Cash Flow Data:
|
|
|
|
|
|
|||||||||||||||
Net cash provided by operating activities
|
$ | 178,292 | $ | 151,903 | $ | 261,151 | $ | 148,959 | $ | 82,370 | ||||||||||
Net cash used in investing activities
|
(252,313 | ) | (73,081 | ) | (108,662 | ) | (409,085 | ) | (193,096 | ) | ||||||||||
Net cash provided by / (used in) financing activities
|
136,997 | 141,583 | (107,182 | ) | 262,341 | 104,007 |
As of and for the | ||||||||||
|
Year Ended December 31,
|
|||||||||
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
(in thousands of U.S. dollars,
|
|||||||||
|
except for share and per share data and average daily results)
|
Fleet Data:
|
|
|
|
|
|
|||||||||||||||
Average number of vessels (1)
|
22.9 | 19.2 | 18.9 | 15.9 | 13.4 | |||||||||||||||
Number of vessels at end of period
|
25.0 | 20.0 | 19.0 | 18.0 | 15.0 | |||||||||||||||
Weighted average age of drybulk vessels at year-end (in years)
|
5.4 | 4.9 | 4.3 | 3.4 | 3.7 | |||||||||||||||
Weighted average age of containerships at year-end (in years)
|
0.6 | - | - | - | - | |||||||||||||||
Ownership days (2)
|
8,348 | 7,000 | 6,913 | 5,813 | 4,897 | |||||||||||||||
Available days (3)
|
8,208 | 6,930 | 6,892 | 5,813 | 4,856 | |||||||||||||||
Operating days (4)
|
8,180 | 6,857 | 6,862 | 5,771 | 4,849 | |||||||||||||||
Fleet utilization (5)
|
99.7 | % | 98.9 | % | 99.6 | % | 99.3 | % | 99.9 | % |
Average Daily Results:
|
|
|
|
|
|
|||||||||||||||
Time charter equivalent (TCE) rate (6)
|
$ | 32,049 | $ | 32,811 | $ | 46,777 | $ | 31,272 | $ | 22,661 | ||||||||||
Daily vessel operating expenses (7)
|
6,299 | 5,910 | 5,772 | 5,046 | 4,592 |
(1)
|
(2)
|
Ownership days are the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
|
(3)
|
Available days are the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.
|
(4)
|
Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
|
(5)
|
We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||
|
(in thousands of U.S. dollars, except for
|
|||||||||||||||||||
TCE rates, which are expressed in U.S. dollars, and available days)
|
||||||||||||||||||||
Time charter revenues
|
$ | 275,448 | 239,342 | $ | 337,391 | $ | 190,480 | $ | 116,101 | |||||||||||
Less: voyage expenses
|
(12,392 | ) | (11,965 | ) | (15,003 | ) | (8,697 | ) | (6,059 | ) | ||||||||||
|
||||||||||||||||||||
Time charter equivalent revenues
|
$ | 263,056 | $ | 227,377 | $ | 322,388 | $ | 181,783 | $ | 110,042 | ||||||||||
|
||||||||||||||||||||
Available days
|
8,208 | 6,930 | 6,892 | 5,813 | 4,856 | |||||||||||||||
Time charter equivalent (TCE) rate
|
$ | 32,049 | $ | 32,811 | $ | 46,777 | $ | 31,272 | $ | 22,661 |
(7)
|
Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period.
|
Ÿ
|
supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;
|
Ÿ
|
changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;
|
Ÿ
|
the location of regional and global exploration, production and manufacturing facilities;
|
Ÿ
|
the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;
|
Ÿ
|
the globalization of production and manufacturing;
|
Ÿ
|
global and regional economic and political conditions, including armed conflicts and terrorist activities; embargoes and strikes;
|
Ÿ
|
natural disasters and other disruptions in international trade;
|
Ÿ
|
developments in international trade;
|
Ÿ
|
changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;
|
Ÿ
|
environmental and other regulatory developments;
|
Ÿ
|
currency exchange rates; and
|
Ÿ
|
weather.
|
Ÿ
|
the number of newbuilding deliveries;
|
Ÿ
|
the scrapping rate of older vessels;
|
Ÿ
|
vessel casualties; and
|
Ÿ
|
the number of vessels that are out of service, namely those that are laid-up, drydocked, awaiting repairs or otherwise not available for hire.
|
·
|
the prevailing level of charter hire rates;
|
·
|
general economic and market conditions affecting the shipping industry;
|
·
|
competition from other shipping companies and other modes of transportation;
|
·
|
the types, sizes and ages of vessels;
|
·
|
the supply and demand for vessels;
|
·
|
applicable governmental regulations;
|
·
|
technological advances; and
|
·
|
the cost of newbuildings.
|
·
|
locate and acquire suitable vessels;
|
·
|
identify and consummate acquisitions or joint ventures;
|
·
|
enhance our customer base;
|
·
|
manage our expansion; and
|
·
|
obtain required financing on acceptable terms.
|
·
|
pay dividends or make capital expenditures if we do not repay amounts drawn under our loan facilities, if there is a default under the loan facilities or if the payment of the dividend or capital expenditure would result in a default or breach of a loan covenant;
|
·
|
incur additional indebtedness, including through the issuance of guarantees;
|
·
|
change the flag, class or management of our vessels;
|
·
|
create liens on our assets;
|
·
|
sell our vessels;
|
·
|
enter into a time charter or consecutive voyage charters that have a term that exceeds, or which by virtue of any optional extensions may exceed a certain period;
|
·
|
merge or consolidate with, or transfer all or substantially all our assets to, another person; and
|
·
|
enter into a new line of business.
|
·
|
marine disaster;
|
·
|
terrorism;
|
·
|
environmental accidents;
|
·
|
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
|
·
|
piracy.
|
·
|
actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;
|
·
|
mergers and strategic alliances in the dry bulk shipping industry;
|
·
|
market conditions in the dry bulk shipping industry;
|
·
|
changes in government regulation;
|
·
|
shortfalls in our operating results from levels forecast by securities analysts;
|
·
|
announcements concerning us or our competitors; and
|
·
|
the general state of the securities market.
|
·
|
authorizing our board of directors to issue "blank check" preferred stock without shareholder approval;
|
·
|
providing for a classified board of directors with staggered, three year terms;
|
·
|
prohibiting cumulative voting in the election of directors;
|
·
|
authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote for the directors;
|
·
|
prohibiting shareholder action by written consent;
|
·
|
limiting the persons who may call special meetings of shareholders; and
|
·
|
establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings.
|
-
|
acquired Gala Properties Inc. ("Gala"), that had a contract with the China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co. Ltd., for the construction of the
Houston,
or Hull No.
H1138
(delivered in October 2009)
,
for a contract price of $60.2 million, as amended, in exchange for our ownership interest in our former subsidiary Eniwetok Shipping Company Inc., which had a contract with the shipbuilders for the construction of a separate 177,000 dwt Capesize drybulk carrier, identified as Hull No. H1108, for the contract price of $60.2 million, with a scheduled delivery date of June 30, 2010 (the "Eniwetok contract"); and
|
-
|
acquired the charter party, which Gala had already entered into, for the
Houston
with Jiangsu Shagang Group Co. ("Shagang") or its nominee (with performance guaranteed by Shagang) providing for a gross charter hire rate of $55,000 per day for a period of a minimum of 59 months and a maximum of 62 months for a consideration of $15.0 million.
|
** Total commission percentage paid to third parties.
|
|||||||
*** Charterers' optional period to redeliver the vessel to owners. Charterers have the right to add the off hire days, if any, and therefore the optional period may be extended.
|
|||||||
|
|||||||
1 Based on latest information received from charterers.
|
|||||||
2 Augustea Oceanbulk Maritime Limitada, Madeira is a guaranteed nominee of Augustea Atlantica Srl, Naples.
|
|||||||
3 Resource Marine Pte., Ltd, Singapore is a guaranteed nominee of Macquarie Bank Limited.
|
|||||||
4 The charterer has the option to employ the vessel for a further 11-13 month period. The optional period, if exercised, must be declared on or before the end of the 42nd month of employment and can only commence at the end of the 48th month, at the daily time charter rate of $52,000.
|
|||||||
5 Shagang Shipping Co. is a guaranteed nominee of the Jiangsu Shagang Shipping Group Co.
|
|||||||
6 Year of delivery and dwt based on shipbuilding contracts.
|
|||||||
7 This newbuilding is also referred to as Hull H1234
|
|||||||
8 This newbuilding is also referred to as Hull H1235
|
·
|
Very Large Ore Carriers (VLOC)
. Very large ore carriers have a carrying capacity of more than 200,000 dwt and are a comparatively new sector of the dry bulk carrier fleet. VLOCs are built to exploit economies of scale on long-haul iron ore routes.
|
·
|
Capesize
. Capesize vessels have a carrying capacity of 110,000-199,999 dwt. Only the largest ports around the world possess the infrastructure to accommodate vessels of this size. Capesize vessels are primarily used to transport iron ore or coal and, to a much lesser extent, grains, primarily on long-haul routes.
|
·
|
Post-Panamax
. Post-Panamax vessels have a carrying capacity of 80,000-109,999 dwt. These vessels tend to have a shallower draft and larger beam than a standard Panamax vessel with a higher cargo capacity. These vessels have been designed specifically for loading high cubic cargoes from draught restricted ports, although they cannot transit the Panama Canal.
|
·
|
Panamax
. Panamax vessels have a carrying capacity of 60,000-79,999 dwt. These vessels carry coal, iron ore, grains, and, to a lesser extent, minor bulks, including steel products, cement and fertilizers. Panamax vessels are able to pass through the Panama Canal, making them more versatile than larger vessels with regard to accessing different trade routes. Most Panamax and Post-Panamax vessels are "gearless," and therefore must be served by shore-based cargo handling equipment. However, there are a small number of geared vessels with onboard cranes, a feature that enhances trading flexibility and enables operation in ports which have poor infrastructure in terms of loading and unloading facilities.
|
·
|
Handymax/Supramax
. Handymax vessels have a carrying capacity of 40,000-59,999 dwt. These vessels operate in a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks. Within the Handymax category there is also a sub-sector known as Supramax. Supramax bulk carriers are ships between 50,000 to 59,999 dwt, normally offering cargo loading and unloading flexibility with on-board cranes, or "gear," while at the same time possessing the cargo carrying capability approaching conventional Panamax bulk carriers.
|
·
|
Handysize
.
Handysize vessels have a carrying capacity of up to 39,999 dwt. These vessels are primarily involved in carrying minor bulk cargoes. Increasingly, ships of this type operate within regional trading routes, and may serve as trans-shipment feeders for larger vessels. Handysize vessels are well suited for small ports with length and draft restrictions. Their cargo gear enables them to service ports lacking the infrastructure for cargo loading and unloading.
|
·
|
We own a modern, high quality fleet of dry bulk carriers.
We believe that owning a modern, high quality fleet reduces operating costs, improves safety and provides us with a competitive advantage in securing favorable time charters. We maintain the quality of our vessels by carrying out regular inspections, both while in port and at sea, and adopting a comprehensive maintenance program for each vessel.
|
·
|
We have an experienced management team
. Our management team consists of experienced executives who each have, on average, more than 25 years of operating experience in the shipping industry and has demonstrated ability in managing the commercial, technical and financial areas of our business. Our management team is led by Mr. Simeon Palios, a qualified naval architect and engineer who has 41 years of experience in the shipping industry.
|
·
|
Internal management of vessel operations
. We conduct all of the commercial and technical management of our vessels in-house through DSS. We believe having in-house commercial and technical management provides us with a competitive advantage over many of our competitors by allowing us to more closely monitor our operations and to offer higher quality performance, reliability and efficiency in arranging charters and the maintenance of our vessels.
|
·
|
We benefit from strong relationships with members of the shipping and financial industries
. We have developed strong relationships with major international charterers, shipbuilders and financial institutions that we believe are the result of the quality of our operations, the strength of our management team and our reputation for dependability.
|
·
|
We have a strong balance sheet and a low level of indebtedness
. We believe that our strong balance sheet and low level of indebtedness provide us with the flexibility to increase the amount of funds that we may draw under our loan facilities in connection with future acquisitions and enable us to use cash flow that would otherwise be dedicated to debt service for other purposes.
|
·
|
real and personal property damage;
|
·
|
net loss of taxes, royalties, rents, fees and other lost revenues;
|
·
|
lost profits or impairment of earning capacity due to property or natural resources damage;
|
·
|
net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and
|
·
|
loss of subsistence use of natural resources.
|
·
|
the change-over to this sulphur limited fuel oil is to be undertaken as soon as possible after arrival and from it as late as possible prior to departure; and
|
·
|
the times of these changeovers are to be recorded in the ship's logbook.
|
·
|
on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status;
|
·
|
on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore;
|
·
|
the development of vessel security plans;
|
·
|
ship identification number to be permanently marked on a vessel's hull;
|
·
|
a 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.
|
·
|
Ownership days.
We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
|
·
|
Operating days.
We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
|
·
|
Fleet utilization.
We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
|
·
|
TCE rates.
We define TCE rates as our time charter revenues less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts.
|
|
|
Year Ended December 31,
|
||||
2010
|
2009
|
2008
|
||||
Ownership days
|
|
8,348
|
|
7,000
|
|
6,913
|
Available days
|
|
8,208
|
|
6,930
|
|
6,892
|
Operating days
|
|
8,180
|
|
6,857
|
|
6,862
|
Fleet utilization
|
|
99.7%
|
98.9%
|
99.6%
|
||
Time charter equivalent (TCE) rate (1)
|
|
$32,049
|
|
$32,811
|
|
$46,777
|
·
|
the duration of our charters;
|
·
|
our decisions relating to vessel acquisitions and disposals;
|
·
|
the amount of time that we spend positioning our vessels;
|
·
|
the amount of time that our vessels spend in drydock undergoing repairs;
|
·
|
maintenance and upgrade work;
|
·
|
the age, condition and specifications of our vessels;
|
·
|
levels of supply and demand in the dry bulk and container shipping industry; and
|
·
|
other factors affecting spot market charter rates for dry bulk carriers and container vessels.
|
·
|
obtain the charterer's consent to us as the new owner;
|
·
|
obtain the charterer's consent to a new technical manager;
|
·
|
in some cases, obtain the charterer's consent to a new flag for the vessel;
|
·
|
arrange for a new crew for the vessel, and where the vessel is on charter, in some cases, the crew must be approved by the charterer;
|
·
|
replace all hired equipment on board, such as gas cylinders and communication equipment;
|
·
|
negotiate and enter into new insurance contracts for the vessel through our own insurance brokers;
|
·
|
register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;
|
·
|
implement a new planned maintenance program for the vessel; and
|
·
|
ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.
|
·
|
employment and operation of our vessels; and
|
·
|
management of the financial, general and administrative elements involved in the conduct of our business and ownership of our vessels.
|
·
|
vessel maintenance and repair;
|
·
|
crew selection and training;
|
·
|
vessel spares and stores supply;
|
·
|
contingency response planning;
|
·
|
onboard safety procedures auditing;
|
·
|
accounting;
|
·
|
vessel insurance arrangement;
|
·
|
vessel chartering;
|
·
|
vessel security training and security response plans (ISPS);
|
·
|
obtaining of ISM certification and audit for each vessel within the six months of taking over a vessel;
|
·
|
vessel hiring management;
|
·
|
vessel surveying; and
|
·
|
vessel performance monitoring.
|
·
|
management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts;
|
·
|
management of our accounting system and records and financial reporting;
|
·
|
administration of the legal and regulatory requirements affecting our business and assets; and
|
·
|
management of the relationships with our service providers and customers.
|
·
|
rates and periods of charter hire;
|
·
|
levels of vessel operating expenses;
|
·
|
depreciation expenses;
|
·
|
financing costs; and
|
·
|
fluctuations in foreign exchange rates.
|
|
·
|
reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;
|
|
·
|
news and industry reports of similar vessel sales;
|
|
·
|
news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;
|
|
·
|
approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;
|
|
·
|
offers that we may have received from potential purchasers of our vessels; and
|
|
·
|
vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.
|
*
|
Indicates dry bulk vessels for which we believe, as of December 31, 2010, the charter-free market value was lower than the vessel's carrying value. We believe that the aggregate carrying value of these vessels exceeded their aggregate charter-free market value by approximately $300 million.
|
Payments due by period
|
||||||||||||||||||||
|
Within
One Year
|
One to
Three Years
|
Three to
Five Years
|
More than
Five years
|
Total
|
|||||||||||||||
|
(in thousands of U.S. dollars)
|
|||||||||||||||||||
Long term debt (1)\
|
$ | 7,320 | $ | 65,340 | $ | 100,840 | $ | 211,470 | $ | 384,970 | ||||||||||
Shipbuilding contracts (2)
|
$ | 56,100 | $ | 27,100 | - | - | $ | 83,200 | ||||||||||||
Broker services agreements (3)
|
$ | 2,692 | $ | 5,384 | $ | 3,814 | - | $ | 11,890 | |||||||||||
Total
|
66,112 | 97,824 | 104,654 | 211,470 | 480,060 |
(1)
|
As of December 31, 2010, we had an aggregate principal of $385.0 million of indebtedness outstanding under our loan facilities, of which $19.7 million related to Diana Containerships. This indebtedness was incurred in connection with the acquisition of dry bulk vessels and containerships and does not include projected interest payments which are based on LIBOR plus a margin. Effective January 19, 2011 Diana Containerships has been de-consolidated from our consolidated financial statements and since that date the related portion of outstanding debt does not constitute our contractual obligation.
|
(2)
|
As of December 31, 2010, we had paid the 1
st
and 2
nd
predelivery installments for the construction of Hull
H1234
, to be renamed
Los Angeles
, amounting to $20.3 million and the 1
st
predelivery installment for the construction of the Hull
H1235
, to be renamed
Philadelphia
,
amounting to $14.5 million. According to our shipbuilding contracts, the vessels are expected to be delivered to us in the second and third quarter of 2012. However, the shipyard has informed us that they may deliver H1234 in the fourth quarter of 2011 and H1235 in the first quarter of 2012. Our contractual obligations for the construction of the two hulls are presented in accordance with the latest information from the shipyard.
|
(3)
|
On June 1, 2010, we and Diana Containerships terminated our existing Consultancy Agreements with companies controlled by our executive officers and the services that were previously provided to us and Diana Containerships by the consultants are provided by DSS. DSS has appointed Diana Enterprises, a related party controlled by our Chief Executive Officer and Chairman, Mr. Simeon Palios, as broker to assist it in providing services to us and to Diana Containerships pursuant to two separate Broker Services Agreements, both dated June 1, 2010, for an annual fee of $1.7 million and $1.0 million, respectively. Effective January 19, 2011 Diana Containerships has been de-consolidated from our consolidated financial statements and since that date the related contract does not constitute our contractual obligation.
|
Name
|
|
Age
|
|
Position
|
Simeon Palios
|
|
69
|
|
Class I Director, Chief Executive Officer and Chairman
|
Anastasios Margaronis
|
|
55
|
|
Class I Director and President
|
Ioannis Zafirakis
|
|
39
|
|
Class I Director, Executive Vice President and Secretary
|
Andreas Michalopoulos
|
39
|
Chief Financial Officer and Treasurer
|
||
Maria Dede
|
38
|
Chief Accounting Officer
|
||
William (Bill) Lawes
|
|
67
|
|
Class II Director
|
Konstantinos Psaltis
|
|
72
|
|
Class II Director
|
Boris Nachamkin
|
|
77
|
|
Class III Director
|
Apostolos Kontoyannis
|
|
62
|
|
Class III Director
|
|
Year Ended December 31,
|
|||||||||||
|
2010
|
2009
|
2008
|
|||||||||
Shoreside
|
58 | 46 | 44 | |||||||||
Seafaring
|
577 | 445 | 422 | |||||||||
Total
|
635 | 491 | 466 | |||||||||
|
A.
|
Major Shareholders
|
Title of Class
|
|
Identity of Person or Group
|
|
Number of
Shares Owned
|
|
Percent of Class
|
|
Common Stock, par value $0.01
|
|
Simeon Palios (1)
|
|
14,923,018
|
|
18.1%
|
|
|
|
All officers and directors as a group (2)
|
|
16,283,341
|
|
19.7%
|
(1)
|
Currently, Mr. Simeon Palios beneficially owns 636,478 restricted common shares granted through the Company's Equity Incentive Plan and 14,286,540 shares indirectly through Corozal Compania Naviera S.A. and Ironwood Trading Corp. over which Mr. Simeon Palios exercises sole voting and dispositive power. As of December 31, 2008, 2009, 2010 and currently, Mr. Simeon Palios owned indirectly through Corozal and Ironwood 19.30%, 17.54%, 17.4% and 17.3%, respectively, of our common stock.
|
(2)
|
Mr. Simeon Palios is our only director or officer that beneficially owns 5% or more of our common stock. Mr. Anastasios Margaronis, our President and a member of our board of directors, and Mr. Ioannis Zafirakis, our Executive Vice President and a member of our board of directors, are indirect shareholders through ownership of stock held in Corozal Compania Naviera S.A., which is the registered owner of some of our common stock. Mr. Margaronis and Mr. Zafirakis do not have dispositive or voting power with regard to shares held by Corozal Compania S.A. and, accordingly, are not considered to be beneficial owners of our common shares held through Corozal Compania Naviera S.A. Messrs. Lawes, Psaltis, Nachamkin and Kontoyannis, each a non-executive director of ours, and Messrs. Margaronis, Zafirakis and Michalopoulos, each executive officers of ours, own shares of our common stock of less than 1% each.
|
A.
|
Consolidated statements and other financial information
|
|
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
||||||
Period
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
Annual
|
|
|
$16.27
|
$11.19
|
$18.52
|
$10.15
|
$31.66
|
$7.24
|
$44.82
|
$15.79
|
$13.55
|
$11.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st quarter
|
|
|
$16.27
|
$13.26
|
$16.89
|
$10.15
|
|
|
|
|
|
|
2nd quarter
|
|
|
15.82
|
11.19
|
18.52
|
11.73
|
|
|
|
|
|
|
3rd quarter
|
|
|
13.39
|
11.46
|
14.98
|
12.01
|
|
|
|
|
|
|
4th quarter
|
|
|
14.08
|
11.82
|
17.97
|
12.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
|
|
|
$12.93
|
$12.11
|
|
|
|
|
|
|
|
|
October
|
|
|
14.08
|
12.51
|
|
|
|
|
|
|
|
|
November
|
|
|
14.03
|
12.63
|
|
|
|
|
|
|
|
|
December
|
|
|
13.53
|
11.82
|
|
|
|
|
|
|
|
|
January
|
$12.52
|
$11.59
|
|
|
|
|
|
|
|
|
|
|
February
|
12.64
|
11.74
|
|
|
|
|
|
|
|
|
|
|
March 1 - 29
|
12.59
|
11.50
|
(1)
|
It is organized in a qualified foreign country which, as defined, is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of the Shipping Income for which exemption is being claimed under Section 883 of the Code, or the "Country of Organization Requirement"; and
|
(2)
|
It can satisfy any one of the following two stock ownership requirements:
|
·
|
more than 50% of its stock, in terms of value, is beneficially owned by qualified shareholders which, as defined, includes individuals who are residents of a qualified foreign country, or the "50% Ownership Test"; or
|
·
|
its stock is "primarily and regularly" traded on an established securities market located in the United States or a qualified foreign country, or the "Publicly Traded Test".
|
·
|
at least 75% of the Company's 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, such passive income.
|
·
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common stock;
|
·
|
the amount allocated to the current taxable year and any taxable years before the Company became a PFIC would be taxed as ordinary income; and
|
·
|
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
·
|
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 a U.S. income tax treaty with respect to that gain, the gain is taxable in the United States only if 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.
|
·
|
fails to provide an accurate taxpayer identification number;
|
·
|
is notified by the IRS that he has failed to report all interest or dividends required to be shown on his U.S. federal income tax returns; or
|
·
|
in certain circumstances, fails to comply with applicable certification requirements.
|
Exhibit
Number
|
Description
|
1.1
|
Amended and Restated Articles of Incorporation of Diana Shipping Inc. (originally known as Diana Shipping Investment Corp.) (1)
|
1.2
|
Amended and Restated By-laws of the Company (2)
|
2.1
|
Form of Share Certificate (10)
|
4.1
|
Second Amended and Restated Stockholders Rights Agreement dated October 7, 2008 (4)
|
4.2
|
Amended and Restated 2005 Stock Incentive Plan (6)
|
4.3
|
Form of Technical Manager Purchase Option Agreement (5)
|
4.4
|
Form of Management Agreement (3)
|
4.5
|
Loan Agreement with Royal Bank of Scotland dated February 18, 2005 (5)
|
4.6
|
Amending and Restating Loan Agreement with Royal Bank of Scotland dated May 24, 2006 (8)
|
4.7
|
Supplemental Agreement with the Royal Bank of Scotland dated January 30, 2007 (7)
|
4.8
|
Sales Agency Financing Agreement dated April 23, 2008 (9)
|
4.9
|
Loan Agreement with Deutsche Bank dated October 8, 2009
|
4.10
|
Loan Agreement with Bremer Landesbank dated October 22, 2009
|
4.11
|
Loan Agreement with the Export-Import Bank of China and DnB Nor Bank ASA dated October 2, 2010
|
8.1
|
Subsidiaries of the Company
|
11.1
|
Code of Ethics (10)
|
12.1
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
|
12.2
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
|
13.1
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
13.2
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
15.1
|
Consent of Independent Registered Public Accounting Firm
|
(1)
|
Filed as Exhibit 1 to the Company's Form 6-K filed on May 29, 2008.
|
(2)
|
Filed as Exhibit 1 to the Company's Form 6-K filed on December 4, 2007.
|
(3)
|
Filed as an Exhibit to the Company's Amended Registration Statement (File No. 123052) on March 15, 2005.
|
(4)
|
Filed as Exhibit 4.5 to the Company's Form 8-A12B/A filed on October 7, 2008 and amended on October 10, 2008 (File No. 001-32458).
|
(5)
|
Filed as an Exhibit to the Company's Registration Statement (File No. 123052) on March 1, 2005.
|
(6)
|
Filed as Exhibit 1 to the Company's Form 6-K filed on October 27, 2008.
|
(7)
|
Filed as Exhibit VI to the Company's Form 6-K filed on March 19, 2007.
|
(8)
|
Filed as Exhibit 4.10 to the Company's 2007 Annual Report on Form 20-F (File No. 001-32458) on March 14, 2008.
|
(9)
|
Filed as Exhibit 2 to the Company's Form 6-K filed on April 24, 2008.
|
(10)
|
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F on March 30, 2010.
|
/s/ Andreas Michalopoulos |
Page
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
|
F-3
|
|
Consolidated Balance Sheets as of December 31, 2010 and 2009
|
F-4
|
|
Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008
|
F-5
|
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2010, 2009 and 2008
|
F-6
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
|
F-7
|
|
Notes to Consolidated Financial Statements
|
F-8
|
|
DIANA SHIPPING INC.
|
||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||
For the years ended December 31, 2010, 2009 and 2008
|
||||||||||||||||||||||||
(Expressed in thousands of U.S. Dollars – except for share and per share data)
|
Common Stock
|
Other | Retained | Diana | |||||||||||||||||||||||||||||||||
Additional | Comprehensive | Earnings / | Shipping | Non- | ||||||||||||||||||||||||||||||||
Comprehensive
|
# of
|
Par
|
Paid-in | Income / | Accumulated | Inc. Total | controlling | Total | ||||||||||||||||||||||||||||
Income
|
Shares
|
Value
|
Capital | (Expense) | Deficit | Equity | Interests | Equity | ||||||||||||||||||||||||||||
BALANCE, December 31, 2007 | 74,375,000 | $ | 744 | $ | 801,349 | $ | 110 | $ | (2,729 | ) | $ | 799,474 | $ | - | $ | 799,474 | ||||||||||||||||||||
Net Income | $ | 221,699 | - | - | - | - | 221,699 | 221,699 | - | 221,699 | ||||||||||||||||||||||||||
Issuance of common stock | - | 686,697 | 7 | 1,225 | - | - | 1,232 | - | 1,232 | |||||||||||||||||||||||||||
- Dividends declared and paid ($ 0.60 per share) | - | - | - | - | - | (44,670 | ) | (44,670 | ) | - | (44,670 | ) | ||||||||||||||||||||||||
- Dividends declared and paid ($ 0.85 per share) | - | - | - | - | - | (63,283 | ) | (63,283 | ) | - | (63,283 | ) | ||||||||||||||||||||||||
- Dividends declared and paid ($ 0.91 per share) | - | - | - | - | - | (67,750 | ) | (67,750 | ) | - | (67,750 | ) | ||||||||||||||||||||||||
- Dividends declared and paid ($ 0.95 per share) | - | - | - | - | - | (71,298 | ) | (71,298 | ) | - | (71,298 | ) | ||||||||||||||||||||||||
- Actuarial gains | 72 | - | - | - | 72 | - | 72 | - | 72 | |||||||||||||||||||||||||||
Comprehensive income | $ | 221,771 | - | |||||||||||||||||||||||||||||||||
BALANCE, December 31, 2008 | 75,061,697 | $ | 751 | $ | 802,574 | $ | 182 | $ | (28,031 | ) | $ | 775,476 | $ | - | $ | 775,476 | ||||||||||||||||||||
- Net income | 121,498 | - | - | - | - | 121,498 | 121,498 | - | 121,498 | |||||||||||||||||||||||||||
- Issuance of common stock | - | 6,369,999 | 64 | 102,403 | - | - | 102,467 | - | 102,467 | |||||||||||||||||||||||||||
- Actuarial losses | (116 | ) | - | - | - | (116 | ) | - | (116 | ) | - | (116 | ) | |||||||||||||||||||||||
Comprehensive income | $ | 121,382 | ||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2009 | 81,431,696 | $ | 815 | $ | 904,977 | $ | 66 | $ | 93,467 | $ | 999,325 | $ | - | $ | 999,325 | |||||||||||||||||||||
Net Income / (loss) | $ | 128,779 | - | - | - | - | 128,779 | 128,779 | (910 | ) | 127,869 | |||||||||||||||||||||||||
Issuance of common stock | 524,117 | 5 | 6,202 | - | - | 6,207 | 6,207 | |||||||||||||||||||||||||||||
Contributions from non-controlling interests (Note 11d)) | - | - | (2,712 | ) | - | - | (2,712 | ) | 39,323 | 36,611 | ||||||||||||||||||||||||||
Actuarial losses | (82 | ) | - | - | - | (82 | ) | - | (82 | ) | - | (82 | ) | |||||||||||||||||||||||
Comprehensive income | $ | 128,697 | ||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2010 | 81,955,813 | $ | 820 | $ | 908,467 | $ | (16 | ) | $ | 222,246 | $ | 1,131,517 | $ | 38,413 | $ | 1,169,930 |
The accompanying notes are an integral part of these consolidated financial statements.
|
1.
|
Basis of Presentation and General Information
|
1.1.
|
Subsidiaries incorporated in the Republic of Panama
|
(a)
|
Skyvan Shipping Company S.A. ("Skyvan"),
owner of the Bahamas flag 75,311 dwt bulk carrier vessel "Nirefs" which was built and delivered in January 2001.
|
(b)
|
Buenos Aires Compania Armadora S.A. ("Buenos"),
owner of the Bahamas flag 75,247 dwt bulk carrier vessel "Alcyon" which was built and delivered in February 2001.
|
(c)
|
Husky Trading S.A. ("Husky
"),
owner of the Bahamas flag 75,336 dwt bulk carrier vessel "Triton" which was built and delivered in March 2001.
|
(d)
|
Panama Compania Armadora S.A. ("Panama"),
owner of the Bahamas flag 75,211 dwt bulk carrier vessel "Oceanis", which was built and delivered in May 2001.
|
(e)
|
Eaton Marine S.A. ("Eaton"),
owner of the Greek flag 75,106 dwt bulk carrier vessel "Danae" (built in 2001), which was acquired in July 2003.
|
(f)
|
Chorrera Compania Armadora S.A. ("Chorrera"),
owner of the Greek flag 75,172 dwt bulk carrier vessel "Dione" (built in 2001), which was acquired in May 2003.
|
(g)
|
Cypres Enterprises Corp. ("Cypres"),
owner of the Bahamas flag 73,630 dwt bulk carrier vessel "Protefs" which was built and delivered in August 2004.
|
(h)
|
Darien Compania Armadora S.A. ("Darien"),
owner of the Bahamas flag 73,691 dwt bulk carrier vessel "Calipso" which was built and delivered in February 2005.
|
(i)
|
Cerada International S.A ("Cerada"),
ex-owner of the Bahamas flag 169,883 dwt bulk carrier vessel "Pantelis SP" (built in 1999), which was acquired in February 2005. The vessel was sold in February 2007, and was delivered to her new owners in July 2007.
|
(j)
|
Texford Maritime S.A. ("Texford"),
owner of the Bahamas flag 73,691 dwt bulk carrier vessel "Clio" which was built and delivered in May 2005.
|
(k)
|
Urbina Bay Trading, S.A. ("Urbina"),
owner of the Bahamas flag 74,444 dwt bulk carrier vessel "Erato" (built in 2004), which was acquired in November 2005.
|
(l)
|
Changame Compania Armadora S.A. ("Changame"),
owner of the Bahamas flag 73,583 dwt bulk carrier vessel "Thetis" (built in 2004), which was acquired in November 2005.
|
(m)
|
Vesta Commercial, S.A. ("Vesta"),
owner of the Bahamas flag 74,381 dwt bulk carrier vessel "Coronis" which was built and delivered in January 2006.
|
(n)
|
Diana Shipping Services S.A. (the "Manager" or "DSS").
DSS was acquired in April 2006, and provides the Company and its vessels with management services since November 12, 2004, pursuant to management agreements, for a fixed monthly fee of $15 per vessel and 2% commission on all voyage and time charter revenues for operating vessels and for a fixed monthly fee of $0.5 for vessels under construction. Since April 2010, DSS provides to Diana Containerships, the Company's beneficially owned subsidiary and its vessels, administrative services for a monthly fee of $10, and since June 2010 technical and commercial services for a monthly fee of $15 per vessel for employed vessels, $20 per vessel per month for laid-up vessels, and 1% commission on the gross charter hire and freight earned by each vessel. Management fees, administrative services fees and commissions charged by DSS are eliminated from the consolidated financial statements as intercompany transactions.
|
1.2.
|
Subsidiaries incorporated in the Republic of the Marshall Islands
|
(a)
|
Ailuk Shipping Company Inc. ("Ailuk"),
owner of the Marshall Islands' flag 73,546 dwt dry bulk carrier vessel "Naias" which was built in 2006 and delivered in August 2006.
|
(b)
|
Bikini Shipping Company Inc. ("Bikini"),
owner of the Marshall Islands' flag 177,773 dwt dry bulk carrier vessel "New York" which was built and delivered in March 2010 (Note 5).
|
(c)
|
Jaluit Shipping Company Inc. ("Jaluit"),
owner of the Marshall Islands' flag, 174,186 dwt, dry bulk carrier vessel "Sideris GS" which was built and delivered in November 2006.
|
(d)
|
Kili Shipping Company Inc. ("Kili"),
owner of the Marshall Islands' flag, 174,261 dwt, dry bulk carrier vessel "Semirio" which was built and delivered in June 2007.
|
(e)
|
Knox Shipping Company Inc. ("Knox"),
owner of the Marshall Islands flag, 180,235 dwt, dry bulk carrier vessel "Aliki" (built 2005), which was acquired in April 2007.
|
(f)
|
Lib Shipping Company Inc. ("Lib"),
owner of the Marshall Islands flag, 177,828 dwt, dry bulk carrier vessel "Boston" which was built and delivered in November 2007.
|
(g)
|
Majuro Shipping Company Inc. ("Majuro"),
owner of the Marshall Islands flag, 93,193 dwt, dry bulk carrier vessel "Alcmene" (built 2010), which was delivered in November 2010 (Note 5).
|
(h)
|
Taka Shipping Company Inc. ("Taka"),
owner of the Marshall Islands flag, 76,436 dwt, dry bulk carrier vessel, "Melite" (built 2004) which was acquired in January 2010 (Note 5).
|
(i)
|
Gala Properties Inc. ("Gala"),
owner of the Marshall Islands flag 177,729 dwt, dry bulk carrier vessel "Houston" which was built and delivered in October 2009.
|
(j)
|
Lae Shipping Company Inc. ("Lae"),
entered into a shipbuilding contract with China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co., Ltd for the construction of one Newcastlemax dry bulk carrier of approximately 206,000 dwt. The vessel has a contract price of $59,000, and is expected to be delivered during the second quarter of 2012 (Note 4).
|
(k)
|
Namu Shipping Company Inc. ("Namu"),
entered into a shipbuilding contract with China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co., Ltd for the construction of one Newcastlemax dry bulk carrier of approximately 206,000 dwt. The vessel has a contract price of $59,000, and is expected to be delivered during the third quarter of 2012 (Note 4).
|
1.3.
|
Subsidiaries incorporated in the United States of America
|
(a)
|
Bulk Carriers (USA) LLC ("Bulk Carriers")
was established in September 2006 in the State of Delaware, USA, to act as the Company's authorized representative in the United States.
|
1.4.
|
Subsidiaries incorporated in the Republic of Cyprus
|
(a)
|
Marfort Navigation Company Limited ("Marfort"),
owner of the Cyprus flag 171,810 dwt bulk carrier vessel "Salt Lake City" (built 2005) which was acquired in December 2007.
|
(b)
|
Silver Chandra Shipping Company Limited ("Silver"),
owner of the Cyprus flag 164,218 dwt bulk carrier vessel "Norfolk" (built 2002) which was acquired in February 2008.
|
1.5.
|
Other Subsidiaries
|
i.
|
Likiep Shipping Company Inc. ("Likiep"
), owner of the Marshall Islands flag, 3,426 TEU capacity container vessel, "Sagitta" which was built and delivered in June 2010 (Note 5).
|
ii.
|
Orangina Inc. ("Orangina"),
owner of the Marshall Islands flag, 3,426 TEU capacity container vessel, "Centaurus" which was built and delivered in July 2010 (Note 5).
|
iii.
|
Lemongina Inc. ("Lemongina"),
a newly established wholly owned subsidiary of Diana Containerships. As at December 31, 2010, Lemongina did not have any operations.
|
Charterer
|
|
2010
|
|
2009
|
|
2008
|
A
|
|
18%
|
|
21%
|
|
15%
|
B
|
|
16%
|
|
23%
|
|
16%
|
C
|
|
10%
|
|
11%
|
|
|
D
|
|
-
|
|
14%
|
|
|
2.
|
Significant Accounting Policies and Recent Accounting Pronouncements
|
(a)
|
Principles of Consolidation
: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, and include the accounts of Diana Shipping Inc. and its wholly-owned subsidiaries referred to in Note 1 above. All significant intercompany balances and transactions have been eliminated upon consolidation.
|
(b)
|
Use of Estimates:
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
|
(c)
|
Other Comprehensive Income / (Expense):
The Company follows the provisions of FASB Accounting Standard Codification (ASC) 220, "Comprehensive Income", which requires separate presentation of certain transactions, which are recorded directly as components of stockholders' equity. In 2010, 2009 and 2008, Other comprehensive income / (expense) increased/(decreased) with gains/(losses) of ($82), ($116) and $72, respectively that resulted from the actuarial valuation of the employees' retirement and staff leaving indemnities (Note 2(u)). As of December 31, 2010, 2009 and 2008, Other comprehensive income / (expense) amounted to ($16), $66 and $182, respectively.
|
(d)
|
Foreign Currency Translation:
The functional currency of the Company is the U.S. Dollar because the Company's vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Company's books of accounts are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities which are denominated in other currencies are translated into U.S. Dollars at the year-end exchange rates. Resulting gains or losses are reflected separately in the accompanying consolidated statements of income.
|
(e)
|
Cash and Cash Equivalents:
The Company considers highly liquid investments such as time deposits, certificates of deposit and their equivalents with an original maturity of three months or less to be cash equivalents.
|
(f)
|
Accounts Receivable, Trade:
The amount shown as accounts receivable, trade, at each balance sheet date, includes receivables from charterers for hire, freight and demurrage billings, net of any provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No provision for doubtful accounts was established as of December 31, 2010 and 2009.
|
(g)
|
Inventories
: Inventories consist of lubricants and victualling which are stated at the lower of cost or market. Cost is determined by the first in, first out method. Inventories may also consist of bunkers when on the cut- off date a vessel has been redelivered by its previous charterers and has not yet been delivered to the new charterers, or remains idle. Bunkers are also stated at the lower of cost or market and cost is determined by the first in, first out method.
|
(h)
|
Vessel Cost:
Vessels are stated at cost which consists of the contract price and any material expenses incurred upon acquisition (initial repairs, improvements and delivery expenses, interest and on-site supervision costs incurred during the construction periods). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred. Interest cost incurred during the assets' construction periods that theoretically could have been avoided if expenditure for the assets had not been made is also capitalized. The capitalization rate, applied on accumulated expenditures for the vessel, is based on interest rates applicable to outstanding borrowings of the period.
|
(i)
|
Prepaid/Deferred Charter Revenue
: The Company records identified assets or liabilities associated with the acquisition of a vessel at fair value, determined by reference to market data. The Company values any asset or liability arising from the market value of the time charters assumed when a vessel is acquired. The amount to be recorded as an asset or liability at the date of vessel delivery is based on the difference between the current fair market value of the charter and the net present value of future contractual cash flows. When the present value of the contractual cash flows of the time charter assumed is greater than its current fair value, the difference is recorded as prepaid charter revenue. When the opposite situation occurs, any difference, capped to the vessel's fair value on a charter free basis, is recorded as deferred revenue. Such assets and liabilities, respectively, are amortized as a reduction of, or an increase in, revenue over the period of the time charter assumed.
|
(j)
|
Impairment of Long-Lived Assets:
The Company follows ASC 360-10-40 "Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The guidance requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted projected net operating cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company should evaluate the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. The Company determines the fair value of its assets based on management estimates and assumptions and by making use of available market data and taking into consideration third party valuations.
|
(k)
|
Assets held for sale
: It is the Company's policy to dispose of vessels and other fixed assets when suitable opportunities occur and not necessarily to keep them until the end of their useful life. The Company classifies assets and disposal groups as being held for sale in accordance with ASC 360-10-45-9 "Long-Lived Assets Classified as Held for Sale", when the following criteria are met: (i) management possessing the necessary authority has committed to a plan to sell the asset (disposal group); (ii) the asset (disposal group) is immediately available for sale on an "as is" basis; (iii) an active program to find the buyer and other actions required to execute the plan to sell the asset (disposal group) have been initiated; (iv) the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year; and (v) the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. In case a long-lived asset is to be disposed of other than by sale (for example, by abandonment, in an exchange measured based on the recorded amount of the nonmonetary asset relinquished, or in a distribution to owners in a spinoff) the Company continues to classify it as held and used until its disposal date. Long-lived assets or disposal groups classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These assets are not depreciated once they meet the criteria to be held for sale.
|
(l)
|
Reporting of discontinued operations
: The current and prior year periods' results of operations and cash flows of assets (disposal groups) classified as held for sale are reported as discontinued operations when it is determined that their operations and cash flows will be eliminated from the ongoing operations of the Company as a result of their disposal, and that the Company will not have continuing involvement in the operation of these assets after their disposal.
|
(m)
|
Vessel Depreciation
: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage value. Each vessel's salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of the Company's vessels to be 25 years for dry bulk vessels and 30 years for containerships from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted.
|
(n)
|
Accounting for Dry-Docking Costs
: The Company follows the deferral method of accounting for dry-docking costs whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next dry-docking is scheduled to become due. Unamortized dry-docking costs of vessels that are sold are written off and included in the calculation of the resulting gain or loss in the year of the vessel's sale.
|
(o)
|
Financing Costs
: Fees paid to lenders for obtaining new loans or refinancing existing ones are deferred and recorded as a contra to debt. Other fees paid for obtaining loan facilities not used at the balance sheet date are capitalized as deferred financing costs. Fees are amortized to interest and finance costs over the life of the related debt using the effective interest method and, for the loan facilities not used at the balance sheet date, according to their availability terms. Unamortized fees relating to loans repaid or refinanced as debt extinguishment are expensed as interest and finance costs in the period the repayment or extinguishment is made. Loan commitment fees are charged to expense in the period incurred.
|
(p)
|
Property and equipment
. The Company has acquired the land and building where its offices are located. Land is presented in its fair value on the date of acquisition and it is not subject to depreciation, but it is reviewed for impairment. As at December 31, 2010, no impairment loss was identified or recorded and the Company has not identified any other facts or circumstances that would require the write down of the value of its land or building in the near future. The building which consists of office space, a warehouse and parking spaces has an estimated useful life of 55 years with no residual value and depreciation is calculated on a straight-line basis. Equipment consists of office furniture and equipment, computer software and hardware and vehicles. The useful life of the office furniture, equipment and vehicles is 5 years; and the computer software and hardware is 3 years. Depreciation is calculated on a straight-line basis.
|
(q)
|
Concentration of Credit Risk:
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers' financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate credit risk.
|
(r)
|
Accounting for Revenues and Expenses:
Revenues are generated from time charter agreements and are usually paid fifteen days in advance. Time charter agreements with the same charterer are accounted for as separate agreements according to the terms and conditions of each agreement. Time charter revenues are recorded over the term of the charter as service is provided. Revenues from time charter agreements providing for varying annual rates over their term are accounted for on a straight line basis. Deferred revenue includes cash received prior to the balance sheet date for which all criteria to recognize as revenue have not been met, including any deferred revenue resulting from charter agreements providing for varying annual rates, which are accounted for on a straight line basis. Deferred revenue also includes the unamortized balance of the liability associated with the acquisition of second-hand vessels with time charters attached which were acquired at values below fair market value at the date the acquisition agreement is consummated. Voyage expenses, primarily consisting of port, canal and bunker expenses that are unique to a particular charter, are paid for by the charterer under time charter arrangements or by the Company under voyage charter arrangements, except for commissions, which are always paid for by the Company, regardless of charter type. All voyage and vessel operating expenses are expensed as incurred, except for commissions. Commissions are deferred over the related voyage charter period to the extent revenue has been deferred since commissions are due as the Company's revenues are earned.
|
(s)
|
Repairs and Maintenance:
All repair and maintenance expenses including underwater inspection expenses are expensed in the year incurred. Such costs are included in vessel operating expenses in the accompanying consolidated statements of income.
|
(t)
|
Pension and retirement benefit obligations.
Administrative employees are covered by state-sponsored pension funds. Both employees and the Company are required to contribute a portion of the employees' gross salary to the fund. Upon retirement, the state-sponsored pension funds are responsible for paying the employees retirement benefits and accordingly the Company has no such obligation. Employer's contributions for 2010, 2009 and 2008 amounted to $838, $627 and $631, respectively.
|
(u)
|
Employees' retirement and staff leaving indemnities.
Administrative personnel are entitled to an indemnity in case of dismissal or retirement unless they resign or are dismissed with cause. The Company, as of the acquisition date of DSS (April 1, 2006), recognizes the estimated benefit obligation for the past service of DSS's employees under the requirements of ASC 715-60, "Defined Benefit Plans - Other Postretirement". This is an unfunded plan and the Company engages a third party company to determine the other comprehensive income component, net of tax and, the gains or losses, the prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost, and to measure defined benefit plan obligations as of the date of the fiscal year-end statement of financial position. At December 31, 2010 and 2009, the projected benefit obligation amounted to $1,154 and $1,034, respectively.
|
(v)
|
Earnings per Common Share:
Basic earnings per common share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the year. Diluted earnings per common share, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised. As of December 31, 2010, 2009 and 2008, the Company had 125,462, 102,689 and 182,568, respectively, dilutive shares (Note 14).
|
(w)
|
Segmental Reporting:
The Company has determined that it operates under two reportable segments, one relating to its operations of the dry bulk vessels and one to the operations of the container vessels. For both segments, the Company reports financial information and evaluates the operations of the two segments by charter revenues and not by the length of ship employment for its customers, i.e. spot or time charters. The Company does not use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the two fleets. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
|
(x)
|
Variable Interest Entities:
ASC 810-10, addresses the consolidation of business enterprises (variable interest entities) to which the usual condition (ownership of a majority voting interest) of consolidation does not apply. The guidance focuses on financial interests that indicate control. It concludes that in the absence of clear control through voting interests, a company's exposure (variable interest) to the economic risks and potential rewards from the variable interest entity's assets and activities are the best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the value of the variable interest entity's assets and liabilities. Additionally, ASU 2009-17, Consolidations (Topic 810) "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity's purpose and design and the reporting entity's ability to direct the activities of the other entity that most significantly impact the other entity's economic performance. ASU 2009-17 also requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement.
|
(y)
|
Fair Value Measurements
: ASC 820 "Fair Value Measurements and Disclosures", provides guidance for using fair value to measure assets and liabilities. The guidance also responds to investors' requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The guidance describes fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. The guidance clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, the guidance establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entity's own data. Under the guidance, fair value measurements would be separately disclosed by level within the fair value hierarchy. Financial statements should include disclosures for transfers in and out of Level 1 and Level 2 fair value measurements and description for the reason for transfer, for inputs and valuation techniques for fair value measurements that fall in either Level 2 or Level 3 and for the level of disaggregation.
|
(z)
|
Share Based Payment:
ASC 718 "Compensation – Stock Compensation", requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met. The Company initially measures the cost of employee services received in exchange for an award or liability instrument based on its current fair value; the fair value of that award or liability instrument is remeasured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period are recognized as compensation cost over that period with the exception of awards granted in the form of restricted shares which are measured at their grant date fair value and are not subsequently re measured. The grant-date fair value of employee share options and similar instruments are estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. As of December 31, 2010 and 2009, the Company had granted 1,559,626 and 1,039,700 restricted shares to senior management and directors (Note 11 (b)).
|
(aa)
|
Derivatives
:
The Company is exposed to interest rate fluctuations associated with its variable rate borrowings and its objective is to manage the impact of such fluctuations on earnings and cash flows of its borrowings. In this respect, in May 2009, the Company entered into a five-year zero cost collar agreement with a floor at 1% and a cap at 7.8% of a notional amount of $100,000 to manage its exposure to interest rate changes related to its borrowings. The collar agreement is considered as an economic hedge agreement as it does not meet the criteria of hedge accounting; therefore, the change in its fair value is recognized in earnings (Note 16).
|
(bb)
|
Subsequent Events
: ASC 855 Subsequent Events establishes general standards of accounting for and disclosing of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The guidance introduces the concept of financial statements being available to be issued. ASC 855 clarifies which entities are required to evaluate subsequent events through the date the financial statements are issued and the scope of the disclosure requirements related to subsequent events. An SEC filer is not required to disclose the date through which management evaluated subsequent events in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP.
|
3.
|
Transactions with Related Parties
|
(a)
|
Altair Travel Agency S.A. ("Altair"):
The Company uses the services of an affiliated travel agent, Altair, which is controlled by the Company's CEO and Chairman. Travel expenses for 2010, and 2009, and 2008 amounted to $1,628, $1,385, and $1,485, respectively, and are included in Vessels, Vessel operating expenses and General and administrative expenses in the accompanying consolidated financial statements. Until September 30, 2010, the Company was also paying Altair rent for office space, parking space and a warehouse leased by DSS until December 31, 2011, for the monthly rent of Euro 6,330 including stamp duty. Rent expense for 2010, 2009 and 2008 amounted to $76, $19, and $19, respectively, and is included in General and administrative expenses in the accompanying consolidated statements of income. At December 31 2010, and 2009, an amount of $206 and $137, respectively, was payable to Altair and is included in Due to related parties in the accompanying consolidated balance sheets. The lease agreement between Altair and DSS was terminated on September 30, 2010, as Altair sold the office space, parking space and the warehouse to Universal Shipping and Real Estates Inc.
|
(b)
|
Universal Shipping and Real Estates Inc. ("Universal"):
Universal was acquired by the Company in October 2010. Until then Universal was a company controlled by the Company's CEO and Chairman from which the DSS was leasing office space, a warehouse and parking spaces for a monthly rent of Euro 24,530 including stamp duty. Rent expense for 2010, 2009, and 2008 amounted to $304, $216, and $231, respectively, which for 2010 and 2009 is included in General and administrative expenses and for 2008 in Interest and finance costs in the accompanying consolidated statement of income. On October 21, 2010, Universal transferred all of its real property to DSS and the company was dissolved in November 2010 (see (e) below and note 6). At December 31, 2010 and 2009, there were no amounts due to or from Universal.
|
(c)
|
Diana Shipping Agencies S.A. ("DSA"):
DSA was acquired by the Company in October 2010. Until then, DSA was a company controlled by the Company's CEO and Chairman, from which DSS was leasing office space, parking spaces and a warehouse for a monthly rent of Euro 23,788 including stamp duty. Rent expense for 2010, 2009, and 2008 amounted to $283, $146, and $156, and is included in General and administrative expenses in the accompanying consolidated statements of income. On October 21, 2010, DSA transferred all of its property to DSS and the company was dissolved in November 2010 (see Note 3(e) and Note 6). At December 31, 2010 and 2009, there were no amounts due to or from DSA.
|
(d)
|
Diana Enterprises Inc. ("Diana Enterprises"):
Diana Enterprises is a company controlled by the Company's CEO and Chairman, and has entered into two agreements with DSS to provide brokerage services through DSS to DSI for an annual fee of $1,652 and to Diana Containerships for an annual fee of $1,040. The agreement has a term of five years and the fees are paid quarterly in advance. For 2010, brokerage fees amounted to $1,570 and are included in General and administrative expenses in the accompanying consolidated statements of income. At December 31, 2010, there were no amounts due to or from Diana Enterprises.
|
(e)
|
Acquisition of affiliated entities
: On October 8, 2010, the Company entered into two transfer agreements with Poinsettia Management Ltd. ("Poinsettia"), an entity affiliated with the Company's CEO and Chairman and with other executives, for the acquisition of 100% of the issued and outstanding shares of Universal and DSA for a total consideration of $21,500. Universal and DSA were entities controlled by Poinsettia, owning the real estate property which the Company was leasing as its principal executive offices in Athens, Greece. The Company's Board of Directors appointed an independent committee consisting of the independent members of the Board of Directors to address any issues in connection with such acquisition and to evaluate the merits and fairness of the consideration of the transaction. The Independent Committee considered the Company's specific facts and circumstances and the developments in the domestic real estate market, obtained financial, legal and other advice as deemed appropriate and utilized multiple valuation approaches from different sources in its analysis, including but not limited to: i) independent market valuations for the entities' real property based on comparable real estate prices, ii) independent assessment of the physical condition of the real property, its fixtures and other infrastructure included within the real property and iii) discounted cash flow analyses (with reference also to the present value of the future lease outflows based upon the Company's then existing lease agreements for office space). Based upon the various inputs discussed above, the independent committee determined that the transaction was in the best interests of the Company and its stockholders and recommended the transaction to the Board for an aggregate purchase price not to exceed $21,500. On October 21, 2010, the building and land were transferred to DSS. Universal and DSA were subsequently dissolved (Note 6).
|
4.
|
Advances for Vessels under Construction and Acquisitions and Other Vessel Costs
|
|
December 31, 2010
|
December 31, 2009
|
||||||
Pre-delivery installments
|
$ | 34,800 | $ | 24,080 | ||||
Advances for vessel acquisitions
|
- | 3,510 | ||||||
Capitalized interest and finance costs
|
449 | 1,829 | ||||||
Other related costs
|
31 | 211 | ||||||
Total
|
$ | 35,280 | $ | 29,630 |
|
December 31, 2010
|
December 31, 2009
|
||||||
Beginning balance
|
$ | 29,630 | $ | 27,199 | ||||
- Advances for vessels under construction and other vessel costs
|
72,111 | 61,715 | ||||||
- Advances for vessel acquisitions and other vessel costs
|
31,647 | 3,510 | ||||||
- Transferred to vessel cost (Note 5)
|
(98,108 | ) | (62,794 | ) | ||||
Ending balance
|
$ | 35,280 | $ | 29,630 |
5.
|
Vessels
|
|
Vessel Cost
|
Accumulated Depreciation
|
Net Book Value
|
|||||||||
|
|
|
||||||||||
|
|
|
||||||||||
Balance, December 31, 2008
|
$ | 1,060,311 | $ | (99,880 | ) | $ | 960,431 | |||||
- Transfer from advances for vessels under construction and acquisition and other vessel costs (Note 4)
|
62,794 | - | 62,794 | |||||||||
- Depreciation for the year
|
- | (43,882 | ) | (43,882 | ) | |||||||
Balance, December 31, 2009
|
$ | 1,123,105 | $ | (143,762 | ) | $ | 979,343 | |||||
- Transfer from advances for vessels under construction and acquisition and other vessel costs (Note 4)
|
98,108 | - | 98,108 | |||||||||
- Acquisition and other vessel costs
|
134,431 | 134,431 | ||||||||||
- Depreciation for the year
|
- | (51,032 | ) | (51,032 | ) | |||||||
Balance, December 31, 2010
|
$ | 1,355,644 | $ | (194,794 | ) | $ | 1,160,850 |
|
Property and Equipment
|
Accumulated Depreciation
|
Net Book Value
|
|||||||||
|
|
|
||||||||||
Balance, December 31, 2009
|
$ | 518 | $ | (318 | ) | $ | 200 | |||||
- Land
|
11,109 | - | 11,109 | |||||||||
- Building acquisition
|
10,391 | (54 | ) | 10,337 | ||||||||
- Additions in equipment
|
314 | (118 | ) | 196 | ||||||||
Balance, December 31, 2010
|
$ | 22,332 | $ | (490 | ) | $ | 21,842 |
7.
|
Prepaid charter revenue, current and non-current
|
Period
|
|
Amount
|
||
January 1, 2011
|
to
|
December 31, 2011
|
|
3,050
|
January 1, 2012
|
to
|
December 31, 2012
|
|
3,058
|
January 1, 2013
|
to
|
December 31, 2013
|
|
3,050
|
January 1, 2014
|
to
|
October 3, 2014
|
|
2,301
|
|
2010
|
2009
|
||||||
Royal Bank of Scotland revolving credit facility
|
$ | 290,700 | $ | 218,210 | ||||
Fortis Bank loan facility
|
- | 24,080 | ||||||
Bremer Landesbank loan facility
|
36,400 | 40,000 | ||||||
Deutsche Bank AG loan facility
|
38,200 | - | ||||||
DnB NOR Bank ASA loan facility
|
19,670 | - | ||||||
Less related deferred financing costs
|
(1,347 | ) | (809 | ) | ||||
Total
|
$ | 383,623 | $ | 281,481 | ||||
Current portion of long term debt
|
$ | (7,320 | ) | $ | (5,400 | ) | ||
Total
|
$ | 376,303 | $ | 276,081 |
Period
|
|
Principal Repayment
|
||
January 1, 2011
|
to
|
December 31, 2011
|
$
|
7,320
|
January 1, 2012
|
to
|
December 31, 2012
|
|
28,020
|
January 1, 2013
|
to
|
December 31, 2013
|
|
37,320
|
January 1, 2014
|
to
|
December 31, 2014
|
|
37,320
|
January 1, 2015
|
to
|
December 31, 2015
|
|
63,520
|
January 1, 2016
|
and thereafter
|
|
211,470
|
|
|
|
Total
|
$
|
384,970
|
|
|
|
|
|
Less: Deferred financing costs
|
$
|
(1,347)
|
||
|
|
Total
|
$
|
383,623
|
9.
|
Deferred revenue, current and non-current
|
|
2010
|
2009
|
||||||
Hires collected in advance
|
$ | 6,643 | $ | 6,865 | ||||
Charter revenue resulting from varying charter rates
|
1,901 | 8,039 | ||||||
Unamortized balance of time charter attached
|
9,345 | 14,459 | ||||||
Total
|
$ | 17,889 | $ | 29,363 | ||||
Less current portion
|
$ | (13,662 | ) | $ | (18,119 | ) | ||
Non-current portion
|
$ | 4,227 | $ | 11,244 |
10.
|
Commitments and Contingencies
|
a)
|
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company's vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.
|
b)
|
The Company has entered into shipbuilding contracts for the construction of two Newcastlemax vessels (Note 4). As at December 31, 2010, the remaining installments under the contract for the construction of Hull H1234, to be named "Los Angeles", amounted to $38,700 and for the construction of Hull H1235, to be named "Philadelphia", amounted to $44,500.
|
c)
|
As of December 31, 2010, all vessels were operating under time charters, the last of which expires in April 2016 (latest redelivery date), under the following terms:
|
Vessel Name
|
|
Daily time charter
gross rate (in U.S. Dollars) |
|
Date delivered to charterer
|
|
Charterer redelivery option periods
|
||
Nirefs
|
|
$21,000
|
|
12-Feb-10
|
|
28-Dec-11
|
-
|
27-Mar-12
|
Alcyon
|
|
$34,500
|
|
21-Feb-08
|
|
21-Nov-12
|
-
|
21-Feb-13
|
Triton
|
|
$19,500
|
|
11-Dec-10
|
|
11-Nov-13
|
-
|
11-Feb-14
|
Oceanis
|
|
$19,750
|
|
17-Sep-10
|
|
17-Aug-12
|
-
|
1-Nov-12
|
Dione
|
|
$20,500
|
|
26-Sep-10
|
|
26-Jul-12
|
-
|
26-Nov-12
|
Danae
|
|
$12,000
|
|
7-Apr-09
|
|
23-Jan-11
|
-
|
22-Apr-11
|
Protefs
|
|
$59,000
|
|
18-Sep-08
|
|
18-Aug-11
|
-
|
18-Nov-11
|
Calipso
|
|
$23,000
|
|
4-Sep-10
|
|
20-Jul-11
|
-
|
19-Oct-11
|
Clio
|
|
$25,000
|
|
8-May-10
|
|
8-Apr-12
|
-
|
8-Jun-12
|
Erato
|
|
$20,500
|
|
4-Mar-10
|
|
4-Dec-11
|
-
|
4-Mar-12
|
Thetis
|
|
$23,000
|
|
6-Mar-10
|
|
6-Feb-11
|
-
|
21-May-11
|
Coronis
|
|
$24,000
|
|
6-Apr-10
|
|
6-Mar-12
|
-
|
21-Jun-12
|
Naias
|
|
$19,750
|
|
24-Sep-10
|
|
24-Aug-12
|
-
|
24-Oct-12
|
Sideris
|
|
$30,500
|
|
16-Oct-10
|
|
16-Feb-13
|
-
|
16-Jun-13
|
Aliki
|
|
$45,000
|
|
1-May-09
|
|
1-Mar-11
|
-
|
1-Jun-11
|
Aliki
|
|
$26,500
|
|
1-Mar-11
|
|
1-Feb-16
|
-
|
1-Apr-16
|
Semirio
|
|
$31,000
|
|
15-Jun-09
|
|
30-Apr-11
|
-
|
30-Jul-11
|
Boston
|
|
$52,000
|
|
13-Nov-07
|
|
28-Sep-11
|
-
|
28-Dec-11
|
SLC
|
|
$55,800
|
|
28-Sep-07
|
|
28-Aug-12
|
-
|
28-Oct-12
|
Norfolk
|
|
$74,750
|
|
12-Feb-08
|
|
12-Jan-13
|
-
|
12-Mar-13
|
New York
|
|
$48,000
|
|
3-Mar-10
|
|
3-Jan-15
|
-
|
3-May-15
|
Melite
|
|
$24,250
|
|
29-Jan-10
|
|
29-Dec-10
|
-
|
1-Mar-11
|
Houston
|
|
$55,000
|
|
3-Nov-09
|
|
3-Oct-14
|
-
|
3-Jan-15
|
Alcmene
|
|
$20,250
|
|
20-Nov-10
|
|
5-Oct-12
|
-
|
4-Jan-13
|
Sagitta
|
|
$16,000
|
|
30-Jun-10
|
|
30-Mar-11
|
-
|
30-Jun-11
|
Centaurus
|
|
$20,000
|
|
4-Sep-10
|
|
21-Jul-12
|
-
|
19-Oct-12
|
11.
|
Capital Stock and Change in Capital Accounts
|
(a)
|
Preferred stock and common stock
:
Under the amended articles of incorporation in May 2008 discussed in Note 1, the Company's authorized capital stock consists of 200,000,000 shares (all in registered form) of common stock, par value $0.01 per share and of 25,000,000 shares (all in registered form) of preferred stock, par value $0.01 per share. The holders of the common shares are entitled to one vote on all matters submitted to a vote of stockholders and to receive all dividends, if any.
|
(b)
|
Incentive plan
: In February 2005, the Company adopted an equity incentive plan (the "Plan") which entitles the Company's employees, officers and directors to receive options to acquire the Company's common stock. A total of 2,800,000 shares of common stock are reserved for issuance under the plan. The plan is administered by the Company's Board of Directors. Under the terms of the plan, the Company's Board of Directors is able to grant a) incentive stock options, b) non-qualified stock options, c) stock appreciation rights, d) dividend equivalent rights, e) restricted stock, f) unrestricted stock, g) restricted stock units, and h) performance shares. No options, stock appreciation rights or restricted stock units can be exercisable prior to the first anniversary or subsequent to the tenth anniversary of the date on which such award was granted. The plan will expire 10 years from the adoption of the plan by the Board of Directors.
|
(c)
|
Dividend Reinvestment and Direct Stock Purchase Plan ("DRIP"):
In April 2008, the Company entered into a Plan for 2,500,000 shares of common stock to allow existing shareholders to purchase additional common stock by reinvesting all or a portion of the dividends paid on their common stock and by making optional cash investments and new investors to enter into the Plan by making an initial investment. During 2010, 4,191 shares were issued pursuant to the DRIP in addition to the 16,996 shares issued as at December 31, 2009.
|
(d)
|
Diana Containerships Inc.
On April 6, 2010, the Company invested $50,000 in a private offering of 5,892,330 shares of common stock of Diana Containerships pursuant to Rule 144A and Regulation S and Regulation D of the Securities Act of 1933, as amended (the "Offering"), and acquired 3,333,333 common shares of Diana Containerships. The difference between the consideration paid by Diana during the offering and the book value of Diana's share in Diana Containerships's net proceeds from the offering, amounting $3,438, was recognized directly as an adjustment to additional paid-in capital.
|
(e)
|
In December 2010, the Company's BOD resolved to distribute 2,667,015 shares of Diana Containerships, or 80% of its interest, as a stock dividend to all shareholders of the Company on a pro-rata basis. As a result of this decision, an information statement was prepared and filed in January 2011. In December 2010, Diana Containerships applied for its listing in Nasdaq Global Market where its shares started to trade on January 3, 2011 on a "when issued" basis and on January 19, 2011, on a "regular way" basis.
|
12.
|
Voyage and Vessel Operating Expenses
|
|
2010
|
2009
|
2008
|
|||||||||
Voyage Expenses
|
|
|
|
|||||||||
Bunkers
|
(652 | ) | 779 | (817 | ) | |||||||
Commissions charged by third parties
|
12,889 | 11,273 | 15,648 | |||||||||
Miscellaneous
|
155 | (87 | ) | 172 | ||||||||
Total
|
12,392 | 11,965 | 15,003 | |||||||||
|
||||||||||||
Vessel Operating Expenses
|
||||||||||||
Crew wages and related costs
|
28,406 | 23,922 | 23,661 | |||||||||
Insurance
|
4,181 | 3,410 | 4,695 | |||||||||
Spares and consumable stores
|
12,691 | 9,149 | 7,948 | |||||||||
Repairs and maintenance
|
6,257 | 4,043 | 2,923 | |||||||||
Tonnage taxes (Note 15)
|
306 | 273 | 260 | |||||||||
Miscellaneous
|
744 | 572 | 412 | |||||||||
Total
|
52,585 | 41,369 | 39,899 |
13.
|
Interest and Finance Costs
|
|
2010
|
2009
|
2008
|
|||||||||
Interest expense
|
4,642 | 2,944 | 5,372 | |||||||||
Amortization and write-off of financing costs
|
263 | 65 | 86 | |||||||||
Commitment fees (Note 8)
|
251 | 220 | 388 | |||||||||
Other
|
57 | 55 | 5 | |||||||||
Total
|
5,213 | 3,284 | 5,851 |
14.
|
Earnings per Share
|
|
2010
|
2009
|
2008
|
|||||||||||||||||||||
|
Basic EPS
|
Diluted EPS
|
Basic EPS
|
Diluted EPS
|
Basic EPS
|
Diluted EPS
|
||||||||||||||||||
Net income
|
$ | 128,779 | $ | 128,779 | $ | 121,498 | $ | 121,498 | $ | 221,699 | $ | 221,699 | ||||||||||||
Less: dividends paid on restricted stock
|
- | - | - | - | (820 | ) | - | |||||||||||||||||
Net income available to common stockholders
|
128,779 | 128,779 | 121,498 | 121,498 | 220,879 | 221,699 | ||||||||||||||||||
|
||||||||||||||||||||||||
Weighted average number of common shares outstanding
|
80,682,770 | 80,682,770 | 78,282,775 | 78,282,775 | 74,375,686 | 74,375,686 | ||||||||||||||||||
Incremental shares
|
- | 125,462 | - | 102,689 | - | 182,568 | ||||||||||||||||||
Total shares outstanding
|
80,682,770 | 80,808,232 | 78,282,775 | 78,385,464 | 74,375,686 | 74,558,254 | ||||||||||||||||||
|
||||||||||||||||||||||||
Earnings per share
|
$ | 1.60 | $ | 1.59 | $ | 1.55 | $ | 1.55 | $ | 2.97 | $ | 2.97 |
15.
|
Income Taxes
|
16.
|
Financial Instruments
|
18.
|
Subsequent Events
|
(a)
|
Partial spin off of Diana Containerships
. On January 18, 2011, the Company distributed 2,667,015 shares of Diana Containerships to its stockholders of record of the Company on January 3, 2011 and as of that date the Company's share in Diana Containerships was reduced to 11%. As a result of this partial spin-off Diana Containerships, effective January 19, 2011, will no longer be consolidated to the consolidated financial statements of the Company.
|
(b)
|
Annual Incentive Bonus
: On February 15, 2010 the Company's Board of Directors approved a cash bonus of about $2.6 million to all employees and executive management of the Company and 616,055 shares of restricted common stock awards to executive management and non-executive directors, pursuant to the Company's 2005 equity incentive plan as amended in 2008. The fair value of the restricted shares based on the closing price on the date of the Board of Directors' approval ($12.64 per share) was $7,787 and will be recognized in income ratably over the restricted shares vesting period which will be three years.
|
1
|
Definitions and Interpretation
|
1
|
2
|
The Loan and its Purpose
|
11
|
3
|
Conditions of Utilisation
|
11
|
4
|
Advance
|
12
|
5
|
Repayment
|
12
|
6
|
Prepayment
|
13
|
7
|
Interest
|
14
|
8
|
Indemnities
|
16
|
9
|
Fees
|
20
|
10
|
Security and Application of Moneys
|
21
|
11
|
Representations
|
24
|
12
|
Undertakings and Covenants
|
26
|
13
|
Events of Default
|
43
|
14
|
Assignment and Sub-Participation
|
49
|
15
|
Set-Off
|
49
|
16
|
Payments
|
50
|
17
|
Notices
|
51
|
18
|
Partial Invalidity
|
53
|
19
|
Remedies and Waivers
|
53
|
20
|
Miscellaneous
|
53
|
21
|
Law and Jurisdiction
|
54
|
LOAN AGREEMENT
|
Dated: 8 October
2009
|
|
(1)
|
BIKINI SHIPPING COMPANY INC.
, a company incorporated under the laws of the Republic of the Marshall Islands, whose registered office is at The Trust Company of the Marshall Islands, Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (the
"
Borrower
"); and
|
(2)
|
DEUTSCHE BANK AKTIENGESELLSCHAFT FILIALE DEUTSCHLANDGESCHÄFT
, acting as lender through its office at Ludwig-Erhard-Str. 1, 20459 Hamburg, Germany (in that capacity the
"
Lender
") and in its capacity as swap provider, acting under the name
DEUTSCHE BANK AKTIENGESELLSCHAFT
, acting
through its office at Theodor-Heuss-Allee-70, 60486 Frankfurt-am-Main, Federal Republic of Germany (herein sometimes referred to as the
"
Swap Provider
").
|
WHEREAS:
|
(A)
|
The Borrower has agreed to purchase the Vessel from the Builder on the terms of the Building Contract and intends to register the Vessel on delivery under the flag of the Marshall Islands, or any other flag acceptable to the Lender.
|
(B)
|
The Lender has agreed to advance to the Borrower an amount not exceeding the lesser of (a) $40,000,000 and (b) 80% of the Fair Market Value to be determined shortly prior to the Drawdown Date, to assist the Borrower to finance or, as the case may be, refinance part of the Contract Price of the Vessel.
|
1
|
Definitions and Interpretation
|
|
"
Administration
"
has the meaning given to it in paragraph 1.1.3 of the ISM Code.
|
|
"
Annex VI
" means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).
|
|
"
Event of Default
" means any of the events or circumstances set out in Clause 13.1 (
Events of Default
).
|
|
(g)
|
any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);
|
|
(h)
|
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;
|
|
(i)
|
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and
|
|
(j)
|
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.
|
|
(b)
|
(if no Screen Rate is available for any Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) quoted to the Lender by prime banks acceptable to the Lender in the London interbank market,
|
|
(a)
|
an actual, constructive, arranged, agreed or compromised total loss of the Vessel; or
|
|
(b)
|
the requisition for title or compulsory acquisition of the Vessel by any government or other competent authority (other than by way of requisition for hire); or
|
|
(c)
|
the capture, seizure, arrest, detention, confiscation, hijacking, theft or condemnation of the Vessel by any government or by persons acting or purporting to act on behalf of any government or otherwise, unless the Vessel is released and returned to the possession of the Borrower
within sixty (60) days after the capture, seizure, arrest, detention, confiscation, hijacking, theft or condemnation in question.
|
|
1.2.1
|
words denoting the plural number include the singular and vice versa;
|
|
1.2.2
|
words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi-governmental bodies or authorities and vice versa;
|
|
1.2.3
|
references to Recitals, Clauses and Schedules are references to recitals, clauses and schedules to or of this Agreement;
|
|
1.2.4
|
references to this Agreement include the Recitals and the Schedules;
|
|
1.2.5
|
the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement;
|
|
1.2.6
|
references to any document (including, without limitation, to all or any of the Relevant Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time;
|
|
1.2.7
|
references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted;
|
|
1.2.8
|
references to the Lender include its successors, transferees and assignees;
|
|
1.2.9
|
a time of day (unless otherwise specified) is a reference to London time; and
|
|
1.2.10
|
words and expressions defined in the Master Agreement, unless the context otherwise requires, have the same meaning.
|
2
|
The Loan and its Purpose
|
|
2.1
|
Amount
Subject to the terms of this Agreement, the Lender agrees to make available to the Borrower a term loan in an aggregate amount not exceeding the Maximum Loan Amount.
|
|
2.2
|
Purpose
The Borrower shall apply the Loan for the purpose referred to in Recital (B).
|
|
2.3
|
Monitoring
The Lender shall not be bound to monitor or verify the application of any amount borrowed under this Agreement.
|
3
|
Conditions of Utilisation
|
|
3.1
|
Conditions precedent
The Borrower is not entitled to have the Loan advanced unless the Lender has received all of the documents and other evidence listed in Part I of Schedule 1 (
Conditions precedent
).
|
|
3.2
|
Further conditions precedent
The Lender will only be obliged to advance the Loan if on the date of the Drawdown Notice and on the proposed Drawdown Date:
|
|
3.2.1
|
no Default is continuing or would result from the advance of the Loan; and
|
|
3.2.2
|
the representations made by the Borrower under Clause 11 (
Representations
) are true in all material respects.
|
|
3.3
|
Conditions subsequent
The Borrower undertakes to deliver or to cause to be delivered to the Lender on, or as soon as practicable after, the Drawdown Date the additional documents and other evidence listed in Part II of Schedule 1 (
Conditions subsequent
).
|
|
3.4
|
No waiver
If the Lender in its sole discretion agrees to advance all or any part of the Loan to the Borrower before all of the documents and evidence required by Clause 3.1 (
Conditions precedent
)
have been delivered to or to the order of the Lender, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Lender no later than thirty (30) days after the Drawdown Date or such other date specified by the Lender.
|
|
3.5
|
Form and content
All documents and evidence delivered to the Lender under this Clause 3 shall:
|
|
3.5.2
|
if required by the Lender, be certified, notarised, legalised or attested in a manner acceptable to the Lender.
|
4
|
Advance
|
|
The Borrower may request the Loan to be advanced in one amount on any Business Day prior to the Availability Termination Date by delivering to the Lender a duly completed Drawdown Notice not more than ten (10) and not fewer than three (3) Business Days before the proposed Drawdown Date.
|
5
|
Repayment
|
|
5.1
|
Repayment of Loan
The Borrower agrees to repay the Loan to the Lender by twenty (20) consecutive quarterly instalments, the first nineteen (19) such instalments each in the sum of six hundred thousand Dollars ($600,000) and the twentieth and final such instalment in the sum of twenty eight million six hundred thousand Dollars ($28,600,000), the first instalment falling due on the date which is three calendar months after the Drawdown Date and subsequent instalments falling due at consecutive intervals of three calendar months thereafter and with the last instalment, together with any other amounts then outstanding under the Indebtedness, falling due on the Final Maturity Date.
|
|
5.2
|
Reduction of Repayment Instalments
If the aggregate amount advanced to the Borrower is less than $40,000,000, the amount of the Repayment Instalments shall be reduced pro rata.
|
|
5.3
|
Reborrowing
The Borrower may not reborrow any part of the Loan which is repaid or prepaid.
|
6
|
Prepayment
|
|
6.1
|
Illegality
If it becomes unlawful in any jurisdiction for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Loan:
|
|
6.1.1
|
the Lender shall promptly notify the Borrower of that event; and
|
|
6.1.2
|
the Borrower shall repay the Loan (to the extent already advanced) on the last day of the current Interest Period or, if earlier, the date specified by the Lender in the notice delivered to the Borrower (being no earlier than the last day of any applicable grace period permitted by law).
|
|
6.2
|
Voluntary prepayment of Loan
The Borrower may prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the Loan by a minimum amount of $1,000,000 or any integral multiple thereof) subject as follows:
|
|
6.2.1
|
it gives the Lender not less than five (5) Business Days' (or such shorter period as the Lender may agree) prior notice; and
|
|
6.2.2
|
any prepayment under this Clause 6.2 shall satisfy the obligations under Clause 5.1 (
Repayment of Loan
) pro rata.
|
|
6.3
|
Mandatory prepayment on sale or Total Loss
If the Vessel is sold by the Borrower or becomes a Total Loss, the Borrower shall, simultaneously with any such sale and transfer of title to the prospective buyer or within one hundred and twenty (120) days after any such Total Loss, prepay the whole of the Indebtedness and any part of the Loan not drawn down shall be cancelled.
|
|
6.4
|
Restrictions
Any notice of prepayment given under this Clause 6 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment is to be made and the amount of that prepayment.
|
7
|
Interest
|
|
7.1
|
Interest Periods
The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of three (3) or six (6) months' duration, as selected by the Borrower by written notice to the Lender not later than 11.00 a.m. on the third Business Day before the beginning of the Interest Period in question, or such other duration as may be agreed by the Lender.
|
|
7.2
|
Beginning and end of Interest Periods
Each Interest Period shall start on the Drawdown Date or (if the Loan is already made) on the last day of the preceding Interest Period and end on the date which numerically corresponds to the Drawdown Date or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month and no Interest Period may exceed the Final Maturity Date.
|
|
7.3
|
Interest Periods to meet Repayment Dates
If an Interest Period will expire after the next Repayment Date, there shall be a separate Interest Period for a part of the Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.
|
|
7.4
|
Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
|
|
7.5
|
Interest rate
During each Interest Period interest shall accrue on the Loan at the rate determined by the Lender to be the aggregate of (a) the Margin, (b) LIBOR and (c) the Mandatory Cost, if any.
|
|
7.6
|
Failure to select Interest Period
If the Borrower at any time fails to select or agree an Interest Period in accordance with Clause 7.1 (
Interest Periods
), the interest rate applicable shall be the rate determined by the Lender in accordance with Clause 7.5 (
Interest rate
)
for an Interest Period of three months or such other period as the Lender may select.
|
|
7.7
|
Accrual and payment of interest
Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice differs, in accordance with the prevailing market practice) and shall be paid by the Borrower to the Lender on the last day of each Interest Period and, if the Interest Period is longer than three months, on the dates falling at three monthly intervals after the first day of that Interest Period.
|
|
7.8
|
Default interest
If the Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent (2%) higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan in the currency of the overdue amount for successive Interest Periods, each selected by the Lender (acting reasonably). Any interest accruing under this Clause 7.8 shall be immediately payable by the Borrower on demand by the Lender.
|
|
7.9
|
Alternative interest rate
If either (a) the applicable Screen Rate is not available for any Interest Period and no rates are quoted to the Lender to determine LIBOR for that Interest Period or (b) the Lender determines that the cost to it of obtaining matching deposits for any Interest Period would be in excess of LIBOR and that determination is made no later than close of business in London on the day LIBOR is determined for that Interest Period:
|
|
7.9.1
|
the Lender shall give notice to the Borrower of the occurrence of such event; and
|
|
7.9.2
|
the rate of interest on the Loan for that Interest Period shall be the rate per annum which is the sum of:
|
|
(a)
|
the Margin; and
|
|
(b)
|
the rate which expresses as a percentage rate per annum the cost to the Lender of funding the Loan from whatever source it may reasonably select; and
|
|
(c)
|
the Mandatory Cost, if any,
|
|
7.9.3
|
the Lender will negotiate with the Borrower in good faith with a view to modifying this Agreement to provide a substitute basis for determining the rate of interest;
|
|
7.9.4
|
any substitute basis agreed pursuant to Clause 7.9.3 shall be binding on the parties to this Agreement; and
|
|
7.9.5
|
if, within thirty (30) days of the giving of the notice referred to in Clause 7.9.1, the Borrower and the Lender fail to agree in writing on a substitute basis for determining the rate of interest, the Borrower will immediately prepay the Loan, together with any Break Costs.
|
|
7.10
|
Determinations conclusive
The Lender shall promptly notify the Borrower of the determination of a rate of interest under this Clause 7 and each such determination shall (save in the case of manifest error) be final and conclusive.
|
8
|
Indemnities
|
|
8.1
|
Transaction expenses
The Borrower will, within fourteen (14) days of the Lender's written demand, pay the Lender the amount of all costs and expenses (including legal fees and Value Added Tax or any similar or replacement tax if applicable) incurred by the Lender in connection with:
|
|
8.1.1
|
the negotiation, preparation, printing, execution and registration of the Finance Documents (whether or not any Finance Document is actually executed or registered and whether or not all or any part of the Loan is advanced);
|
|
8.1.2
|
any amendment, addendum or supplement to any Finance Document (whether or not completed) (except from those pursuant to Clause 14); and
|
|
8.1.3
|
any other document which may at any time be required by the Lender to give effect to any Finance Document or which the Lender is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of the Vessel).
|
|
8.2
|
Funding costs
The Borrower shall indemnify the Lender on the Lender's written demand against all losses and costs incurred or sustained by the Lender if, for any reason, the Loan is not advanced to the Borrower after the relevant Drawdown Notice has been given to the Lender, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by the Lender).
|
|
8.3
|
Break Costs
The Borrower shall indemnify the Lender on the Lender's written demand against all costs, losses, premiums or penalties incurred by the Lender as a result of its receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 6 (
Prepayment
)
or otherwise) on a day other than the last day of an Interest Period for the Loan or relevant part of the Loan, or any other payment under or in relation to the Finance Documents on a day other than the due date for payment of the sum in question, including (without limitation) any losses or costs incurred in liquidating or re-employing deposits from third parties acquired to effect or maintain all or any part of the Loan, and any liabilities, expenses or losses incurred by the Lender in terminating or reversing, or otherwise in connection with, any Transaction or any other interest rate and/or currency swap, transaction or arrangement entered into by the Lender to hedge any exposure arising under this Agreement, or in terminating or reversing, or otherwise in connection with, any open position arising under this Agreement or the Master Agreement.
|
|
8.4
|
Currency indemnity
In the event of the Lender receiving or recovering any amount payable under a Finance Document in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrower shall, on the Lender's written demand, pay to the Lender such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Lender as a separate debt under this Agreement.
|
|
8.5
|
Increased costs (subject to Clause
8.6
(
Exceptions to increased costs
))
If, by reason of the introduction of any law, or any change in any law, or any change in the interpretation or administration of any law, or compliance with any request or requirement from any central bank or any fiscal, monetary or other authority occurring after the date of this Agreement (including the implementation or application of or compliance with the Basel II Accord or any other Basel II Regulation (whether such implementation, application or compliance is by any central bank or any fiscal, monetary or other authority, the Lender or the holding company of the Lender)):
|
|
8.5.1
|
the Lender (or the holding company of the Lender) shall be subject to any Tax with respect to payment of all or any part of the Indebtedness (other than Tax on overall net income); or
|
|
8.5.2
|
the basis of Taxation of payments to the Lender in respect of all or any part of the Indebtedness shall be changed; or
|
|
8.5.3
|
any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of the Lender; or
|
|
8.5.4
|
the manner in which the Lender allocates capital resources to its obligations under this Agreement and/or the Master Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which the Lender is required or requested to maintain shall be affected; or
|
|
8.5.5
|
there is imposed on the Lender (or on the holding company of the Lender) any other condition in relation to the Indebtedness or the Finance Documents;
|
|
8.6
|
Exceptions to increased costs
Clause 8.5 (
Increased costs
)
does not apply to the extent any additional cost or reduced return referred to in that Clause is:
|
|
8.6.1
|
compensated for by a payment made under Clause 8.10 (
Taxes
); or
|
|
8.6.2
|
compensated for by a payment made under Clause 16.3 (
Grossing-up
); or
|
|
8.6.3
|
compensated for by the payment of the Mandatory Cost; or
|
|
8.6.4
|
attributable to the wilful breach by the Lender (or the holding company of the Lender) of any law or regulation.
|
|
8.7
|
Events of Default
The Borrower shall indemnify the Lender from time to time on the Lender's written demand against all losses, costs and liabilities incurred or sustained by the Lender as a consequence of any Event of Default.
|
|
8.8
|
Enforcement costs
The Borrower shall pay to the Lender on the Lender's written demand the amount of all costs and expenses (including legal fees) incurred by the Lender in connection with the enforcement of, or the preservation of any rights under, any Finance Document including (without limitation) any losses, costs and expenses which the Lender may from time to time sustain, incur or become liable for by reason of the Lender being mortgagee of the Vessel and/or a lender to the Borrower, or by reason of the Lender being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Vessel.
|
|
8.9
|
Other costs
The Borrower shall pay to the Lender on the Lender's written demand the amount of all sums which the Lender may pay or become actually or contingently liable for on account of the Borrower in connection with the Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which the Lender may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by the Lender in connection with the maintenance or repair of the Vessel or in discharging any lien, bond or other claim relating in any way to the Vessel, and any sums which the Lender may pay or guarantees which it may give to procure the release of the Vessel from arrest or detention.
|
|
8.10
|
Taxes
The Borrower shall pay all Taxes to which all or any part of the Indebtedness or any Finance Document may be at any time subject (other than Tax on the Lender's overall net income) and shall indemnify the Lender on the Lender's written demand against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.
|
|
8.11
|
Cancellation
The Borrower may cancel the Loan and prepay to the Lender the full amount of the Indebtedness, if the Lender makes a claim under Clauses 8.5 or 8.10.
|
9
|
Fees
|
|
9.1
|
Commitment fee
The Borrower shall pay to the Lender a fee computed at the rate of zero point fifty per cent (0.50%) per annum on the undrawn amount of the Loan from time to time from the date of this Agreement until the earlier of the Drawdown Date and the Availability Termination Date or the date on which the Borrower cancels the whole of the undrawn amount of the Loan by giving to the Lender relevant notice in writing to that effect. The accrued commitment fee is payable in arrears on the last day of each successive period of three months from the date of this Agreement and on the earlier of the Drawdown Date and the Availability Termination Date.
|
|
9.2
|
Arrangement fee
The Borrower shall pay to the Lender an arrangement fee in the amount of three hundred thousand Dollars ($300,000) on the date of this Agreement.
|
10
|
Security and Application of Moneys
|
|
10.1
|
Security
Documents
As security for the payment of the Indebtedness, the Borrower shall execute and deliver to the Lender and/or the Swap Provider or cause to be executed and delivered to the Lender and/or the Swap Provider the following documents in such forms and containing such terms and conditions as the Lender and/or the Swap Provider shall require:
|
|
10.1.1
|
a first preferred mortgage over the Vessel;
|
|
10.1.2
|
a first priority deed or deeds of assignment of the Insurances, Earnings and Requisition Compensation of the Vessel;
|
|
10.1.3
|
a guarantee and indemnity from the Guarantor; and
|
|
10.1.4
|
a first priority deed of charge over the Master Agreement Benefits.
|
|
10.2
|
Earnings Account
The Borrower shall maintain the Earnings Account with the Lender for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.
|
|
10.3
|
Earnings
The Borrower shall procure that all Earnings and any Requisition Compensation are credited to the Earnings Account.
|
|
10.4
|
Application of Earnings Account
The Borrower shall procure that there is transferred from the Earnings Account to the Lender:
|
|
10.4.1
|
on each Repayment Date, the amount of the Repayment Instalment then due; and
|
|
10.4.2
|
on each Interest Payment Date, the amount of interest then due,
|
|
10.5
|
Borrower's obligations not affected
If for any reason the amount standing to the credit of the Earnings Account is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrower's obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.
|
|
10.6
|
Release of surplus
Any amount remaining to the credit of the Earnings Account following the application of the Earnings Account required by Clause 10.4 (
Application of Earnings Account
)
shall (unless a Default shall have occurred and be continuing) be released to or to the order of the Borrower.
|
|
10.7
|
Relocation of Earnings Account
At any time following the occurrence and during the continuation of a Default, the Lender may without the consent of the Borrower relocate the Earnings Account to any other branch of the Lender, without prejudice to the continued application of this Clause 10 and the rights of the Lender under the Finance Documents.
|
|
10.8
|
Application after acceleration
From and after the giving of notice to the Borrower by the Lender under Clause 13.2 (
Acceleration
), the Borrower shall procure that all sums from time to time standing to the credit of the Earnings Account are immediately transferred to the Lender for application in accordance with Clause 10.9 (
General application of moneys
) and the Borrower irrevocably authorises the Lender to make those transfers.
|
|
10.9
|
General application of moneys
The Borrower, subject to Clause 10.10 (
Application of moneys on sale or Total Loss
), irrevocably authorises the Lender to apply all sums which the Lender may receive:
|
|
10.9.1
|
pursuant to a sale or other disposition of the Vessel or any right, title or interest in the Vessel; or
|
|
10.9.2
|
by way of payment of any sum in respect of the Insurances, Earnings or Requisition Compensation; or
|
|
10.9.3
|
by way of transfer of any sum from the Earning Account; or
|
|
10.9.4
|
otherwise arising under or in connection with any Security Document,
|
|
10.10
|
Application of moneys on sale or Total Loss
The
Borrower irrevocably authorises the Lender to apply all sums which the Lender may receive pursuant to a sale by the Borrower or a Total Loss in or towards satisfaction of the prepayment due and payable under Clause 6.3 (
Mandatory prepayment on sale or Total Loss
) by virtue of that sale or Total Loss, but the Borrower's obligation to make that prepayment shall not be affected if those sums are insufficient to satisfy that obligation.
|
|
10.11
|
Additional security
If at any time the aggregate of the Fair Market Value of the Vessel and the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers appointed by the Lender (in the case of other charged assets), and determined by the Lender in its discretion (in all other cases)) for the time being provided to the Lender under this Clause 10.11 is less than one hundred and twenty five per cent (125%) of the aggregate of the
amount of the Loan then outstanding and the amount certified by the Lender to be the amount which would be payable by the Borrower to the Lender under the Master Agreement if an Early Termination Date were to occur at that time, the Borrower shall, within thirty (30) days of the Lender's request, at the Borrower's option:
|
|
10.11.1
|
pay to the Lender or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Lender and the Swap Provider as additional security for the payment of the Indebtedness; or
|
|
10.11.2
|
give to the Lender other additional security in amount and form acceptable to the Lender in its discretion; or
|
|
10.11.3
|
prepay the Loan in the amount of the shortfall.
|
|
10.12
|
Cost of valuations
For the purposes of Clause 10.12, the cost of one set of valuations per annum shall be borne by the Borrower, unless there is an Event of Default which is continuing, in which case the cost of all valuations obtained from time to time upon the request of the Lender shall be borne by the Borrower.
|
11
|
Representations
|
|
11.1
|
Representations
The Borrower makes the representations and warranties set out in this Clause 11.1 to the Lender on the date of this Agreement.
|
|
11.1.1
|
Status
Each Security Party (which is not an individual) is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation and has the power to own its assets and carry on its business as it is being conducted.
|
|
11.1.2
|
Binding obligations
The obligations expressed to be assumed by each Security Party in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations.
|
|
11.1.3
|
Non-conflict with other obligations
The entry into and performance by each Security Party of, and the transactions contemplated by, the Finance Documents do not conflict with:
|
|
(a)
|
any law or regulation applicable to that Security Party;
|
|
(b)
|
the constitutional documents of that Security Party; or
|
|
(c)
|
any document binding on that Security Party or any of its assets,
|
|
and in borrowing the Loan, the Borrower is acting for its own account.
|
|
11.1.4
|
Power and authority
Each Security Party has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
|
|
11.1.5
|
Validity and admissibility in evidence
All consents, licences, approvals, authorisations, filings and registrations required or desirable:
|
|
(a)
|
to enable each Security Party lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party or to enable the Lender to enforce and exercise all its rights under the Finance Documents; and
|
|
(b)
|
to make the Finance Documents to which any Security Party is a party admissible in evidence in its jurisdiction of incorporation,
|
|
11.1.6
|
Governing law and enforcement
The choice of English law as the governing law of any Finance Document expressed to be governed by English law will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party, and any judgment obtained in England in relation to any such Finance Document will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party.
|
|
11.1.7
|
Deduction of Tax
No Security Party is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document.
|
|
11.1.8
|
No filing or stamp taxes
Under the law of jurisdiction of incorporation of each relevant Security Party it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents.
|
|
11.1.9
|
No default
No Event of Default is continuing or might reasonably be expected to result from the advance of the Loan.
|
|
11.1.10
|
No misleading information
Any factual information provided by any Security Party to the Lender was true and accurate in all material respects as at the date it was provided.
|
|
11.1.11
|
Pari passu ranking
The payment obligations of each Security Party under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
|
|
11.1.12
|
No proceedings pending or threatened
No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have been started or (to the best of the Borrower's knowledge threatened) which, if adversely determined, might reasonably be expected to have a materially adverse effect on the business, assets, financial condition or credit worthiness of any Security Party.
|
|
11.1.13
|
Disclosure of material facts
The Borrower is not aware of any material facts or circumstances which have not been disclosed to the Lender and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower.
|
|
11.1.14
|
No established place of business in the UK or US
No Security Party has an established place of business in the United Kingdom or the United States of America.
|
|
11.1.15
|
Completeness of Relevant Documents
The copies of any Relevant Documents provided or to be provided by the Borrower to the Lender in accordance with Clause 3 (
Conditions of Utilisation
)
are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Lender.
|
|
11.2
|
Repetition
Each representation and warranty in Clause 11.1 (
Representations
) is deemed to be repeated by the Borrower by reference to the facts and circumstances then existing on the date of the Drawdown Notice and the first day of each Interest Period.
|
12
|
Undertakings and Covenants
|
|
12.1.1
|
Financial statements
The Borrower shall procure that the Guarantor shall supply to the Lender as soon as the same become available, but in any event within 120 days after the end of each of its financial years, the Guarantor's annual audited consolidated financial statements for that financial year, together with a Compliance Certificate, signed by two directors of the Guarantor, setting out (in reasonable detail) computations as to compliance with Clause 12.2 (
Financial covenants
)
as at the date as at which those financial statements were drawn up.
|
|
12.1.2
|
Requirements as to financial statements
Each set of financial statements delivered by the Borrower or the Guarantor under Clause 12.1.1 (
Financial statements
):
|
|
(a)
|
shall be certified by a director of the Guarantor as fairly representing its financial condition as at the date as at which those financial statements were drawn up; and
|
|
(b)
|
shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Borrower notifies the Lender that there has been a change in GAAP, the accounting practices or reference periods and the Guarantor's auditors deliver to the Lender:
|
|
(i)
|
a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and
|
|
(ii)
|
sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to make an accurate comparison between the financial position indicated in those financial statements and that indicated in the Original Financial Statements.
|
|
12.1.3
|
Interim financial statements
The Borrower shall procure that the Guarantor shall supply to the Lender as soon as the same become available, but in any event within 90 days after the end of each quarter during each of its financial years, the Guarantor's unaudited quarterly consolidated financial statements for that quarter.
|
|
12.1.4
|
Information: miscellaneous
The Borrower shall supply to the Lender:
|
|
(a)
|
all documents dispatched by the Borrower to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;
|
|
(b)
|
promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which might, if adversely determined, have a materially adverse effect on the business, assets, financial condition or credit worthiness of that Security Party; and
|
|
(c)
|
promptly, such further information regarding the financial condition, business and operations of any Security Party as the Lender may reasonably request including, without limitation, cash flow analyses and details of the operating costs of the Vessel.
|
|
12.1.5
|
Notification of default
|
|
(a)
|
The Borrower shall notify the Lender of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.
|
|
(b)
|
Promptly upon a request by the Lender, the Borrower shall supply to the Lender a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
|
|
(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 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,
|
|
12.2
|
Financial covenants
|
|
12.2.1
|
The Borrower shall maintain from the Drawdown Date throughout the Facility Period minimum Cash of not less than $400,000.
|
|
12.2.2
|
The Borrower shall procure that the Guarantor shall maintain the following financial ratios on a consolidated basis throughout the Facility Period:
|
|
(a)
|
Adjusted Net Worth shall not be less than $150,000,000;
|
|
(b)
|
Adjusted Net Worth shall exceed 25% of the Total Assets;
|
|
(c)
|
Average Cash Balance shall not be less than $10,000,000.
|
|
12.2.3
|
In the event that after the date of this Agreement, the Guarantor enters into any financial agreement in which it agrees to any further financial covenants or any different covenant ratios in relation to those contained in Clause 12.2.2, the Lender reserves the right to demand that these financial covenants shall become part of this Agreement.
|
|
"
Accounting Information
" means the quarterly consolidated financial statements and/or the annual consolidated financial statements to be provided by the Guarantor to the Lender in accordance with Clauses 12.1.1 and 12.1.3.
|
|
"
Accounting Period
" means each consecutive period of approximately three months falling during the Facility Period (ending on the last day in March, June, September and December of each year) for which quarterly Accounting Information is required to be delivered pursuant to Clause 12.1.3.
|
|
"
Adjusted Net Worth
"
means, in respect of an Accounting Period, the amount of Total Assets less Consolidated Debt.
|
|
"
Average Cash Balance
" means the aggregate amount of Cash on each day during the immediately preceding 12 months period divided by the same number of days.
|
|
"
Cash
" means cash in hand which is not subject to any charge back or other Encumbrance and to which the Borrower or the Guarantor (as the context requires) has free, immediate and direct access.
|
|
"
Consolidated Debt
" means, in respect of an Accounting Period, the aggregate amount of Debt owing by members of the Group (other than any such Debt owing by any member of the Group to another member of the Group) as stated in the then most recent Accounting Information.
|
|
"
Current Assets
" means, in respect of each Accounting Period, the aggregate of the cash and marketable securities, trade and other receivables from persons other than a member of the Group realisable within one year, inventories and prepaid expenses which are to be charged to income within one year less any doubtful debts and any discounts or allowances given as stated in the then most recent Accounting Information.
|
|
"
Debt
" means the aggregate (as of the date of calculation) of all obligations of the Group then outstanding for the payment or repayment of money as stated in the Accounting Information then most recently required to be delivered pursuant to Clause 12.1.1 or 12.1.3 including, without limitation:
|
|
(a)
|
any amounts payable by the Group under leases or similar arrangements over their respective periods;
|
|
(b)
|
any credit to the Group from a supplier of goods or under any instalment purchase or other similar arrangement;
|
|
(c)
|
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Group;
|
|
(d)
|
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or, under GAAP, should be recorded in the notes to the Group's financial statements; and
|
|
(e)
|
any deferred tax liabilities.
|
|
"Fleet Vessels
" means any vessel directly or indirectly owned by members of the Group.
|
|
"
Tangible Fixed Assets
" means, in respect of an Accounting Period, the value (less depreciation computed in accordance with GAAP) on a consolidated basis of all the assets of the Group which would, in accordance with GAAP, be classified as tangible fixed assets, namely items held for ongoing use to the business of the Group including, without limitation, any land, plant, machinery and vessels as such value is stated in the then most recent Accounting Information Provided that, for the purposes of determining compliance with the covenants set forth in Clause 12.2.2, the value of such tangible fixed assets attributable to the Fleet Vessels shall be equal to the aggregate Fair Market Value of such Fleet Vessels rather than the value of such Fleet Vessels as stated in the then most recent Accounting Information.
|
|
"
Total Assets
" means, in respect of an Accounting Period, the aggregate of Current Assets and Tangible Fixed Assets.
|
|
12.2.4
|
General undertakings
|
|
12.2.5
|
Authorisations
The Borrower shall promptly:
|
|
(a)
|
obtain, comply with and do all that is necessary to maintain in full force and effect; and
|
|
(b)
|
supply certified copies to the Lender of,
|
|
12.2.6
|
Compliance with laws
The Borrower shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.
|
|
12.2.7
|
Conduct of business
The Borrower shall carry on and conduct its business in
a proper and efficient manner, file all requisite tax returns and pay all tax which becomes due and payable (except where contested in good faith).
|
|
12.2.8
|
Evidence of good standing
The Borrower will from time to time if requested by the Lender provide the Lender with evidence in form and substance satisfactory to the Lender that the Security Parties (other than the Guarantor for as long as it remains listed) and all corporate shareholders of any Security Party remain in good standing.
|
|
12.2.9
|
Negative pledge and no disposals
The Borrower shall not without the prior written consent of the Lender create nor permit to subsist any Encumbrance or other third party rights over any of its present or future assets or undertaking nor dispose of any of those assets or of all or part of that undertaking.
|
|
12.2.10
|
Merger
The Borrower shall not enter into any amalgamation, demerger, merger or any form of corporate reconstruction, reorganisation or consolidation.
|
|
12.2.11
|
Change of business
The Borrower shall not make any substantial change to the general nature of its business from that carried on at the date of this Agreement.
|
|
12.2.12
|
No other business
The Borrower shall not engage in any business other than the ownership, operation, chartering and management of the Vessel.
|
|
12.2.13
|
No place of business in UK or US
The Borrower shall not have an established place of business in the United Kingdom or the United States of America at any time during the Facility Period.
|
|
12.2.14
|
No borrowings
The Borrower shall not borrow any money (except for the Loan and unsecured Financial Indebtedness subordinated to the Loan) nor incur any obligations under leases.
|
|
12.2.15
|
No substantial liabilities
Except in the ordinary course of business and/or as may be required for the operation of the Vessel, the Borrower shall not incur any liability to any third party which is in the Lender's opinion of a substantial nature.
|
|
12.2.16
|
No loans or other financial commitments
The Borrower shall not (a) make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person nor provide any other 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, or (b) enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arm's length on normal commercial terms.
|
|
12.2.17
|
No dividends
The Borrower shall not pay any dividends or make any other distributions or effect any form of redemption, purchase or return of share capital which would result in a breach of the financial covenants set out in Clause 12.2 or if an Event of Default has occurred and is continuing, unremedied and unwaived.
|
|
12.2.18
|
Inspection of records
The Borrower will permit the inspection of its financial records and accounts from time to time by the Lender or its nominee.
|
|
12.2.19
|
No change in Relevant Documents
The Borrower shall procure that, without the prior written consent of the Lender such consent not to be unreasonably withheld or unduly delayed, there shall be no termination of, alteration to any (in the Lender's opinion) material term of, or waiver of any (in the Lender's opinion) material term of, any of the Relevant Documents which are not Finance Documents.
|
|
12.2.20
|
No dealings with Master Agreement
The Borrower shall not assign, novate or encumber or in any other way transfer any of its rights or obligations under the Master Agreement.
|
|
12.2.21
|
No change in capital
The Borrower shall not reduce its issued share capital or issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital other than pursuant to an IPO.
|
|
12.2.22
|
No securities
The Borrower shall not acquire any shares or other securities other than US or UK Treasury bills, certificates of deposit issued by major North American or European banks and shares in newly established companies, or enter into any transaction in a derivative other than under the Master Agreement.
|
|
12.2.23
|
Directors
The Borrower shall not without the prior written consent of the Lender, permit a majority of the seats (other than vacant seats) on the board of directors of the Borrower to be held by persons other than persons who are either (a) nominated by the Borrower's then current board of directors
or (b) appointed by persons as so nominated in accordance with (a)
above.
|
|
12.2.24
|
Shareholders
The Borrower shall procure that Diana Shipping Inc. of the Marshall Islands remains 100% shareholder of the Borrower.
|
|
12.2.25
|
Subordination
The
Borrower shall subordinate in priority of payment to the Indebtedness any loans made to it by its shareholders or affiliated companies of the Borrower or the Guarantor and any other present or future indebtedness of the Borrower.
|
|
12.2.26
|
No sharing agreement
The Borrower shall not without the prior written consent of the Lender enter into any agreement or arrangement for sharing or pooling its Earnings.
|
|
12.3
|
Vessel undertakings
|
|
12.3.1
|
No sale of Vessel
The Borrower shall not sell or otherwise dispose of the Vessel or any shares in the Vessel nor agree to do so without the prior written consent of the Lender.
|
|
12.3.2
|
No chartering after Event of Default
Following the occurrence and during the continuation of an Event of Default the Borrower shall not without the prior written consent of the Lender let the Vessel on charter or renew or extend any charter or other contract of employment of the Vessel (nor agree to do so).
|
|
12.3.3
|
No change in management
The Borrower shall procure that, without the prior written consent of the Lender, there shall be no termination of, alteration to any (in the Lender's opinion) material term, or waiver of any (in the Lender's opinion) material term of, the Management Agreement and the Borrower shall not without the prior written consent of the Lender permit the Managers to sub-contract or delegate the commercial or technical management of the Vessel to any third party.
|
|
12.3.4
|
Registration of Vessel
The Borrower undertakes to maintain the registration of the Vessel under the flag stated in Recital (A) for the duration of the Facility Period unless the Lender agrees otherwise in writing.
|
|
12.3.5
|
Evidence of current COFR
The Borrower will, if and for so long as the Vessel trades in the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990), obtain and retain a valid Certificate of Financial Responsibility for the Vessel under that Act, and will comply strictly with the requirements of that Act.
|
|
12.3.6
|
ISM Code compliance
The Borrower will:
|
|
(a)
|
procure that the Vessel remains for the duration of the Facility Period subject to a SMS;
|
|
(b)
|
maintain a valid and current SMC for the Vessel throughout the Facility Period;
|
|
(c)
|
procure that the ISM Company maintains a valid and current DOC throughout the Facility Period; and
|
|
(d)
|
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the SMC of the Vessel or of the DOC of the ISM Company.
|
|
12.3.7
|
ISPS Code compliance
The Borrower will:
|
|
(a)
|
for the duration of the Facility Period comply with the ISPS Code in relation to the Vessel and procure that the Vessel and the ISPS Company comply with the ISPS Code;
|
|
(b)
|
maintain a valid and current ISSC for the Vessel throughout the Facility Period; and
|
|
(c)
|
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
|
|
12.3.8
|
Annex VI compliance
The Borrower will for the duration of the Facility Period comply with Annex VI in relation to the Vessel and procure that the Vessel's master and crew are familiar with, and that the Vessel complies with, Annex VI.
|
|
12.3.9
|
No bareboat charter
The Borrower shall not without the prior written consent of the Lender let the Vessel on any bareboat charter.
|
|
12.3.10
|
Physical inspection
The Lender shall be entitled to physically inspect the Vessel, and the Borrower shall bear the cost of such inspection not more than once every calendar year, provided that the Vessel is found to be in satisfactory condition, according to the reasonable opinion of the Lender. If the Vessel is not found to be in satisfactory condition, according to the reasonable opinion of the Lender, or there is an Event of Default which is continuing, then the Borrower shall bear the cost of all inspections of the Vessel at any time.
|
|
12.3.11
|
International laws
The Borrower shall at all times comply with all national and international applicable laws and conventions relating to it or to the Vessel, including without limitation the International Convention for the Safety of Life at Sea 1974 (SOLAS) and the International Convention for the Prevention of Pollution from Ships 1973, as modified by the Protocol of 1978 relating thereto and as further amended (MARPOL), and shall procure that there are on board the Vessel valid certificates showing compliance therewith.
|
|
12.3.12
|
Class
The Vessel shall be classed to the highest notation with a classification society acceptable to the Lender without any overdue recommendations and/or qualifications and/or requirements and the Borrower shall not without the prior written consent of the Lender change the class of the Vessel.
|
|
12.3.13
|
Trading
The Borrower undertakes to use the Vessel only for civil merchant trading, for the duration of the Facility Period and for as long as any part of the Indebtedness remains outstanding.
|
|
12.4
|
Insurances
|
|
12.4.1
|
the Vessel remains insured against marine risks and war risks on an agreed value basis for an amount which is the greater from time to time of (a) her full market value and (b) an amount which equals one hundred and twenty per cent (120%) of the amount of the Loan then outstanding; and
|
|
12.4.2
|
the Vessel remains entered in a protection and indemnity association in both protection and indemnity classes, or remains otherwise insured against protection and indemnity risks and liabilities (including, without limitation, protection and indemnity war risks); and
|
|
12.4.3
|
the Vessel remains insured against oil pollution caused by the Vessel for such amounts as the Lender may from time to time approve unless that risk is covered to the satisfaction of the Lender by the Vessel's protection and indemnity entry or insurance.
|
|
12.4.4
|
The Lender agrees that, if and for so long as the Vessel may be laid up with the approval of the Lender, the Borrower may at its own expense take out port risk insurance on the Vessel in place of hull and machinery insurance.
|
|
12.4.5
|
The Borrower undertakes to place the Obligatory Insurances in such markets, in such currency, on such terms and conditions, and with such brokers, underwriters and associations as the Lender shall have previously approved in writing. The Borrower shall not alter the terms of any of the Obligatory Insurances without the prior written consent of the Lender, and will supply the Lender from time to time on request with such information as the Lender may in its discretion require with regard to the Obligatory Insurances and the brokers, underwriters or associations through or with which the Obligatory Insurances are placed. The Borrower shall reimburse the Lender on demand for all costs and expenses incurred by the Lender in obtaining from time to time a report on the adequacy of the Obligatory Insurances from an insurance adviser instructed by the Lender.
|
|
12.4.6
|
The Borrower undertakes duly and punctually to pay all premiums, calls and contributions, and all other sums at any time payable in connection with the Obligatory Insurances, and, at its own expense, to arrange and provide any guarantees from time to time required by any protection and indemnity or war risks association. From time to time at the Lender's request, the Borrower will provide the Lender with evidence satisfactory to the Lender that such premiums, calls, contributions and other sums have been duly and punctually paid; that any such guarantees have been duly given; and that all declarations and notices required by the terms of any of the Obligatory Insurances to be made or given by or on behalf of the Borrower to brokers, underwriters or associations have been duly and punctually made or given.
|
|
12.4.7
|
The Borrower will comply in all respects with all terms and conditions of the Obligatory Insurances and will make all such declarations to brokers, underwriters and associations as may be required to enable the Vessel to operate in accordance with the terms and conditions of the Obligatory Insurances. The Borrower will not do, nor permit to be done, any act, nor make, nor permit to be made, any omission, as a result of which any of the Obligatory Insurances may become liable to be suspended, cancelled or avoided, or may become unenforceable, or as a result of which any sums payable under or in connection with any of the Obligatory Insurances may be reduced or become liable to be repaid or rescinded in whole or in part. In particular, but without limitation, the Borrower will not permit the Vessel to be employed other than in conformity with the Obligatory Insurances without first taking out additional insurance cover in respect of that employment in all respects to the satisfaction of the Lender, and the Borrower will promptly notify the Lender of any new requirement imposed by any broker, underwriter or association in relation to any of the Obligatory Insurances.
|
|
12.4.8
|
The Borrower will, no later than fourteen days (or, in the case of war risks, no later than seven days), before the expiry of any of the Obligatory Insurances renew them and shall immediately give the Lender such details of those renewals as the Lender may require.
|
|
12.4.9
|
The Lender shall be at liberty to take out Mortgagees Insurances in relation to the Vessel for such amounts (but not more than 110% of the Loan) and on such terms and conditions as the Lender may from time to time decide, and the Borrower shall from time to time on demand reimburse the Lender for all costs, premiums and expenses paid or incurred by the Borrower in connection with any Mortgagees Insurances.
|
|
12.4.10
|
The Borrower shall deliver to the Lender certified copies (and, if required by the Lender, the originals) of all policies, certificates of entry and other documents relating to the Insurances (including, without limitation, receipts for premiums, calls or contributions) and shall procure that letters of undertaking in such form as the Lender may approve shall be issued to the Lender by the brokers through which the Insurances are placed (or, in the case of protection and indemnity or war risks associations, by their managers). If the Vessel is at any time during the Facility Period insured under any form of fleet cover, the Borrower shall procure that those letters of undertaking contain confirmation that the brokers, underwriters or association (as the case may be) will not set off claims relating to the Vessel against premiums, calls or contributions in respect of any other vessel or other insurance, and that the insurance cover of the Vessel will not be cancelled by reason of non-payment of premiums, calls or contributions relating to any other vessel or other insurance. Failing receipt of those confirmations, the Borrower will instruct the brokers, underwriters or association concerned to issue a separate policy or certificate for the Vessel in the sole name of the Borrower or of the Borrower's brokers as agents for the Borrower.
|
|
12.4.11
|
The Borrower shall promptly provide the Lender with full information regarding any casualty or other accident or damage to the Vessel exceeding the Threshold Amount.
|
|
12.4.12
|
The Borrower agrees that, at any time after the occurrence and during the continuation of an Event of Default, the Lender shall be entitled to collect, sue for, recover and give a good discharge for all claims in respect of any of the Insurances; to pay collecting brokers the customary commission on all sums collected in respect of those claims; to compromise all such claims or refer them to arbitration or any other form of judicial or non-judicial determination; and otherwise to deal with such claims in such manner as the Lender shall in its discretion think fit.
|
|
12.4.13
|
Whether or not an Event of Default shall have occurred or be continuing, the proceeds of any claim under any of the Insurances in respect of a Total Loss shall be paid to the Lender and applied by the Lender in accordance with Clause 10.1.
|
|
12.4.14
|
The Borrower agrees that, at any time after the occurrence and during the continuation of an Event of Default, the Lender shall be entitled to require payment to itself, if the Borrower shall fail to reach agreement with any of the brokers, underwriters or associations with regard to any claim in respect of any of the Insurances (other than in respect of a Total Loss), or the restoration of the Vessel, according to good commercial maintenance practice, or for payment to third parties, within such time as the Lender may stipulate. In addition, in the event of any dispute arising between the Borrower and any broker, underwriter or association with respect to any obligation to make any payment to the Borrower or to the Lender under or in connection with any of the Insurances, or with respect to the amount of any such payment, the Lender shall be entitled to settle that dispute directly with the broker, underwriter or association concerned. Any such settlement shall be binding on the Borrower.
|
|
12.4.15
|
The Lender agrees that any amounts which may become due under any protection and indemnity entry or insurance shall be paid to the Borrower to reimburse the Borrower for, and in discharge of, the loss, damage or expense in respect of which they shall have become due, unless, at the time the amount in question becomes due, an Event of Default shall have occurred and be continuing, in which event the Lender shall be entitled to receive the amounts in question and to apply them either in reduction of the Indebtedness or, at the option of the Lender, to the discharge of the liability in respect of which they were paid.
|
|
12.4.16
|
The Borrower shall not settle, compromise or abandon any claim under or in connection with any of the Insurances (other than a claim of less than the Threshold Amount arising other than from a Total Loss) without the prior written consent of the Lender.
|
|
12.4.17
|
If the Borrower fails to effect or keep in force the Obligatory Insurances, the Lender may (but shall not be obliged to) effect and/or keep in force such insurances on the Vessel and such entries in protection and indemnity or war risks associations as the Lender in its discretion considers desirable, and the Lender may (but shall not be obliged to) pay any unpaid premiums, calls or contributions. The Borrower will reimburse the Lender from time to time on demand for all such premiums, calls or contributions paid by the Lender, together with interest at the default rate from the date of payment by the Lender until the date of reimbursement.
|
|
12.4.18
|
The Borrower shall comply strictly with the requirements of any legislation relating to pollution or protection of the environment which may from time to time be applicable to the Vessel in any jurisdiction in which the Vessel shall trade and in particular (if the Vessel is to trade in the United States of America and Exclusive Economic Zone (as defined in the Act)) the Borrower shall comply strictly with the requirements of the United States Oil Pollution Act 1990 (the "
Act
"). Before any such trade is commenced and during the entire period during which such trade is carried on, the Borrower shall:
|
|
(a)
|
pay any additional premiums required to maintain protection and indemnity cover for oil pollution up to the limit available to the Borrower for the Vessel in the market; and
|
|
(b)
|
make all such quarterly or other voyage declarations as may from time to time be required by the Vessel's protection and indemnity association in order to maintain such cover; and
|
|
(c)
|
submit the Vessel to such additional periodic, classification, structural or other surveys which may be required by the Vessel's protection and indemnity insurers to maintain cover for such trade and at the Lender's request deliver to the Lender copies of reports made in respect of such surveys; and
|
|
(d)
|
implement any recommendations contained in the reports issued following the surveys referred to in Clause 12.4.18(c) within the relevant time limits, and provide evidence satisfactory to the Lender that the protection and indemnity insurers are satisfied that this has been done; and
|
|
(e)
|
in addition to the foregoing (if such trade is in the United States of America and Exclusive Economic Zone):
|
(aa) |
obtain and retain a certificate of financial responsibility under the Act in form and substance satisfactory to the United States Coast Guard; and
|
(bb) |
procure that the protection and indemnity insurances do not contain a US Trading Exclusion Clause or any other analogous provision; and
|
(cc) | comply strictly with any operational or structural regulations issued from time to time by any relevant authorities under the Act so that at all times the Vessel falls within the provisions which limit strict liability under the Act for oil pollution. |
13
|
Events of Default
|
|
13.1
|
Events of Default
Each of the events or circumstances set out in this Clause 13.1 is an Event of Default.
|
|
13.1.1
|
Non-payment
The Borrower does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
|
|
(a)
|
its failure to pay is caused by manifest administrative or technical error; and
|
|
13.1.2
|
Other obligations
A Security Party or any other person (except the Lender) does not comply with any provision of any of the Relevant Documents (other than the Building Contract) to which that Security Party or person is a party (other than as referred to in Clause 13.1.1 (
Non-payment
)).
|
|
13.1.3
|
Misrepresentation
Any representation, warranty or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be repeated.
|
|
13.1.4
|
Cross default
Any Financial Indebtedness of the Borrower in excess of an aggregate amount of $500,000 or any Financial Indebtedness of any other Security Party or the Group in excess of an aggregate amount of $10,000,000:
|
|
(a)
|
is not paid when due or within any originally applicable grace period; or
|
|
(b)
|
is declared to be, or otherwise becomes, due and payable before its specified maturity as a result of an event of default (however described); or
|
|
(c)
|
is capable of being declared by a creditor to be due and payable before its specified maturity as a result of such an event.
|
|
13.1.5
|
Insolvency
|
|
(a)
|
A Security Party or a member of the Group is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Financial Indebtedness.
|
|
(b)
|
The value of the assets of a Security Party or the Group on a consolidated basis is less than its liabilities (taking into account contingent and prospective liabilities).
|
|
(c)
|
A moratorium is declared in respect of any Financial Indebtedness of a Security Party or a member of the Group.
|
|
13.1.6
|
Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is taken for:
|
|
(a)
|
the suspension of payments, a moratorium of any Financial Indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Security Party or a member of the Group;
|
|
(b)
|
a composition, compromise, assignment or arrangement with any creditor of a Security Party or a member of the Group;
|
|
(c)
|
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of any Security Party or a member of the Group or any of its (in the Lender's opinion) material assets; or
|
|
(d)
|
enforcement of any Encumbrance over any material (in the Lender's opinion) assets of a Security Party or a member of the Group,
|
|
or any analogous procedure or step is taken in any jurisdiction.
|
|
13.1.7
|
Creditors' process
Any expropriation, attachment, sequestration, distress or execution affects any (in the Lender's opinion) material asset or (in the Lender's opinion) material assets of a Security Party.
|
|
13.1.8
|
Change in ownership or control of the Borrower
There is any change in the beneficial ownership or control of the Borrower from that advised to the Lender by the Borrower at the date of this Agreement.
|
|
13.1.9
|
Repudiation
A Security Party or any other person (except the Lender or the Builder) repudiates any of the Relevant Documents (other than the Building Contract) to which that Security Party or person is a party or evidences an intention to do so.
|
|
No Event of Default under this Clause 13.1.9 will occur if the repudiation is in relation to the Charter and such repudiation is outside the control of the Borrower and if capable of remedy is remedied within seven (7) Business Days of the Lender giving notice to the Borrower or the Borrower becoming aware of such repudiation.
|
|
13.1.10
|
Impossibility or illegality
Any event occurs which would, or would with the passage of time, render performance of any of the Relevant Documents by a Security Party or any other party to any such document impossible, unlawful or unenforceable by the Lender or a Security Party.
|
|
13.1.11
|
Conditions subsequent
Any of the conditions referred to in Clause 3.3 (
Conditions subsequent
)
is not satisfied within the time reasonably required by the Lender.
|
|
13.1.12
|
Revocation or modification of authorisation
Any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable a Security Party or any other person (except the Lender) to comply with any of its obligations under any of the Relevant Documents is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Lender considers is, or may be, prejudicial to the interests of the Lender, or ceases to remain in full force and effect.
|
|
|
No Event of Default under this Clause 13.1.12 will occur if the revocation or modification of authorisation is in relation to the Charter and/or the Management Agreement and such revocation or modification of authorisation is outside the control of the Borrower and if capable of remedy is remedied within seven (7) Business Days of the Lender giving notice to the Borrower or the Borrower becoming aware of such revocation or modification of authorisation.
|
|
13.1.13
|
Curtailment of business
A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business or, as a result of intervention by or under the authority of any government, the business of a Security Party is wholly or partially curtailed or suspended, or all or a substantial part of the assets or undertaking of a Security Party is seized, nationalised, expropriated or compulsorily acquired.
|
|
13.1.14
|
Reduction of capital
A Security Party reduces its authorised or issued or subscribed capital.
|
|
13.1.15
|
Loss of Vessel
The Vessel suffers a Total Loss or is otherwise destroyed, abandoned, confiscated, forfeited or condemned as prize, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Lender as security for the payment of all or any part of the Indebtedness, except that a Total Loss, or event similar to a Total Loss in relation to any other vessel, shall not be an Event of Default if:
|
|
(a)
|
the Vessel or other vessel is insured in accordance with the Security Documents; and
|
|
(b)
|
no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Lender in its discretion that any such refusal or dispute is likely to occur; and
|
|
(c)
|
payment of all insurance proceeds in respect of the Total Loss is made in full to the Lender within one hundred and twenty (120) days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Lender may in its discretion agree.
|
|
13.1.16
|
Challenge to registration
The registration of the Vessel or the Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of the Mortgage is contested.
|
|
13.1.17
|
War
The country of registration of the Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Lender in its discretion considers that, as a result, the security conferred by the Security Documents is materially prejudiced.
|
|
13.1.18
|
Master Agreement termination
A notice is given by the Swap Provider under section 6(a) of the Master Agreement, or by any person under section 6(b)(iv) of the Master Agreement, in either case designating an Early Termination Date for the purpose of the Master Agreement, or the Master Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect.
|
|
13.1.19
|
Notice of termination
The Guarantor gives notice to the Lender to determine its obligations under the Guarantee.
|
|
13.1.20
|
Material adverse change
Any event or series of events occurs which, in the reasonable opinion of the Lender, is likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness of a Security Party or a member of the Group.
|
|
13.1.21
|
Default under the Charter
Any event or circumstance occurs which in the opinion of the Lender constitutes a material default under the Charter, including without limitation a material amendment to the Charter.
|
|
13.1.22
|
Invalidity
At any time, any (in the Lender's opinion) material provision of a Relevant Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction.
|
|
13.1.23
|
Shareholding
Without the Lender's consent, any one person (or associated (in the sole opinion of the Lender) persons) - other than members of the Palios and Margaronis family and one or more underwriters temporarily holding shares of the Guarantor pursuant to an offering of such shares - acquires more than 20% of the Guarantor's issued share capital at any one time.
|
|
13.2
|
Acceleration
If an Event of Default is continuing the Lender may by notice to the Borrower:
|
|
13.2.1.
|
declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, whereupon they shall become immediately due and payable; and/or
|
|
13.2.2
|
declare that the Loan is payable on demand, whereupon it shall immediately become payable on demand by the Lender.
|
14
|
Assignment and Sub-Participation
|
|
14.1
|
Lender's rights
The Lender may assign any of its rights under this Agreement or transfer by novation any of its rights and obligations under this Agreement to any branch or consolidated subsidiary of Deutsche Bank Aktiengesellschaft or, with the Borrower's prior written consent (unless an Event of Default has occurred and is continuing, in which case no Borrower's consent shall be required) to any other bank or financial institution or (for the purpose of a securitisation of the Lender's rights or obligations under the Finance Documents or a similar transaction of broadly equivalent economic effect) to any special purpose vehicle,
and may grant sub-participations in all or any part of the Loan.
|
|
14.2
|
Borrower's co-operation
The Borrower will co-operate fully with the Lender in connection with any assignment, transfer or sub-participation; will execute and procure the execution of such documents as the Lender may require in that connection; and irrevocably authorises the Lender to disclose to any proposed assignee, transferee or sub-participant (whether before or after any assignment, transfer or sub-participation and whether or not any assignment, transfer or sub-participation shall take place) all information relating to the Security Parties, the Loan, the Relevant Documents and the Vessel which the Lender may in its discretion consider necessary or desirable.
|
|
14.3
|
Rights of assignee or transferee
Any assignee or transferee of the Lender shall (unless limited by the express terms of the assignment or novation) take the full benefit of every provision of the Finance Documents benefitting the Lender.
|
|
14.4
|
No assignment or transfer by the Borrower
The Borrower may not assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
|
|
14.5
|
Securitisation
The Lender may disclose the size and term of the Loan and the name of each of the Security Parties to any investor or potential investor in a securitisation (or similar transaction of broadly equivalent economic effect) of the Lender's rights or obligations under the Finance Documents.
|
15
|
Set-Off
|
|
15.1
|
Set-off
The Lender and the Swap Provider may set off any matured obligation due from the Borrower under any Finance Document against any matured obligation owed by the Lender or the Swap Provider to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender or the Swap Provider may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
|
|
15.2
|
Master Agreement rights
The rights conferred on the Swap Provider by this Clause 15 shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Swap Provider by the Master Agreement.
|
16
|
Payments
|
|
16.1
|
Payments
Each amount payable by the Borrower under a Finance Document shall be paid to such account at such bank as the Lender may from time to time direct to the Borrower in the Currency of Account and in such funds as are customary at the time for settlement of transactions in the relevant currency in the place of payment. Payment shall be deemed to have been received by the Lender on the date on which the Lender receives authenticated advice of receipt, unless that advice is received by the Lender on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Lender in its discretion considers that it is impossible or impracticable for the Lender to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Lender on the Business Day next following the date of receipt of advice by the Lender.
|
|
16.2
|
No deductions or withholdings
Each payment (whether of principal or interest or otherwise) to be made by the Borrower under a Finance Document shall, subject only to Clause 16.3 (
Grossing-up
), be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.
|
|
16.3
|
Grossing-up
If at any time any law requires (or is interpreted to require) the Borrower to make any deduction or withholding from any payment, or to change the rate or manner in which any required deduction or withholding is made, the Borrower will promptly notify the Lender and, simultaneously with making that payment, will pay to the Lender whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after making the deduction or withholding, the Lender receives a net sum equal to the sum which the Lender would have received had no deduction or withholding been made.
|
|
16.4
|
Evidence of deductions
If at any time the Borrower is required by law to make any deduction or withholding from any payment to be made by it under a Finance Document, the Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty (30) days after making that payment, deliver to the Lender an original receipt issued by the relevant authority, or other evidence acceptable to the Lender, evidencing the payment to that authority of all amounts required to be deducted or withheld.
|
|
16.5
|
Adjustment of due dates
If any payment or transfer of funds to be made under a Finance Document, other than a payment of interest on the Loan or a payment under the Master Agreement, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment.
|
|
16.6
|
Control Account
The Lender shall open and maintain on its books a control account in the name of the Borrower showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement and the Master Agreement. The Borrower's obligations to repay the Loan and to pay interest and all other sums due under this Agreement and the Master Agreement
shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 16.6 and those entries will, in the absence of manifest error, be conclusive and binding.
|
17
|
Notices
|
|
17.1
|
Communications in writing
Any communication to be made under or in connection with this Agreement shall be made in writing and, unless otherwise stated, may be made by fax or letter.
|
|
17.2
|
Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party to this Agreement for any communication or document to be made or delivered under or in connection with this Agreement are:
|
|
17.2.1
|
in the case of the Borrower, to Gala Properties Inc., c/o Diana Shipping Services S.A., Pendelis 16, 175 64 Palaio Faliro, Athens, Greece (fax no: +30 210 9470101) marked for the attention of Mr Andreas Michalopoulos; and
|
|
17.2.2
|
in the case of the Lender, Deutsche Bank Aktiengesellschaft Filiale Deutschlandgeschäft, Ludwig-Erhard-Str. 1, 20459 Hamburg, Germany (fax no: +49 (0)40 3701 4649) marked for the attention of Jörg Zickermann;
|
|
|
or any substitute address, fax number, department or officer as either party may notify to the other by not less than five (5) Business Days' notice.
|
|
17.3
|
Delivery
Any communication or document made or delivered by one party to this Agreement to the other under or in connection this Agreement will only be effective:
|
|
17.3.2
|
if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;
|
|
17.4
|
English language
Any notice given under or in connection with this Agreement must be in English. All other documents provided under or in connection with this Agreement must be:
|
|
17.4.1
|
in English; or
|
|
17.4.2
|
if not in English, and if so required by the Lender, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
|
18
|
Partial Invalidity
|
19
|
Remedies and Waivers
|
20
|
Miscellaneous
|
|
20.1
|
No oral variations
No variation or amendment of a Finance Document shall be valid unless in writing and signed on behalf of the Lender.
|
|
20.2
|
Further assurance
If any provision of a Finance Document shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by or on behalf of the Lender are considered by the Lender for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrower will promptly, on demand by the Lender, execute or procure the execution of such further documents as in the opinion of the Lender are necessary to provide adequate security for the repayment of the Indebtedness.
|
|
20.3
|
Rescission of payments etc.
Any discharge, release or reassignment by the Lender of any of the security constituted by, or any of the obligations of a Security Party contained in, a Finance Document shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.
|
|
20.4
|
Certificates
Any certificate or statement signed by an authorised signatory of the Lender purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any Finance Document shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrower of that amount.
|
|
20.5
|
Counterparts
This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.
|
|
20.6
|
Contracts (Rights of Third Parties) Act 1999
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.
|
|
20.7
|
Ancillary Business
Provided such terms are competitive, the Swap Provider shall have the right of first refusal to quote for any derivative transaction to be entered into between the Swap Provider and the Borrower or the Guarantor in relation to this Agreement and/or the Vessel, including without limitation, any interest rate hedging contracts in respect of the Borrower's exposure to interest rate fluctuations in connection with the Loan and shall be secured by the Security Documents.
|
21
|
Law and Jurisdiction
|
|
21.1
|
Governing law
This Agreement and any non-contractual obligations arising from or in connection with it shall in all respects be governed by and interpreted in accordance with English law.
|
|
21.2
|
Jurisdiction
For the exclusive benefit of the Lender, the parties to this Agreement irrevocably agree that the courts of England are to have jurisdiction to settle any dispute (a) arising from or in connection with this Agreement or (b) relating to any non-contractual obligations arising from or in connection with this Agreement and that any proceedings may be brought in those courts.
|
|
21.3
|
Alternative jurisdictions
Nothing contained in this Clause 21 shall limit the right of the Lender to commence any proceedings against the Borrower in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Borrower in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.
|
|
21.4
|
Waiver of objections
The Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause 21, and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.
|
|
21.5
|
Service of process
Without prejudice to any other mode of service allowed under any relevant law, the Borrower:
|
|
21.5.1
|
irrevocably appoints Nikolaou & Co., Chartered Accountants, 25 Heath Drive, Potters Bar, Herts, EN6 1EN, England (tel +44 17 0765 2193, Fax +44 17 0766 4340) (for the attention of: Mr. Antonis Nicolaou) as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement; and
|
|
21.5.2
|
agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.
|
SIGNED by Andre-Nikos Michalopoulos | ) | /s/ Andre-Nikos Michalopoulos | |
duly authorised for and on behalf | ) | ||
of BIKINI SHIPPING COMPANY INC. | ) |
SIGNED by Ralf Bedranowsky | ) | /s/ Ralf Bedranowsky | |
duly authorised for and on behalf | ) | ||
of DEUTSCHE BANK | ) | ||
AKTIENGESELLSCHAFT | ) | ||
FILIALE DEUTSCHLANDGESCHÄFT | ) |
1.
|
PURPOSE AND DEFINITIONS
|
3
|
2.
|
THE LOAN
|
13
|
3.
|
INTEREST AND MARGIN
|
14
|
4.
|
ALTERNATIVE INTEREST RATES - CURRENCY
|
16
|
5.
|
REPAYMENT, PREPAYMENT, AND APPLICATION OF FUNDS
|
17
|
6.
|
PAYMENTS
|
21
|
7.
|
FEES
|
22
|
8.
|
REPRESENTATIONS AND WARRANTIES
|
22
|
9.
|
CONDITIONS PRECEDENT AND SUBSEQUENT
|
26
|
10.
|
SECURITY
|
29
|
11.
|
INSURANCES
|
30
|
12.
|
COVENANTS
|
37
|
13.
|
EVENTS OF DEFAULT
|
44
|
14.
|
INDEMNITIES
|
49
|
15.
|
ASSIGNMENT AND PARTICIPATION
|
51
|
16.
|
CHANGE IN CIRCUMSTANCES - INCREASED COST
|
52
|
17.
|
WAIVER AND REMEDIES
|
54
|
18.
|
INVALIDITY OF PROVISIONS
|
54
|
19.
|
NOTICES
|
54
|
20.
|
LAW AND JURISDICTION
|
55
|
21.
|
MISCELLANEOUS
|
56
|
|
(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 amounts which have become due for payment by the Borrower or any other Security Party under the Agreement, the ISDA Agreement, and any other Security Document have been paid;
|
|
(b)
|
no amount is owing or has accrued (without yet having become due for payment) under the Agreement, the ISDA Agreement, and any other Security Document;
|
|
(c)
|
neither the Borrower nor any other Security Party has any future or contingent liability under any provision of this Agreement, the ISDA Agreement, or any other Security Document; and
|
|
(d)
|
the Bank does not consider that there is a significant risk that any payment or transaction under the Agreement, or the ISDA Agreement, or any other Security Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of a Borrower or any other Security Party or in any present or possible future proceeding relating to the Agreement, the ISDA Agreement, or any other Security Document or any asset of the Borrower or any other Security Party;
|
(A)
|
During the Initial Margin Application Period at the rate as determined by the Bank to be the aggregate of (i) the Initial Margin, plus (ii) LIBOR, or any Substitute Basis as certified according to Clause 4.01.02. for the respective period agreed upon;
|
(B)
|
Upon expiration of the Initial Margin Application Period at the rate as determined by the Bank to be the aggregate of (i) the Margin, plus (ii) LIBOR, or any Substitute Basis as certified according to Clause 4.01.02. for the respective period agreed upon;
|
|
(1)
|
the obligation of the Bank to advance any remaining part of the Loan not already drawn down shall immediately cease, and
|
|
(2)
|
the Borrower shall within ninety days (90) of the Vessel becoming a Total Loss, or immediately upon payment of any insurance claim with respect to Total Loss, whichever is the earlier, prepay an amount equal to the Outstanding Indebtedness, and in case of outstanding Designated Transactions, the Swap Exposure.
|
|
1)
|
against fire and usual marine risks (including Excess Risks) on an agreed value basis, in such amounts (but not in any event less than whichever shall be the greater of the Vessel's Market Value for the time being, and 120% of the aggregate of the Outstanding Indebtedness and in case of outstanding Designated Transactions, of the Swap Exposure, and of any claim, lien, or encumbrance having priority over the Bank's security) on a full cover/all risks basis with such reasonable deductible and upon such terms as shall from time to time be approved in writing by the Bank; and
|
|
2)
|
against War Risks including claims and/or liabilities related to terrorism and including War P&I cover, either with Lloyd's or other insurance companies and/or underwriters and/or war risk associations acceptable to the Bank according to London Institute War Clauses, on an agreed value basis, in such amounts (but not in any event less than whichever shall be the greater of the Vessel's Market Value for the time being, and 120% of the aggregate of the Outstanding Indebtedness, and in case of outstanding Designated Transactions, of the Swap Exposure, and of any claim, lien, or encumbrance having priority over the Bank's security) with reasonable deductibles and terms as shall from time to time be approved in writing by the Bank attaching also the so called war protection clauses. If not fully covered by these insurances, crew war liabilities insurance shall have to be effected separately; and
|
|
3)
|
against Protection and Indemnity Risks for the full value and tonnage of the Vessel (as approved in writing by the Bank) according to the relevant rules and deductibles provided thereof for all risks insured by protection and indemnity associations or clubs including Pollution, and including excess War P&I cover and at the highest limits of cover equivalent to limits of the IGA Group . If any risks are excluded or the deductibles as provided by the rules have been altered, the consent of the Bank shall have to be previously obtained. In case that crew liabilities (loss of life, injury or illness) have been entirely excluded from the association cover or insured on a deductible excess basis, such liabilities shall have to be further insured separately with other underwriters acceptable to the Bank and upon such terms as shall from time to time be approved in writing by the Bank; and
|
|
4)
|
in respect of such other matters of whatsoever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of a vessel; and
|
|
5)
|
port risks insurance, (in the event of the Vessel being laid up for an extended period) may be effected with prior written consent of the Bank in lieu of the insurances required under the provisions of sub-clauses (1), (2), (3) and (4) above against fire and usual marine risks and Protection and Indemnity Risks subject to the conditions of "Institute Time Clauses Hulls, Port Risks" including War Risks subject to the conditions of "Institute War and Strikes Clauses, Hulls, Time" extended to include War Protection and Indemnity risks or other such similar insurance clauses or contract the terms of which shall be acceptable to the Bank;
|
|
(a)
|
a Mortgagee's Interest Insurance for at least 120% of the Outstanding adebtedness and any Swap Exposure; and
|
|
(b)
|
a Mortgagee's Additional Perils Insurance (MAP) (oil pollution) for at least 120% of the Outstanding Indebtedness and any Swap Exposure. Condition for this kind of insurance is that the cover for oil pollution by the protection and indemnity association or club is increased to $ 1,000,000,000.00, such insurance to be effected at the sole discretion of the Bank.
|
(i)
|
a claim in respect of any one casualty where the aggregate claim against all insurers does not exceed UNITED STATES DOLLARS FOUR HUNDRED THOUSAND ($ 400,000.00) or the equivalent in any other currency, prior to adjustment for any franchise or deductible under the terms of the policy, shall be paid directly to the Owner for the repair, salvage or other charges involved or as a reimbursement if they have fully repaired the damage and paid all of the salvage or other charges;
|
(ii)
|
a claim in respect of any one casualty where the aggregate claim against all insurers exceeds UNITED STATES DOLLARS FOUR HUNDRED THOUSAND ($ 400,000.00) or the equivalent in any other currency prior to adjustment for any franchise or deductible under the terms of the policy, shall subject to the prior written consent of the Bank, be paid to the Owner as and when the Vessel is restored to its former state and condition and the liability in respect of which the insurance loss is payable is discharged, and provided that the insurers may with such consent as aforesaid make payment on account of repairs in the course of being effected.
|
SIGNED AND DELIVERED
|
)
|
|||
for and on behalf of
|
)
|
|||
GALA PROPERTIES INC.
|
)
|
|||
by: IOANNIS ZAFIRAKIS
|
)
|
/s/ IOANNIS ZAFIRAKIS
|
||
pursuant to a Power of Attorney
|
)
|
|||
dated the 20
th
day of October 2009
|
)
|
|||
in the presence of:
|
)
|
|||
Witness:
|
/s/ Anna Papanikolaou
|
|||
Name: Anna Papanikolaou
|
||||
Address: 130, Kolokotroni street, 185 36 Piraeus, Greece
|
||||
SIGNED
|
)
|
|||
for and on behalf of
|
)
|
|||
BREMER LANDESBANK KREDITANSTALT
|
)
|
|||
OLDENBURG - GIROZENIRALE -
|
)
|
|||
by:
IOANNIS VAFEIADIS-CHASOPOULOS
|
)
|
/s/
IOANNIS VAFEIADIS-CHASOPOULOS
|
||
pursuant to a Power of Attorney
|
)
|
|||
dated the 19
th
day of October 2009
|
)
|
|||
in the presence of:
|
)
|
|||
Witness:
|
/s/ Anna Papanikolaou
|
|||
Name: Anna Papanikolaou
|
||||
Address: 130, Kolokotroni street, 185 36 Piraeus, Greece
|
||||
Private & Confidential
|
||
for a Loan of up to US$82,600,000
to
LAE SHIPPING COMPANY INC.
and
NAMU SHIPPING COMPANY INC.
provided by
THE BANKS AND FINANCIAL INSTITUTIONS SET OUT IN SCHEDULE 1
Mandated Co-Lead Arrangers
THE EXPORT-IMPORT BANK OF CHINA
and
DNB NOR BANK ASA
Agent, Security Agent
and Account Bank
DNB NOR BANK ASA
Swap Provider
DNB NOR BANK ASA
|
||
|
Clause | Page | |
1
|
Purpose and definitions
|
1
|
2
|
The Total Commitment and the Advances
|
14
|
3
|
Interest and Interest Periods
|
15
|
4
|
Repayment and prepayment
|
17
|
5
|
Fees, commitment commission and expenses
|
20
|
6
|
Payments and taxes; accounts and calculations
|
21
|
7
|
Representations and warranties
|
23
|
8
|
Undertakings
|
28
|
9
|
Conditions
|
34
|
10
|
Events of Default
|
35
|
11
|
Indemnities
|
39
|
12
|
Unlawfulness and increased costs
|
40
|
13
|
Security, set-off and pro-rata payments
|
42
|
14
|
Operating Accounts
|
44
|
15
|
Assignment, transfer and lending office
|
45
|
16
|
Arrangers, Agent and Security Agent
|
47
|
17
|
Notices and other matters
|
56
|
18
|
Governing law and jurisdiction
|
59
|
Schedule 1 The Banks and their Commitments
|
60
|
Schedule 2 Form of Drawdown Notice
|
61
|
Schedule 3 Documents and evidence required as conditions precedent to the Loan being made
|
62
|
Schedule 4 Form of Transfer Certificate
|
68
|
Schedule 5 Form of Trust Deed
|
72
|
Schedule 6 Mandatory Cost formula
|
73
|
Schedule 7 Form of Mortgage
|
75
|
Schedule 8 Form of General Assignment
|
76
|
Schedule 9 Form of Corporate Guarantee
|
77
|
Schedule 10 Form of Manager's Undertaking
|
78
|
Schedule 11 Form of Master Swap Agreement
|
79
|
Schedule 12 Form of Swap Assignment
|
80
|
Schedule 13 Form of Operating Account Assignment
|
81
|
Schedule 14 Form of Charter Assignment
|
82
|
(1)
|
LAE SHIPPING COMPANY INC.
and
NAMU SHIPPING COMPANY INC.
as joint and several Borrowers;
|
(2)
|
DNB NOR BANK ASA
as Agent, Security Agent and Account Bank;
|
(3)
|
DNB NOR BANK ASA
as Swap Provider;
|
(4)
|
DNB NOR BANK ASA
and
THE EXPORT-IMPORT BANK OF CHINA
as Arrangers; and
|
(5)
|
THE BANKS AND FINANCIAL INSTITUTIONS
whose names are set out in schedule 1 as Banks.
|
1.1
|
Purpose
|
1.2
|
Definitions
|
|
(a)
|
in relation to
the Lae Ship, it means the Lae Advance; or
|
|
(b)
|
in relation to the Namu Ship, it means the Namu Advance,
|
|
(a)
|
in relation to the Lae Ship and/or the Lae Advance, means the Lae Borrower; or
|
|
(b)
|
in relation to the Namu Ship and/or the Namu Advance, means the Namu Borrower,
|
|
(a)
|
in relation to the Lae Ship, the Lae Contract; or
|
|
(b)
|
in relation to the Namu Ship, the Namu Contract,
|
|
(a)
|
it is entered into by the Borrowers pursuant to the Master Swap Agreement with the Swap Provider as contemplated by clause 2.9; and
|
|
(b)
|
its purpose is the hedging of the Borrowers' exposure under this Agreement to fluctuations of LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the final Repayment Date for the Loan or the relevant part thereof;
|
|
(a)
|
in relation to the Lae Ship, the Lae General Assignment; or
|
|
(b)
|
in relation to the Namu Ship, the Namu General Assignment,
|
|
(a)
|
the rate for deposits of the relevant currency for a period equivalent to such period at or about 11:00 a.m. on the Quotation Date for such period as displayed on Reuters page LIBOR 01 (British Bankers' Association Interest Settlement Rates) (or such other page as may replace such page LIBOR 01 on such system or on any other system of the information vendor for the time being designated by the British Bankers' Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers' Association's Recommended Terms and Conditions ("
BBAIRS
" terms) applicable at the relevant time)); or
|
|
(b)
|
provided that if on such date no such rate is so displayed, LIBOR for such period shall be the arithmetic mean of the rates quoted to the Agent by the Reference Banks at the request of the Agent as the Reference Banks' offered rate for deposits of the relevant currency in an amount approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such period to prime banks in the London Interbank Market at or about 11:00 a.m. on the Quotation Date for such period;
|
|
(a)
|
in relation to the Lae Ship, the Lae Management Agreement; or
|
|
(b)
|
in relation to the Namu Ship, the Namu Management Agreement,
|
|
(a)
|
in relation to the Lae Ship, the Lae Manager's Undertaking; or
|
|
(b)
|
in relation to the Namu Ship, the Namu Manager's Undertaking,
|
|
(a)
|
in relation to the Lae Ship, the Lae Mortgage; or
|
|
(b)
|
in relation to the Namu Ship, the Namu Mortgage,
|
|
(a)
|
in relation to the Lae Ship, the Lae Operating Account; or
|
|
(b)
|
in relation to the Namu Ship, the Namu Operating Account,
|
|
(a)
|
in relation to the Lae Ship, the Lae Operating Account Assignment; or
|
|
(b)
|
in relation to the Namu Ship, the Namu Operating Account Assignment,
|
|
(a)
|
any lien on such Ship for master's, officer's or crew's wages outstanding in the ordinary course of trading;
|
|
(b)
|
any lien for salvage; and
|
|
(c)
|
any ship repairer's or outfitter's possessory lien for a sum not (except with the prior written consent of the Agent) exceeding the Casualty Amount (as defined in the relevant General Assignment) for such Ship;
|
|
(a)
|
in relation to the Lae Borrower and/or the Lae Advance, means the Lae Ship; or
|
|
(b)
|
in relation to the Namu Borrower and/or the Namu Advance, means the Namu Ship,
|
|
(a)
|
in respect of the Lae Ship, means the Lae Mortgage, the Lae General Assignment, the Lae Manager's Undertaking and any relevant Charter Assignment; or
|
|
(b)
|
in respect of the Namu Ship, means the Namu Mortgage, the Namu General Assignment, the Namu Manager's Undertaking and any relevant Charter Assignment;
|
|
(a)
|
actual, constructive, compromised or arranged total loss of such Ship; or
|
|
(b)
|
the Compulsory Acquisition of such Ship; or
|
|
(c)
|
the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Ship (other than where the same amounts to the Compulsory Acquisition of such Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless such Ship be released and restored to the relevant Borrower from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof;
|
1.3
|
Headings
|
|
Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement.
|
1.4
|
Construction of certain terms
|
|
In this Agreement, unless the context otherwise requires:
|
1.4.1
|
references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules;
|
1.4.2
|
references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with terms thereof, or, as the case may be, with the agreement of the relevant parties;
|
1.4.3
|
references to a "
regulation
" include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority and, for the avoidance of doubt, shall include any Basel 2 Regulation;
|
1.4.4
|
words importing the plural shall include the singular and vice versa;
|
1.4.5
|
references to a time of day are to London time;
|
1.4.6
|
references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity;
|
1.4.7
|
two or more persons are "
acting in concert
" if, pursuant to an agreement or understanding (whether formal or informal), they actively co-operate, through the acquisition (directly or indirectly) of shares in the Corporate Guarantor by any of them, either directly or indirectly to obtain or consolidate control of the Corporate Guarantor;
|
1.4.8
|
references to a "
guarantee
" include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "
guaranteed
" shall be construed accordingly; and
|
1.4.9
|
references to any enactment shall be deemed to include references to such enactment as re-enacted, amended or extended.
|
1.5
|
Majority Banks
|
|
Where this Agreement or any other Security Document provides for any matter to be determined by reference to the opinion of the Majority Banks or to be subject to the consent or request of the Majority Banks or for any action to be taken on the instructions in writing of the Majority Banks, such opinion, consent, request or instructions shall (as between the Banks) only be regarded as having been validly given or issued by the Majority Banks if all the Banks shall have received prior notice of the matter on which such opinion, consent, request or instructions are required to be obtained and the relevant majority of Banks shall have given or issued such opinion, consent, request or instructions but so that (as between the Borrowers and the Creditors) the Borrowers shall be entitled (and bound) to assume that such notice shall have been duly received by each Bank and that the relevant majority shall have been obtained to constitute Majority Banks whether or not this is in fact the case.
|
1.6
|
Banks' Commitment
|
|
For the purposes of the definition of "
Majority Banks
" in clause
1.2
and the relevant provisions of the Security Documents, references to the Commitment of a Bank shall, if the Total Commitment has, at any relevant time, been reduced to zero, be deemed to be a reference to the Commitment of that Bank immediately prior to such reduction to zero.
|
2
|
The Total Commitment and the Advances
|
2.1
|
Agreement to lend
|
|
The Banks, relying upon each of the representations and warranties in clause
7
, agree to lend to the Borrowers, jointly and severally, in two (2) Advances and upon and subject to the terms of this Agreement, the aggregate principal sum of up to Eighty two million six hundred thousand Dollars ($82,600,000). The obligation of each Bank under this Agreement shall be to contribute that proportion of each Advance which, as at the Drawdown Date of such Advance, such Bank's Commitment bears to the Total Commitment.
|
2.2
|
Obligations several
|
|
The obligations of the Banks under this Agreement are several according to their respective Commitments and/or Contributions; the failure of any Bank to perform such obligations or the failure of the Swap Provider to perform its obligations under the Master Swap Agreement shall not relieve any other Creditor or the Borrowers or either of them of any of their respective obligations or liabilities under this Agreement or, as the case may be, the Master Swap Agreement nor shall any Creditor be responsible for the obligations of any Creditors (except for its own obligations, if any, as a Bank or Swap Provider) under this Agreement or the Master Swap Agreement.
|
2.3
|
Interests several
|
|
Notwithstanding any other term of this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Banks) the interests of the Creditors are several and the amount due to any Creditor is a separate and independent debt. Each Creditor shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Creditor to be joined as an additional party in any proceedings for this purpose.
|
2.4
|
Drawdown
|
|
Subject to the terms and conditions of this Agreement, each Advance shall be made to the Borrowers following receipt by the Agent from the Borrowers of a Drawdown Notice not later than 10:00 a.m. on the third Banking Day before the proposed Drawdown Date which shall be a Banking Day falling within the Drawdown Period. A Drawdown Notice shall be effective on actual
receipt by the Agent
and, once given, shall, subject as provided in clause
3.6.1
, be irrevocable.
|
2.5
|
Timing and limitation of Advances
|
2.5.1
|
The aggregate amount of both Advances shall not exceed the Total Commitment.
|
2.5.2
|
Each Advance shall not exceed the lower of (a) Forty one million three hundred thousand Dollars ($41,300,000) and (b) seventy per cent (70%) of the market value of the Ship relevant to such Advance determined in accordance with the valuation(s) obtained for that Ship pursuant to schedule 3, Part 2.
|
2.5.3
|
Each Advance:
|
|
(a)
|
shall be applied in or towards payment to the Seller of such part of the Contract Price for the Ship relevant to such Advance, which is payable on the Delivery Date for that Ship;
|
|
(b)
|
shall be drawn down only once the part of the Contract Price referred to in paragraph 2.5.3(a) above has become due and payable; and
|
|
(c)
|
shall be paid by the Banks to the Seller directly, unless (i) the relevant Borrower has already paid such part of the Contract Price to the Seller when it was due, in which case the relevant Advance (or part thereof) shall be advanced to the Borrowers, or (ii) the Advance exceeds the portion of the Contract Price payable to the Seller on the delivery of the relevant Ship under the relevant Contract, in which case a part of the Advance equal to such portion shall be paid to the Seller and the balance of the Advance shall be advanced to the Borrowers.
|
2.6
|
Availability
|
|
Upon receipt of a Drawdown Notice complying with the terms of this Agreement the Agent shall promptly notify each Bank (and, in the case of The Export-Import Bank of China only, such notification shall be sent by the Agent via swift message) and, subject to the provisions of clause 9, on the Drawdown Date for the relevant Advance, each Bank shall make available to the Agent its portion of such Advance for payment by the Agent in accordance with clause
6.2
. The Borrowers acknowledge that payment of any Advance or part thereof to the Seller, in accordance with clause 6.2, shall satisfy the obligations of the Banks to lend such Advance or part thereof to the Borrowers.
|
2.7
|
Termination of Total Commitment
|
|
Any part of the Total Commitment which remains undrawn and uncancelled by the end of the Termination Date shall thereupon be automatically cancelled.
|
2.8
|
Application of proceeds
|
|
Without prejudice to the Borrowers' obligations under clause
8.1.3
, none of the Creditors shall have any responsibility for the application of the proceeds of the Loan or part thereof by the Borrowers.
|
2.9
|
Derivative transactions
|
2.9.1
|
If, at any time during the Security Period, the Borrowers wish to enter into interest rate swap or other derivative transactions so as to hedge all or any part of their exposure under this Agreement to interest rate fluctuations, they shall advise the Swap Provider in writing.
|
2.9.2
|
Any such swap or other derivative transaction shall be concluded with the Swap Provider under the Master Swap Agreement provided however that no such swap or other derivative transaction shall be concluded unless the Swap Provider first agrees to it in writing. For the avoidance of doubt, other than the Swap Provider's agreement in writing referred to in the preceding sentence no prior approval is required by the Borrowers from any other Creditor before concluding any such transaction. If and when any such swap or other derivative transaction has been concluded, it shall constitute a Designated Transaction, and the Borrowers shall sign a Confirmation with the Swap Provider and advise the Banks through the Agent promptly after concluding any Designated Transaction.
|
3
|
Interest and Interest Periods
|
3.1
|
Normal interest rate
|
|
The Borrowers shall pay interest on each Advance in respect of each Interest Period relating thereto on each Interest Payment Date (or, in the case of Interest Periods of more than three (3) months, by instalments, the first instalment three (3) months from the commencement of the Interest Period and the subsequent instalments at intervals of three (3) months or, if shorter, the period from the date of the preceding instalment until the Interest Payment Date relative to such Interest Period) at the rate per annum determined by the Agent to be the aggregate of (a) the Margin, (b) LIBOR for such Interest Period and (c) Mandatory Cost (if any).
|
3.2
|
Selection of Interest Periods
|
|
The Borrowers may by notice received by the Agent not later than 10:00 a.m. on the third Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of three (3), six (6), nine (9) or twelve (12) months or such other period (shorter than twelve (12) months) as the Borrowers may select and the Agent (acting on the instructions of the Majority Banks) may agree.
|
3.3
|
Determination of Interest Periods
|
|
Every Interest Period shall be of the duration specified by the Borrowers pursuant to clause 3.2 but so that:
|
3.3.1
|
the initial Interest Period in respect of each Advance shall commence on the Drawdown Date for such Advance and each subsequent Interest Period for such Advance shall commence on the last day of the previous Interest Period for such Advance;
|
3.3.2
|
if any Interest Period for an Advance would otherwise overrun a Repayment Date for such Advance, then, in the case of the last Repayment Date for such Advance, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date or Repayment Dates for such Advance, the relevant Advance shall be divided into parts so that there is one part in the amount of the repayment instalment due on each Repayment Date for such Advance falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the relevant Advance having an Interest Period ascertained in accordance with clause
3.2
and the other provisions of this clause
3.3
; and
|
3.3.3.
|
if the Borrowers fail to specify the duration of an Interest Period in accordance with the provisions of clause
3.2
and this clause
3.3
such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause
3.3
.
|
3.4
|
Default interest
|
3.5
|
Notification of Interest Periods and interest rate
|
|
The Agent shall notify the Borrowers and the Banks promptly of the duration of each Interest Period and of each rate of interest (or, as the case may be default interest) determined by it under this clause 3.
|
3.6
|
Market disruption; non-availability
|
3.6.1
|
If and whenever, at any time prior to the commencement of any Interest Period:
|
|
(a)
|
the Agent shall have determined (which determination shall, in the absence of manifest error, be conclusive) that adequate and fair means do not exist for ascertaining LIBOR during such Interest Period; or
|
|
(b)
|
where applicable, none or only one of the Reference Banks supplies the Agent with a quotation for the purpose of calculating LIBOR; or
|
|
(c)
|
the Agent shall have received notification from Banks whose aggregate Contributions are not less than twenty per cent (20%) of the Loan (or, prior to the first Drawdown Date, whose aggregate Commitments are not less than twenty per cent (20%) of the Total Commitment), that deposits in Dollars are not available to such Banks in the London Interbank Market in the ordinary course of business in sufficient amounts to fund their Commitments or their Contributions for such Interest Period, or that LIBOR does not accurately reflect the cost to such Banks of obtaining such deposits,
|
|
the Agent shall forthwith give notice (a "
Determination Notice
") thereof to the Borrowers and to each of the Banks and the Swap Provider. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. After the giving of any Determination Notice the undrawn amount of the Total Commitment shall not be borrowed until notice to the contrary is given to the Borrowers by the Agent.
|
3.6.2
|
During the period of ten (10) days after any Determination Notice has been given by the Agent under clause
3.6.1
, each Bank shall certify an alternative basis (the "
Alternative Basis
") for funding its Commitment or for maintaining its Contribution. The Alternative Basis may at the relevant Bank's sole and unfettered discretion (without limitation) include alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds (including Mandatory Cost, if any) to such Bank equivalent to the Margin. The Agent shall calculate the arithmetic mean of the Alternative Basis provided by the relevant Banks (the "
Substitute Basis
") and certify the same to the Borrowers, the Banks and the Swap Provider. The Substitute Basis so certified shall be binding upon the Borrowers and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Agent notifies the Borrowers that none of the circumstances specified in clause
3.6.1
continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply.
|
3.7
|
Reference Bank quotations
|
|
If any Reference Bank is unable or otherwise fails to furnish a quotation for the purposes of calculating LIBOR, the interest rate shall be determined, subject to clause 3.6, on the basis of quotations furnished by the other Reference Banks (if any).
|
4
|
Repayment and prepayment
|
4.1
|
Repayment
|
4.1.1
|
Subject to clause 4.1.3 below, the Borrowers shall repay each Advance by forty (40) instalments, one such instalment to be repaid on each of the Repayment Dates for such Advance. Subject to the provisions of this Agreement, the amount of each of the first to thirty ninth instalments (inclusive) for such Advance shall be Six hundred and ninety two thousand five hundred Dollars ($692,500) and the amount of the fortieth and final instalment for such Advance shall be Fourteen million two hundred and ninety two thousand five hundred Dollars ($14,292,500) (comprising an instalment of Six hundred and ninety two thousand five hundred Dollars ($692,500) and a balloon payment of Thirteen million six hundred thousand Dollars ($13,600,000) (each such balloon payment in relation to an Advance, the "
Balloon Instalment
" for such Advance)).
|
4.1.2
|
If the Total Commitment in respect of any Advance or part thereof is not drawn down in full, the amount of each instalment in respect of such Advance (including the relevant Balloon Instalment) referred to in clause 4.1.1 shall be reduced proportionately.
|
4.1.3
|
Notwithstanding clause 4.1.1 above, any individual Bank in its absolute and unfettered discretion (but acting through the Agent) shall be entitled to demand repayment in full of each Advance on the twenty fourth Repayment Date in respect of that Advance (namely, the Repayment Date for that Advance falling seventy two (72) months after the Drawdown Date for such Advance). If one or more Banks (acting through the Agent) exercise such right in respect of an Advance, the Borrowers shall be obliged to repay the entire balance of that Advance in full on such Repayment Date. In that case, the Borrowers shall continue to repay the repayment instalments in respect of that Advance on the same Repayment Dates as scheduled and specified in clause 4.1.1 for that Advance but up to the twenty fourth Repayment Date for that Advance and, on the said twenty fourth Repayment Date, in addition to the relevant instalment for that Advance falling due on such date under clause 4.1.1, the Borrowers shall also repay the remaining balance of that Advance in full.
|
4.1.4
|
The Banks shall be entitled to exericse their right under clause 4.1.3, whether in respect of one Advance only, or in respect of both Advances, and they can exercise it at separate times in respect of each Advance.
|
4.1.5
|
If one or more Banks wish to exercise their right under clause 4.1.3 in respect of an Advance, the Agent shall send to the Borrowers a written demand to this effect in respect of that Advance by not earlier than the date falling fifty four (54) months after the Drawdown Date for such Advance and by not later than the date falling sixty (60) months after the Drawdown Date for such Advance. Neither the Agent nor any Bank shall be obliged to assign any reason to any decision to demand such repayment of an Advance under clause 4.1.3 above.
|
4.2
|
Voluntary prepayment
|
|
The Borrowers may prepay any Advance in whole or part (being Five hundred thousand Dollars ($500,000) or any larger sum which is an integral multiple of Five hundred thousand Dollars ($500,000)), on any Interest Payment Date relating to the Advance to be prepaid without premium or penalty.
|
4.3
|
Cancellation of Commitments and prepayment on Total Loss or sale
|
4.3.1
|
Before drawdown
|
|
On a Ship becoming a Total Loss (or suffering damage or being involved in an incident which in the opinion of the Agent may result in such Ship being subsequently determined to be a Total Loss) before the Advance in respect of such Ship is drawn down, the obligations of the Banks to make the Advance for such Ship available shall immediately cease and the Total Commitment shall be immediately reduced by the amount of the Advance for such Ship.
|
4.3.2
|
Thereafter
|
|
On the date falling one hundred and twenty (120) days after that on which a Mortgaged Ship became a Total Loss or, if earlier, on the date upon which the insurance proceeds in respect of such Total Loss are, or Requisition Compensation (as defined in the relevant Ship Security Documents) is, received by the relevant Borrower (or the Security Agent pursuant to the relevant Ship Security Documents), or on the date falling immediately prior to the completion of the sale of a Mortgaged Ship, the Borrowers shall prepay the outstanding Advance relevant to that Ship in full.
|
4.3.3
|
Interpretation
|
|
For the purpose of this Agreement and the other Security Documents, a Total Loss in respect of a Ship shall be deemed to have occurred:
|
|
(a)
|
in the case of an actual total loss of a Ship, on the actual date and at the time such Ship was lost or, if such date is not known, on the date on which such Ship was last reported;
|
|
(b)
|
in the case of a constructive total loss of a Ship, upon the date and at the time notice of abandonment of such Ship is given to the insurers of such Ship for the time being;
|
|
(c)
|
in the case of a compromised or arranged total loss of a Ship, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the insurers of such Ship;
|
|
(d)
|
in the case of Compulsory Acquisition of a Ship, on the date upon which the relevant requisition of title or other compulsory acquisition of such Ship occurs; and
|
|
(e)
|
in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Ship (other than where the same amounts to Compulsory Acquisition of such Ship) by any Government Entity, or by persons purporting to act on behalf of any Government Entity, which deprives the relevant Borrower of the use of such Ship for more than thirty (30) days, upon the expiry of the period of thirty (30) days after the date upon which the relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation occurred.
|
4.4
|
Amounts payable on prepayment
|
|
Any prepayment of all or part of the Loan under this Agreement and any repayment of an Advance made under clause 4.1.3, shall be made together with:
|
|
(a)
|
accrued interest on the amount to be prepaid to the date of such prepayment;
|
|
(b)
|
any additional amount payable under clauses
6.6
or
12.2
; and
|
|
(c)
|
all other sums payable by the Borrowers to the Creditors under this Agreement or any of the other Security Documents including, without limitation, any commitment commission and any amounts payable under clause 11.1.
|
4.5
|
Notice of prepayment; reduction of repayment instalments
|
4.5.1
|
No prepayment may be effected under clause 4.2 unless the Borrowers shall have given the Agent at least ten (10) Banking Days' prior written notice of their intention to make such prepayment. Every notice of prepayment shall be effective only on actual receipt by the Agent, shall be irrevocable, shall specify the Advance and the amount thereof to be prepaid and shall oblige the Borrowers to make such prepayment on the date specified.
|
4.5.2
|
Any amount prepaid pursuant to clause 4.2 in respect of an Advance shall be applied in reducing the repayment instalments of the relevant Advance (including, where applicable, the relevant Balloon Instalment) under clause 4.1 proportionately.
|
4.5.3
|
Any amount prepaid pursuant to clause 8.2.1(a) shall be applied in prepayment of both Advances proportionately as between them and in reduction of the repayment instalments of each Advance proportionately.
|
4.5.4
|
The Borrowers may not prepay the Loan or any part thereof save as expressly provided in this Agreement.
|
4.5.5
|
No amount prepaid under this Agreement may be re-borrowed.
|
4.6
|
Unwinding of Designated Transactions
|
|
On or prior to any repayment or prepayment of all or part of the Loan or any cancellation or reduction of all or part of the Commitments (including, without limitation, pursuant to clauses 4.1, 4.2, 4.3, 8.2.1(a), 10.2 or 12), the Borrowers shall upon the request of the Swap Provider wholly or partially reverse, offset, unwind, cancel, close out, net out or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time thereafter pursuant to clause 4.1 or the amount of the Total Commitment as cancelled or reduced to that date.
|
5
|
Fees, commitment commission and expenses
|
5.1
|
Fees
|
|
The Borrowers shall pay to the Agent:
|
5.1.1
|
for the account of the Arrangers, on or prior to the date of this Agreement, such fees and in such amounts as are specified in the relevant Fee Letters;
|
5.1.2
|
for the account of the Agent, on or prior to the date of this Agreement and at twelve (12) monthly intervals thereafter until all moneys owing under the Security Documents have been repaid in full, an annual agency fee of such amount as is specified in the relevant Fee Letter; and
|
5.1.3
|
for the account of each Bank pro rata in accordance with its Commitment, on each of the dates falling at three (3) monthly intervals after the date of this Agreement until the last day of the Drawdown Period and on such day, commitment commission computed from the date of this Agreement (in the case of the first payment of commission) and from the due date of the preceding payment of commission (in the case of each subsequent payment), at the rate of zero point five zero per cent (0.50%) per annum on the daily undrawn amount of the Total Commitment.
|
|
The fees referred to in clauses 5.1.1 and 5.1.2 and the commitment commission referred to in clause 5.1.3 shall be non-refundable and shall be payable by the Borrowers, whether or not any part of the Total Commitment is ever advanced.
|
5.2
|
Expenses
|
|
The Borrowers shall pay to the Agent on a full indemnity basis on demand all expenses (including legal, printing and out-of-pocket expenses) incurred by the Creditors or any of them:
|
5.2.1
|
in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents and of any amendment or extension of or the granting of any waiver or consent under, any of the Security Documents, the syndication of the Loan and/or the securitisation of the Loan and any or all of the Security Documents; and
|
5.2.2
|
in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, any of the Security Documents, or otherwise in respect of the moneys owing under any of the Security Documents,
|
|
together with interest at the rate referred to in clause
3.4
from the date on which such expenses were incurred to the date of payment (as well after as before judgment).
|
5.3
|
Value added tax
|
|
All fees and expenses payable pursuant to this clause 5 and/or pursuant to the Security Documents shall be paid together with value added tax or any similar tax (if any) properly chargeable thereon. Any value added tax chargeable in respect of any services supplied by the Creditors or any of them under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.
|
5.4
|
Stamp and other duties
|
|
The Borrowers shall pay all stamp, documentary, registration or other like duties or taxes (including any duties or taxes payable by, or assessed on, the Creditors or any of them) imposed on or in connection with any of the Underlying Documents, the Security Documents or the Loan and shall indemnify the Creditors or any of them against any liability arising by reason of any delay or omission by the Borrowers to pay such duties or taxes.
|
6
|
Payments and taxes; accounts and calculations
|
6.1
|
No set-off or counterclaim
|
|
The Borrowers acknowledge that in performing their respective obligations under this Agreement, the Banks will be incurring liabilities to third parties in relation to the funding of amounts to the Borrowers, such liabilities matching the liabilities of the Borrowers to the Banks and that it is reasonable for the Banks to be entitled to receive payments from the Borrowers gross on the due date in order that each of the Banks is put in a position to perform its matching obligations to the relevant third parties. All payments to be made by the Borrowers under any of the Security Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in clause
6.6
, free and clear of any deductions or withholdings, in Dollars on the due date to such account at such bank and in such place as the Agent may from time to time specify for this purpose. Save for payments which are for the account of the Swap Provider and save as otherwise provided in this Agreement or any relevant Security Documents, such payments shall be for the account of all Banks and the Agent or, as the case may be, the Security Agent shall distribute such payments in like funds as are received by the Agent or, as the case may be, the Security Agent to the Banks rateably in accordance with their respective Commitment or (if after the first drawdown) Contribution, as the case may be.
|
6.2
|
Payment by the Banks
|
|
All sums to be advanced by the Banks to the Borrowers under this Agreement shall be remitted in Dollars on the Drawdown Date for the relevant Advance to the account of the Agent at such bank as the Agent may have notified to the Banks and shall be paid by the Agent to such account as is specified in the Drawdown Notice for such Advance.
|
6.3
|
Non-Banking Days
|
|
When any payment under any of the Security Documents would otherwise be due on a day which is not a Banking Day, the due date for payment shall be extended to the next following Banking Day unless such Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day.
|
6.4
|
Calculations
|
|
All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year.
|
6.5
|
Certificates conclusive
|
|
Any certificate or determination of the Agent or the Security Agent or any Bank or the Swap Provider as to any rate of interest or any other amount pursuant to and for the purposes of any of the Security Documents shall, in the absence of manifest error, be conclusive and binding on the Borrowers and (in the case of a certificate or determination by the Agent or the Security Agent) on the other Creditors.
|
6.6
|
Grossing-up for Taxes
|
6.6.1
|
If at any time the Borrowers are required to make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of any Creditor (or if the Agent or, as the case may be, the Security Agent is required to make any such deduction or withholding from a payment to a Bank), the sum due from the Borrowers in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the relevant Creditor receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrowers shall indemnify each Creditor against any losses or costs incurred by it by reason of any failure of the Borrowers to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrowers shall promptly deliver to the Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.
|
6.6.2
|
For the avoidance of doubt, clause 6.6.1 does not apply in respect of sums due from the Borrowers to the Swap Provider under or in connection with the Master Swap Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Swap Agreement shall apply.
|
6.7
|
Loan account
|
|
Each Bank shall maintain, in accordance with its usual practice, an account evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Agent shall maintain a control account showing the Loan, interest and other sums owing and/or payable by the Borrowers under the Security Documents. The control account shall, in the absence of manifest error, be conclusive as to the amount from time to time owing by the Borrowers under the Security Documents.
|
6.8
|
Agent may assume receipt
|
|
Where any sum is to be paid under this Agreement to the Agent for the account of another person, the Agent may assume that the payment will be made when due and may (but shall not be obliged to) make such sum available to the person so entitled. If it proves to be the case that such payment was not made to the Agent, then the person to whom such sum was so made available shall on request refund such sum to the Agent together with interest thereon sufficient to compensate the Agent for the cost of making available such sum up to the date of such repayment and the person by whom such sum was payable shall indemnify the Agent for any and all loss or expense which the Agent may sustain or incur as a consequence of such sum not having been paid on its due date.
|
6.9
|
Partial payments
|
|
If, on any date on which a payment is due to be made by the Borrowers under any of the Security Documents, the amount received by the Agent from the Borrowers falls short of the total amount of the payment due to be made by the Borrowers on such date then, without prejudice to any rights or remedies available to the Creditors or any of them under the Security Documents, the Agent shall apply the amount actually received from the Borrowers in or towards discharge of the obligations of the Borrowers under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by the Borrowers:
|
6.9.1
|
firstly, in or towards payment, on a pro rata basis, of any unpaid costs and expenses of any Arranger, the Agent, the Security Agent or any other Creditor under, or in relation to, the Security Documents;
|
6.9.2
|
secondly, in or towards payment of any fees or commitment commission payable to any Arranger, the Agent or any other Creditor under, or in relation to, the Security Documents which remain unpaid;
|
6.9.3
|
thirdly, in or towards payment to the Banks, on a pro rata basis, of any accrued interest which shall have become due under any of the Security Documents but remains unpaid;
|
6.9.4
|
fourthly, in or towards payment to the Banks, on a pro rata basis, of any principal in respect of the Loan which shall have become due but remains unpaid;
|
6.9.5
|
fifthly, in or towards payment to any Bank for any loss suffered by reason of any payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid and which amounts are so payable under this Agreement;
|
6.9.6
|
sixthly, in or towards payment to the Swap Provider of any amounts owing to it under the Master Swap Agreement; and
|
6.9.7
|
seventhly, in or towards payment to the relevant person of any other sum which shall have become due under any of the Security Documents but remains unpaid (and, if more than one such sum so remains unpaid, on a pro rata basis).
|
|
The order of application set out in clauses 6.9.3 to 6.9.7 may be varied by the Agent if the Majority Banks so direct, without any reference to, or consent or approval from, the Borrowers.
|
7
|
Representations and warranties
|
7.1
|
Continuing representations and warranties
|
|
The Borrowers jointly and severally represent and warrant to each Creditor that:
|
7.1.1
|
Due incorporation
|
|
the Borrowers and each of the other Security Parties are duly incorporated and validly existing in good standing under the laws of their respective countries of incorporation as limited liabilities companies or (as the case may be) corporations, and have power to carry on their respective businesses as they are now being conducted and to own their respective property and other assets;
|
7.1.2
|
Corporate power
|
|
each of the Borrowers has power to execute, deliver and perform its obligations under the Underlying Documents and the Borrowers' Security Documents to which it is or is to be a party and to borrow the Total Commitment and each of the other Security Parties has power to execute and deliver and perform its obligations under the Security Documents and the Underlying Documents to which it is or is to be a party; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of either Borrower to borrow will be exceeded as a result of borrowing the Loan;
|
7.1.3
|
Binding obligations
|
|
the Underlying Documents and the Security Documents constitute or will, when executed, constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms;
|
7.1.4
|
No conflict with other obligations
|
|
the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and 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 either of the Borrowers or any other Security Party 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 either of the Borrowers or any other Security Party is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of either of the Borrowers or any other Security Party or (iv) result in the creation or imposition of or oblige either of the Borrowers or any other member of the Group or any other Security Party to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of either of the Borrowers or any other member of the Group or any other Security Party;
|
7.1.5
|
No litigation
|
|
no litigation, arbitration or administrative proceeding is taking place, pending or, to the knowledge of the officers of either of the Borrowers, threatened against either of the Borrowers or any other member of the Group or any other Security Party which could have a material adverse effect on the business, assets, management prospects, performance, operations, results of operations, properties or the condition (financial or otherwise) of either of the Borrowers or any other member of the Group or any other Security Party or the Group as a whole;
|
7.1.6
|
No filings required
|
|
save for the registration of the Mortgages under the laws of the Flag State through the Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Relevant Jurisdiction;
|
7.1.7
|
Choice of law
|
|
the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgages) and the choice of Marshall Islands law to govern the Mortgages, and the submissions by the Security Parties therein to the non-exclusive jurisdiction of the English courts are valid and binding;
|
7.1.8
|
No immunity
|
|
neither of the Borrowers nor any other Security Party nor any of their respective assets 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 judgement, execution or other enforcement);
|
|
every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of each of the Underlying Documents and each of the Security Documents to which it is a party or the performance by each Security Party of its obligations under the Security Documents to which it is a party, respectively, has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same;
|
7.1.10
|
Financial statements correct and complete
|
|
the unaudited consolidated financial statements of the Group in respect of the financial half-year ended on 30 June 2010 as delivered to the Agent, have been prepared in accordance with the Applicable Accounting Principles which have been consistently applied and present fairly and accurately the consolidated financial position of the Group as at the date they were prepared and the consolidated results of the operations of the Group for the financial period ended on such date and, as at such date no member of the Group had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements;
|
7.1.11
|
Compliance with laws and regulations
|
|
each of the Borrowers is in compliance with the terms and conditions of all laws, regulations, agreements, licences and concessions material to the carrying on of its business (including in relation to Taxation);
|
7.1.12
|
No material adverse change
|
|
there has been no material adverse change in the business, management, assets, operations, results of operations, properties, performance, prospects or the condition (financial or otherwise) of any of the Borrowers or the Manager or the Corporate Guarantor or the Group as a whole from that existing on the date of this Agreement as described by or on behalf of the Borrowers and/or any other Security Party to the Agent and/or the Arrangers in the negotiation of this Agreement; and
|
7.1.13
|
Solvency
|
|
(a)
|
none of the Borrowers nor any other Relevant Party is unable, or admits or has admitted its inability, to pay its debts or has suspended making payments on any of its debts;
|
|
(b)
|
none of the Borrowers nor any other Relevant Party by reason of actual or anticipated financial difficulties has commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness;
|
|
(c)
|
the value of the assets of the Borrowers and the other Relevant Parties is not less than their respective liabilities (taking into account contingent and prospective liabilities); and
|
|
(d)
|
no moratorium has been, or may, in the reasonably foreseeable future be, declared in respect of any Indebtedness of the Borrowers or any other Relevant Party.
|
7.2
|
Initial representations and warranties
|
|
The Borrowers jointly and severally further represent and warrant to each Creditor that:
|
7.2.1
|
Pari passu and subordinated indebtedness
|
|
(a)
|
the obligations of each Borrower under this Agreement are direct, general and unconditional obligations of such Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of such Borrower with the exception of any obligations which are mandatorily preferred by law and not by contract;
|
|
(b)
|
any Indebtedness of the Borrowers or the Corporate Guarantor owing to any of its respective shareholders or other members of the Group is subordinated in all respects to the Borrowers' obligations under this Agreement and the Master Swap Agreement (in the case of the Borrowers) and to the Corporate Guarantor's obligations under the Corporate Guarantee (in the case of the Corporate Guarantor);
|
7.2.2
|
No default under other Indebtedness
|
|
neither of the Borrowers nor any other member of the Group nor any other Security Party is (nor would with the giving of notice or lapse of time or the satisfaction of any other condition or combination thereof be) in breach of or in default under any agreement relating to Indebtedness to which it is a party or by which it may be bound;
|
7.2.3
|
Information
|
|
the information, exhibits and reports furnished by or on behalf of any Security Party to the Agent and/or the Arrangers in connection with the negotiation and preparation of the Security Documents are true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other facts the omission of which would make any fact or statement therein misleading;
|
7.2.4
|
No withholding Taxes
|
|
no Taxes are imposed by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;
|
7.2.5
|
No Default
|
|
no Default has occurred and is continuing;
|
7.2.6
|
The Ships
|
|
each Ship will, on the Drawdown Date of the Advance relevant to such Ship, be:
|
|
(a)
|
in the absolute ownership of the relevant Borrower who will, on and after such Drawdown Date, be the sole, legal and beneficial owner of such Ship;
|
|
(b)
|
permanently registered through the Registry as a ship under the laws and flag of the relevant Flag State;
|
|
(c)
|
operationally seaworthy and in every way fit for service; and
|
|
(d)
|
classed with the relevant Classification free of all requirements and recommendations of the relevant Classification Society;
|
7.2.7
|
Ships' employment
|
|
save for any relevant Charter delivered to the Agent prior to the date of this Agreement, neither Ship is nor will, on or before the Drawdown Date of the Advance relevant to such Ship, be subject to any charter or contract or to any agreement to enter into any charter or contract which, if entered into after the date of the relevant Ship Security Documents, would have required the consent of the Agent or, as the context may require, the Security Agent and on or before the Drawdown Date of the Advance relevant to such Ship, there will not be any agreement or arrangement whereby the Earnings (as defined in the General Assignment for such Ship) of such Ship may be shared with any other person;
|
7.2.8
|
Freedom from Encumbrances
|
|
neither of the Ships, nor its Earnings, Insurances or Requisition Compensation (each as defined in the relevant Ship Security Documents) nor the Operating Account for such Ship nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be, on the Drawdown Date of the Advance relevant to such Ship, subject to any Encumbrance;
|
7.2.9
|
Compliance with Environmental Laws and Approvals
|
|
except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Agent:
|
|
(a)
|
the Borrowers and the other Relevant Parties and, to the best of the Borrowers' knowledge and belief (having made due enquiry), their respective Environmental Affiliates have complied with the provisions of all Environmental Laws;
|
|
(b)
|
the Borrowers and the other Relevant Parties and, to the best of the Borrowers' knowledge and belief (having made due enquiry), their respective Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and
|
|
(c)
|
neither the Borrowers nor any other Relevant Party nor, to the best of the Borrowers' knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have received notice of any Environmental Claim that the Borrowers or any other Relevant Party or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval;
|
7.2.10
|
No Environmental Claims
|
|
except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Agent, there is no Environmental Claim pending or, to the best of the Borrowers' knowledge and belief, threatened against the Borrowers or either of the Ships or any other Relevant Party or any other Relevant Ship or, to the best of the Borrowers' knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates;
|
7.2.11
|
No potential Environmental Claims
|
|
except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Agent, there has been no emission, spill, release or discharge of a Pollutant from either of the Ships or any other Relevant Ship owned by, managed or crewed by or chartered to the Borrowers nor, to the best of the Borrowers' knowledge and belief (having made due enquiry), from any Relevant Ship owned by, managed or crewed by or chartered to any other Relevant Party which could give rise to an Environmental Claim;
|
7.2.12
|
Copies true and complete
|
|
the copies of the Underlying Documents delivered or to be delivered to the Agent pursuant to clause
9.1
are or will, when delivered, be true and complete copies of such documents; such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their terms and there have been no amendments or variations thereof or defaults thereunder;
|
7.2.13
|
Shareholdings and management
|
|
(a)
|
each of the Borrowers is a wholly-owned direct Subsidiary of the Corporate Guarantor;
|
|
(b)
|
all of the issued shares in the Manager are legally and beneficially owned by the Corporate Guarantor;
|
|
(c)
|
to the best of their knowledge and belief (having made due and careful enquiry), no person, or persons acting in concert (other than any financial institution acting as a passive investor), are the legal or ultimate beneficial owners of a higher percentage of the total issued share capital of the Corporate Guarantor, than the percentage of the total issued share capital of the Corporate Guarantor, beneficially owned by Mr Simeon Palios; and
|
|
(d)
|
Mr. Simeon Palios is the Chief Executive Officer, the Chairman and a member of the board of directors of the Corporate Guarantor;
|
7.2.14
|
DOC and SMC
|
|
on the Drawdown Date of the Advance relevant to a Ship, the Operator will have a DOC for itself and an SMC in respect of such Ship; and
|
7.2.15
|
ISPS Code
|
|
on the Drawdown Date of the Advance relevant to a Ship, the Borrower owning such Ship shall have a valid and current ISSC in respect of such Ship and such Ship shall be in compliance with the ISPS Code.
|
7.3
|
Repetition of representations and warranties
|
|
On and as of each Drawdown Date and (except in relation to the representations and warranties in clause 7.2) on each Interest Payment Date, the Borrowers shall (a) be deemed to repeat the representations and warranties in clauses
7.1
and
7.2
(other than clauses 7.2.13(c) and (d)) as if made with reference to the facts and circumstances existing on such day and (b) be deemed to further represent and warrant to each of the Creditors that the then latest financial statements delivered to the Agent by the Borrowers (if any) under clause 8.1.5 have been prepared in accordance with the Applicable Accounting Principles which have been consistently applied and present fairly and accurately the consolidated financial position of the Group as at the end of the financial period to which the same relate and the consolidated results of the operations of the Group, respectively, for the financial period to which the same relate and, as at the end of such financial period, neither the Corporate Guarantor nor any other member of the Group had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements.
|
8
|
Undertakings
|
8.1
|
General
|
|
The Borrowers jointly and severally undertake with each Creditor that, from the date of this Agreement and so long as any moneys are owing under any of the Security Documents and while all or any part of the Total Commitment remains outstanding, they will:
|
8.1.1
|
Notice of Default
|
|
promptly inform the Agent of any occurrence of which either of them becomes aware which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents and the Underlying Documents and, without prejudice to clause 8.1.9 and without limiting the generality of the foregoing, will inform the Agent of any Default forthwith upon becoming aware thereof and will from time to time, if so requested by the Agent, confirm to the Agent in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing;
|
8.1.2
|
Consents and licences
|
|
without prejudice to clauses
7.1
and
9
, obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, licence or approval of governmental or public bodies or authorities or courts and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;
|
8.1.3
|
Use of proceeds
|
|
use the Loan or, as the case may be, the Advances for their benefit and under their full responsibility and exclusively for the purposes specified in clauses
1.1
and
2.5
;
|
8.1.4
|
Pari passu and subordination
|
|
(a)
|
ensure that their obligations under this Agreement and the Master Swap Agreement shall, without prejudice to the provisions of clause 8.3 and the security intended to be created by the Security Documents, at all times rank at least pari passu with all their other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract; and
|
|
(b)
|
ensure that the obligations (if any) of the Borrowers to repay any loan advanced to them by their shareholders or any other member of the Group are at all times fully subordinated towards their obligations to the Creditors under this Agreement and the other Security Documents and that any such loans or advances are and remain at all times on terms and conditions acceptable to the Banks in all respects;
|
8.1.5
|
Financial statements and Compliance Certificate
|
|
(a)
|
prepare or cause to be prepared consolidated financial statements of the Group in accordance with the Applicable Accounting Principles consistently applied in respect of each financial year (but commencing with the financial year ending on 31 December 2010) and cause the same to be reported on by their auditors and prepare unaudited consolidated financial statements of the Group on the same basis as the annual statements in respect of each financial quarter, including on a year to date basis (but commencing with the financial quarter ending on 31 December 2010) and deliver as many copies of the same as the Agent may reasonably require as soon as practicable but not later than one hundred and twenty (120) days (in the case of audited financial statements) or ninety (90) days (in the case of unaudited financial statements) after the end of the financial period to which they relate; and
|
|
(b)
|
deliver to the Agent in sufficient copies for all the Banks, a Compliance Certificate for the relevant period executed by the Corporate Guarantor and counter-signed by the Chief Financial Officer or two authorised Directors of the Corporate Guarantor at the time when any unaudited or audited consolidated financial statements of the Group are delivered to the Agent in accordance with clause 8.1.5(a) and clause 5.1.4 of the Corporate Guarantee;
|
8.1.6
|
Delivery of reports
|
|
deliver to the Agent sufficient copies for all the Banks of every report, circular, notice or like document issued by the Borrowers or any member of the Group to their shareholders or creditors generally, at the same time when it is issued or given;
|
8.1.7
|
Provision of further information
|
|
provide the Agent with such financial and other information concerning the Borrowers, the other Security Parties, any other member of the Group, the Group as a whole and their respective affairs as the Agent may from time to time reasonably require, including, without limitation, regarding their financial standing, commitments, operations, vessel sales or purchases, any new borrowings, any material litigation, arbitration and administrative proceedings and all major financial developments in relation to each Security Party, any other member of the Group and the Group as a whole;
|
8.1.8
|
Know your customer information
|
|
deliver to the Agent such documents and evidence as the Agent shall from time to time require relating to the verification of identity and knowledge of the Agent's or any Bank's or the Swap Provider's customers and the compliance by the Agent or any Bank or the Swap Provider with all necessary "know your customer" or similar checks, always on the basis of applicable laws and regulations or the Agent's or any Bank's or any Swap Provider's own internal guidelines, in each case as such laws, regulations or internal guidelines apply from time to time;
|
8.1.9
|
Obligations under Security Documents
|
|
and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by them under the Security Documents;
|
8.1.10
|
Compliance with Code
|
|
and will procure that the Manager or any Operator will, comply with and ensure that each Ship and the Manager or any Operator at all times complies with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period and will procure that each member of the Group and each vessel thereof complies with the requirements of the Code;
|
8.1.11
|
Withdrawal of DOC and SMC
|
|
and will procure that the Manager or any Operator will, immediately inform the Agent if there is any threatened or actual withdrawal of its Operator's DOC or the SMC in respect of any Ship;
|
8.1.12
|
Issuance of DOC and SMC
|
|
and will procure that the Manager or any Operator will, promptly inform the Agent upon the issue to either of the Borrowers, the Manager or any Operator of a DOC and to each Ship of an SMC or the receipt by either of the Borrowers, the Manager or any Operator of notification that its application for the same has been refused;
|
8.1.13
|
ISPS Code Compliance
|
|
and will procure that the Manager or any Operator will:
|
|
(a)
|
maintain at all times a valid and current ISSC respect of each Ship;
|
|
(b)
|
immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of each Ship; and
|
|
(c)
|
procure that each Ship and any other vessel of the Group will comply at all times with the ISPS Code;
|
8.1.14
|
Charters
|
|
advise the Agent promptly of any Charter of either Ship and (i) forthwith after its execution deliver a certified copy of each such Charter to the Agent, (ii) forthwith following demand by the Agent execute a Charter Assignment of any such Charter in favour of the Security Agent and any notice of assignment required in connection therewith and promptly procure the service of any such notice of assignment on the relevant Charterer and the acknowledgement of such notice by the relevant Charterer and (iii) pay all legal and other costs incurred by the Agent or any other Creditor in connection with any such Charter Assignments;
|
8.1.15
|
Intra-Group transactions
|
|
ensure that any transactions, agreements or other arrangements (if any) entered into by it with any members of the Group, are entered into on an arm's length basis and for full value and consideration;
|
8.1.16
|
Minimum liquidity
|
|
maintain at all times a credit balance of no less than Four hundred thousand Dollars ($400,000) in each Operating Account; and
|
8.1.17
|
Acknowledgement
|
|
if a Charter exists on the Drawdown Date for an Advance relevant to a Ship, procure that there are delivered to the Agent, no later than fourteen (14) days after the Drawdown Date of that Advance, a duly executed acknowledgment of the notice of assignment of that Charter by the relevant Charterer in the form set out in schedule 1 of the relevant Charter Assignment, together with evidence of the authority of the relevant Charterer to execute the same.
|
8.2
|
Security value maintenance
|
8.2.1
|
Security shortfall
|
|
If at any time the Security Value shall be less than the Security Requirement, the Agent (acting on the instructions of the Majority Banks) shall give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers shall either:
|
|
(a)
|
prepay within a period of ten (10) days of the date of receipt by the Borrowers of the Agent's said notice, such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other repayment made between the date of the notice and the date of such prepayment) being equal to the Security Value; or
|
|
(b)
|
within ten (10) days of the date of receipt by the Borrowers of the Agent's said notice constitute to the satisfaction of the Agent such further security for the Loan and amounts owing under the Master Swap Agreement, as shall be acceptable to the Banks, having a value for security purposes (as determined by the Agent in its absolute discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date.
|
|
The provisions of clause 4.4 and any relevant provisions of clause 4.5 shall apply to prepayments made under
clause
8.2.1(a)
.
|
8.2.2
|
Valuation of Mortgaged Ships
|
|
Each of the Mortgaged Ships shall, for the purposes of this Agreement, be valued in Dollars as and when the Agent (acting on instructions of the Majority Banks) shall require by two (2) of the Approved Shipbrokers nominated by the Borrowers (or, failing this, by the Agent) and appointed by the Agent. Each such valuation shall be addressed to the Agent (with a copy to the Borrowers) and made without, unless required by the Agent, physical inspection and on the basis of a sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing buyer and a willing seller without taking into account the benefit of any charterparty or other engagement concerning such Mortgaged Ship. In the event that the said two (2) valuations differ between them by more than fifteen per cent (15%), then the Agent may, in its sole discretion, obtain a third valuation of a Mortgaged Ship from another Approved Broker and made on the same basis as the other two valuations for such Mortgaged Ship. The arithmetic mean of the valuations for a Mortgaged Ship eventually obtained in accordance with this clause shall constitute the value of such Mortgaged Ship for the purposes of this clause
8.2
.
|
|
The value of each Mortgaged Ship determined in accordance with the provisions of this clause 8.2 shall be binding upon the parties hereto until such time as any such further valuation shall be obtained.
|
8.2.3
|
Information
|
|
The Borrowers jointly and severally undertake with each Creditor to supply to the Agent and to any such Approved Shipbrokers such information concerning each Mortgaged Ship and its condition as such Approved Shipbroker may require for the purpose of making any such valuation.
|
8.2.4
|
Costs
|
|
All costs in connection with the Agent obtaining any valuation of the Mortgaged Ships referred to in clause
8.2.2
up to once per calendar year (without taking into account any valuation of the Mortgaged Ships included in the valuations obtained under clause 5.4 of the Corporate Guarantee), any valuation of the Fleet Vessels referred to in clause 5.4 of the Corporate Guarantee, the valuations of the Ships referred to in schedule 3, and any valuation either of any additional security for the purposes of ascertaining the Security Value at any time or necessitated by the Borrowers electing to constitute additional security pursuant to clause
8.2.1(b)
, shall be borne by the Borrowers
Provided however
that, if a Default shall have occurred, the cost of any and all such valuation or valuations of the Mortgaged Ships and the Fleet Vessels shall be borne by the Borrowers.
|
8.2.5
|
Valuation of additional security
|
|
For the purpose of this clause 8.2, the market value of any additional security provided or to be provided to the Security Agent shall be determined by the Agent in its absolute discretion without any necessity for the Agent assigning any reason thereto.
|
8.2.6
|
Documents and evidence
|
|
In connection with any additional security provided in accordance with this clause 8.2, the Agent shall be entitled to receive such evidence and documents of the kind referred to in schedule 3 as may in the Agent's opinion be appropriate and such favourable legal opinions as the Agent shall in its absolute discretion require.
|
8.3
|
Negative undertakings
|
|
The Borrowers jointly and severally undertake with each Creditor that, from the date of this Agreement and so long as any moneys are owing under the Security Documents and while all or any part of the Total Commitment remains outstanding, the Borrowers will not, without the prior written consent of the Agent:
|
8.3.1
|
Negative pledge
|
|
permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of their present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any Security Party (other than the Corporate Guarantor) or any other person;
|
8.3.2
|
No merger
|
|
merge or consolidate with any other person or enter into any demerger, amalgamation or corporate reconstruction or redomiciliation of any type;
|
8.3.3
|
Disposals
|
|
sell, transfer, abandon, lend or otherwise dispose of or cease to exercise direct control over any part (being, either alone or when aggregated with all other disposals falling to be taken into account pursuant to this clause 8.3.3, material in the opinion of the Agent in relation to their respective undertakings, assets, rights and revenues taken as a whole) of their respective present or future undertakings, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading but in any event excluding the Ships) whether by one or a series of transactions related or not;
|
8.3.4
|
Other business
|
|
undertake any business other than the ownership, chartering and operation of the Ships and the chartering of the Ships to third parties;
|
8.3.5
|
Acquisitions
|
|
acquire any further assets other than the Ships and rights arising under contracts entered into by or on behalf of the Borrowers in the ordinary course of their businesses of owning, operating and chartering the Ships;
|
8.3.6
|
Other obligations
|
|
incur any obligations except for obligations arising under the Underlying Documents or the Security Documents or contracts entered into in the ordinary course of their business of owning, operating and chartering the Ships;
|
8.3.7
|
No borrowing
|
|
incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents;
|
8.3.8
|
Repayment of borrowings
|
|
repay or prepay the principal of, or pay interest on or any other sum in connection with, any of their Borrowed Money except for Borrowed Money pursuant to the Security Documents;
|
8.3.9
|
Guarantees
|
|
issue any guarantees or indemnities or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which a Ship is entered, guarantees required to procure the release of a Ship from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of a Ship;
|
8.3.10
|
Loans
|
|
make any loans or grant any credit (save for normal trade credit in the ordinary
course of business) to any person or agree to do so;
|
8.3.11
|
Sureties
|
|
permit any Indebtedness of either Borrower to any person (other than the Creditors) to be guaranteed by any person (save for guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which a Ship is entered, guarantees required to procure the release of a Ship from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of a Ship);
|
8.3.12
|
Share capital and distribution
|
|
purchase or otherwise acquire for value any shares of their capital or declare or pay any dividends or distribute any of their present or future assets, undertakings, rights or revenues to any of their shareholders
Provided however
that each Borrower may declare or pay dividends to the Corporate Guarantor, if no Event of Default has occurred and is continuing at the time of declaration or payment of such dividends or would occur as a result thereof;
|
8.3.13
|
Change of management of a Ship
|
|
appoint any person to carry out the commercial and technical management of any Ship other than the Manager or terminate a Management Agreement or vary or amend the terms thereof;
|
8.3.14
|
Designated Transactions
|
|
enter into any derivative transactions other than Designated Transactions; or
|
8.3.15
|
Subsidiaries
|
|
form or acquire any Subsidiaries; or
|
8.3.16
|
Financial year, auditors and constitutional documents
|
|
(a)
|
change, cause, permit or agree to any change in, the way of computation of their financial year;
|
|
(b)
|
change, permit or agree to any change of, their auditors from those existing on the date of this Agreement; or
|
|
(c)
|
change, amend or vary, or agree to or permit any change, amendment or variation of or to, their constitutional documents.
|
9
|
Conditions
|
9.1
|
Documents and evidence
|
|
The obligation of each Bank to make its Commitment available shall be subject to the condition that:
|
9.1.1
|
the Agent, or its duly authorised representative, shall have received, not later than the day on which the Drawdown Notice for the first Advance is given, the documents and evidence specified in Part 1 of schedule 3 in form and substance satisfactory to the Agent; and
|
9.1.2
|
the Agent, or its duly authorised representative, shall have received, on or prior to the drawdown of an Advance for a Ship, the documents and evidence specified in Part 2 of schedule 3 in respect of such Advance and the Ship relevant to it, in form and substance satisfactory to the Agent.
|
9.2
|
General conditions precedent
|
|
The obligation of each Bank to contribute to any Advance shall be subject to the further conditions that, at the time of the giving of the Drawdown Notice for such Advance, and at the time of the making of such Advance:
|
9.2.1
|
the representations and warranties contained in (a) clauses
7.1
, 7.2 and 7.3(b) and (b) clause 4 of the Corporate Guarantee, are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; and
|
9.2.2
|
no Default shall have occurred and be continuing or would result from the making of such Advance.
|
9.3
|
Waiver of conditions precedent
|
|
The conditions specified in this clause
9
are inserted solely for the benefit of the Banks and may be waived by the Agent (acting on the instructions of the Majority Banks) in whole or in part and with or without conditions.
|
9.4
|
Further conditions precedent
|
|
Not later than five (5) Banking Days prior to each Drawdown Date and not later than five (5) Banking Days prior to each Interest Payment Date, the Agent (acting on the instructions of the Majority Banks) may request and the Borrowers shall, not later than two (2) Banking Days prior to such date, deliver to the Agent on such request further favourable certificates and/or favourable opinions as to any or all of the matters which are the subject of clauses
7
,
8
,
9
and
10
.
|
10
|
Events of Default
|
10.1
|
Events
|
|
There shall be an Event of Default if:
|
10.1.1
|
Non-payment
: any Security Party fails to pay any sum payable by it under any of the Security Documents at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or
|
10.1.2
|
Master Swap Agreement
: (a) an Event of Default or Potential Event of Default (in each case as defined in the Master Swap Agreement) has occurred and is continuing with the Borrowers or either of them as the Defaulting Party (as defined in the Master Swap Agreement) under the Master Swap Agreement or (b) an Early Termination Date has occurred or been or become capable of being effectively designated under the Master Swap Agreement by the Swap Provider or (c) the Master Swap Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason; or
|
10.1.3
|
Breach of Insurance and certain other obligations
: either of the Borrowers or, as the context may require, the Manager fails to obtain and/or maintain the Insurances (as defined in, and in accordance with the requirements of, the Ship Security Documents) for either of the Mortgaged Ships or if any insurer in respect of such Insurances cancels such Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for such Insurances or for any other failure or default on the part of either of the Borrowers or any other person or either of the Borrowers commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by them under clauses 8.1.5, 8.2 or 8.3 or the Corporate Guarantor commits any breach or fails to observe any of the obligations or undertakings expressed to be assumed by it under clauses 5.1.4, 5.1.5, 5.2, 5.3 or 5.4 of the Corporate Guarantee; or
|
10.1.4
|
Breach of other obligations
: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses
10.1.1
and 10.1.3 above) and, in respect of any such breach or omission which in the opinion of the Agent (acting on the instructions of the Majority Banks) is capable of remedy, such action as the Agent (acting on the instructions of the Majority Banks) may require shall not have been taken within fourteen (14) days of the Agent notifying the relevant Security Party of such default and of such required action; or
|
10.1.5
|
Misrepresentation
: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or
|
10.1.6
|
Cross-default
: any Indebtedness of any Security Party or any other member of the Group is not paid when due or any Indebtedness of any Security Party or any other member of the Group becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) 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 or any other member of the Group of a voluntary right of prepayment), or any creditor of any Security Party or any other member of the Group becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to any Security Party or other member of the Group relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party or any other member of the Group shall have satisfied the Agent that such withdrawal, suspension or cancellation will not affect or prejudice in any way the ability of the relevant Security Party or of the relevant member of the Group to pay its debts as they fall due and fund its commitments, or any guarantee given by any Security Party or any other member of the Group in respect of Indebtedness is not honoured when due and called upon
Provided that
the amount or aggregate amount at any one time, of all Indebtedness of any Security Party or any other member of the Group in relation to which any of the foregoing events shall have occurred and be continuing, is equal to or greater than Five million Dollars ($5,000,000) or its equivalent in the currency which the same is denominated or payable.
|
|
For the avoidance of doubt for the purpose of this clause 10.1.6 "Indebtedness" shall exclude Indebtedness owing under this Agreement and/or the other Security Documents; or
|
10.1.7
|
Legal process
: any judgment or order made against any Security Party or other member of the Group is not stayed or complied with within seven (7) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party or other member of the Group and is not discharged within seven (7) days; or
|
10.1.8
|
Insolvency
: any Security Party or other member of the Group is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; has assets the value of which is less than the value of its liabilities (taking into account contingent and prospective liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or
|
10.1.9
|
Reduction or loss of capital
: a meeting is convened by any Security Party or other member of the Group for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital; or
|
10.1.10
|
Winding up
: any corporate action, legal proceedings or other procedure or step is taken for the purpose of winding-up any Security Party or other member of the Group or an order is made or resolution passed for the winding up of any Security Party or other member of the Group or a notice is issued convening a meeting for the purpose of passing any such resolution; or
|
10.1.11
|
Administration
: any petition is presented, notice given or other step is taken for the purpose of the appointment of an administrator of any Security Party or other member of the Group or the Agent believes that any such petition or other step is imminent or an administration order is made in relation to any Security Party or other member of the Group; or
|
10.1.12
|
Appointment of receivers and managers
: any administrative or other receiver, liquidator, compulsory manager or other similar officer is appointed of any Security Party or other member of the Group or any part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any part of the assets of any Security Party or other member of the Group; or
|
10.1.13
|
Compositions
: any corporate action, legal proceedings or other procedures or steps are taken, or negotiations commenced, by any Security Party or other member of the Group or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such person and any of its creditors; or
|
10.1.14
|
Analogous proceedings
: there occurs, in relation to any Security Party or other member of the Group, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Agent, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.7 to 10.1.13 (inclusive) or any Security Party or other member of the Group otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or
|
10.1.15
|
Cessation of business
: any Security Party or any other member of the Group suspends or ceases or threatens to suspend or cease to carry on its business; or
|
10.1.16
|
Seizure
: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party or any other member of the Group are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; or
|
10.1.17
|
Invalidity
: any of the 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 Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or
|
10.1.18
|
Unlawfulness
: it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for a Creditor to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or
|
10.1.19
|
Repudiation
: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or
|
10.1.20
|
Encumbrances enforceable
: any Encumbrance (other than Permitted Liens) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or
|
10.1.21
|
Material adverse change
: there occurs, in the opinion of the Agent, a material adverse change in the business, management, assets, operations, results of operations, properties, performances, prospects or the condition (financial or otherwise) of either Borrower or any other Security Party or any other member of the Group from that existing on the date of this Agreement, as described by or on behalf of the Borrowers or any other Security Party to the Agent and/or the Arrangers in the negotiation of this Agreement which in the reasonable opinion of the Agent (following consultation with the Banks) is likely, materially and adversely, to affect the ability of any Security Party to perform all or any of its obligations under, or otherwise to comply with the terms of, any of the Security Documents; or
|
10.1.22
|
Arrest
: either Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the relevant Borrower and such Borrower shall fail to procure the release of such Ship within a period of seven (7) days thereafter; or
|
10.1.23
|
Registration
: the registration of either Ship under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Agent (acting on the instructions of the Majority Banks) or if such registration of such Ship is not renewed at least thirty (30) days prior to the expiry of such registration; or
|
10.1.24
|
Unrest
: the Flag State of either Ship becomes involved in hostilities or civil war or there is a seizure of power in the Flag State of either Ship by unconstitutional means if, in any such case such event could in the opinion of the Agent reasonably be expected to have a material adverse effect on the security constituted by any of the Security Documents; or
|
10.1.25
|
Environment
: either Borrower and/or any other Relevant Party and/or any of their respective Environmental Affiliates fails to comply with any Environmental Law or any Environmental Approval or either of the Ships or any other Relevant Ship is involved in any incident which gives rise or may give rise to an Environmental Claim if, in any such case, such non-compliance or incident or the consequences thereof could, in the opinion of the Majority Banks acting through the Agent, reasonably be expected to have an adverse effect on the business, assets, operations, property or financial condition of either Borrower or any other Security Party, or on the security constituted by any of the Security Documents or on the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents; or
|
10.1.26
|
P&I
: either Borrower or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which such Borrower's Ship is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where such Ship operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or
|
10.1.27
|
Shareholdings
:
|
|
(a)
|
either of the Borrowers ceases at any time to be a wholly-owned direct Subsidiary of the Corporate Guarantor; or
|
|
(b)
|
there is any change in the legal and/or beneficial ownership of any of the shares of the Manager, from that existing on the date of this Agreement, as set out in clause
7.2.13
; or
|
|
(c)
|
any person, or persons acting in concert (other than any financial institution acting as a passive investor), become at any time the legal or ultimate beneficial owners of a higher percentage of the total issued share capital of the Corporate Guarantor, than the percentage of the total issued share capital of the Corporate Guarantor, beneficially owned by Mr Simeon Palios at that time; or
|
|
(d)
|
Mr. Simeon Palios ceases to hold an executive position in the Corporate Guarantor; or
|
10.1.28
|
Listing
: the shares of the Corporate Guarantor are de-listed or cease to trade permanently on, the New York Stock Exchange; or
|
10.1.29
|
Accounts
: moneys are withdrawn from either of the Operating Accounts other than in accordance with clause
14
or as otherwise provided in this Agreement; or
|
10.1.30
|
Manager
: either Ship ceases to be managed by the Manager; or
|
10.1.31
|
Licenses, etc
: any license, authorisation, consent or approval at any time necessary to enable any Security Party to comply with its obligations under the Security Documents is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect or if any exchange control or other law or regulation shall exist which would make any transaction under the Security Documents or the continuation thereof, unlawful or would prevent the performance by any Security Party of any term of any of the Security Documents; or
|
10.1.32
|
Material events
: any other event occurs or circumstance arises which, in the reasonable opinion of the Agent (following consultation with the Banks), is likely materially and adversely to affect either (a) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents or (b) the security created by any of the Security Documents.
|
10.2
|
Acceleration
|
|
The Agent may, and if so requested by the Majority Banks shall, without prejudice to any other rights of the Banks, at any time after the happening of an Event of Default by notice to the Borrowers declare that:
|
10.2.1
|
the obligation of each Bank to make its Commitment available shall be terminated, whereupon the Total Commitment shall be reduced to zero forthwith; and/or
|
10.2.2
|
the Loan and all interest and commitment commission accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.
|
10.3
|
Demand basis
|
|
If, pursuant to clause
10.2.2
, the Agent declares the Loan to be due and payable on demand, the Agent may (and if so instructed by the Majority Banks shall) by written notice to the Borrowers (a) call for repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable on the date so specified together with all interest and commitment commission accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.
|
10.4
|
Position of Swap Provider
|
|
Neither the Agent nor the Security Agent shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this clause 10, to have any regard to the requirements of the Swap Provider except to the extent that the Swap Provider is also a Bank.
|
11
|
Indemnities
|
11.1
|
Miscellaneous indemnities
|
|
The Borrowers shall on demand indemnify each Creditor, without prejudice to any of such Creditor's other rights under any of the Security Documents, against any loss (including loss of Margin) or expense which such Creditor shall certify as sustained or incurred by it as a consequence of:
|
11.1.1
|
any default in payment by any Security Party of any sum under any of the Security Documents when due;
|
11.1.2
|
the occurrence of any other Event of Default;
|
11.1.3
|
any prepayment or repayment of the Loan or part thereof being made under clauses 4.1, 4.2,
4.3
,
8.2.1
or
12.1
, or any other repayment or prepayment 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; or
|
11.1.4
|
any Advance not being made for any reason (excluding any default by any Creditor) after the Drawdown Notice for such Advance has been given,
|
|
including, in any such case, but not limited to, any loss or expense sustained or incurred by the relevant Creditor in maintaining or funding its Contribution or, as the case may be, Commitment or any part thereof or in liquidating or re-employing deposits from third parties acquired to effect or maintain its Contribution or, as the case may be, Commitment or any part thereof or in terminating or reversing or otherwise in connection with, any interest rate and/or currency swap or other derivative transaction or other arrangement entered into by a Creditor (whether with another legal entity or with another office or department of such Creditor) to hedge any exposure arising under this Agreement or in terminating, reversing, or otherwise in connection with, any open position arising under this Agreement, or any other amount owing to such Creditor.
|
11.2
|
Currency indemnity
|
|
If any sum due from the Borrowers or either of them under any of the Security Documents or any order or judgment given or made in relation thereto has to be converted from the currency (the "
first currency
") in which the same is payable under the relevant Security Document or under such order or judgment into another currency (the "
second currency
") for the purpose of (a) making or filing a claim or proof against the Borrowers or either of them, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to any of the Security Documents, the Borrowers shall indemnify and hold harmless each Creditor from and against any loss suffered as a result of any difference between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which the relevant Creditor may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.
|
|
Any amount due from the Borrowers under this clause
11.2
shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term "
rate of exchange
" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.
|
11.3
|
Environmental indemnity
|
|
The Borrowers shall indemnify each Creditor on demand and hold it harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal), penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be suffered, incurred or paid by, or made or asserted against such Creditor at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of an Environmental Claim made or asserted against such Creditor if such Environmental Claim would not have been, or been capable of being, made or asserted against such Creditor if it had not entered into any of the Security Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Security Documents.
|
11.4
|
Central Bank or European Central Bank reserve requirements indemnity
|
|
The Borrowers shall on demand promptly indemnify each Bank against any cost incurred or loss suffered by such Bank as a result of its complying with the minimum reserve requirements of the European Central Bank and/or any other National Central Bank with respect to maintaining required reserves with the relevant national Central Bank to the extent that such compliance relates to such Bank's Commitment and/or Contribution or deposits obtained by it to fund the whole or part of that Contribution and to the extent such cost or loss is not recoverable by such Bank under clause
12.2
.
|
12
|
Unlawfulness and increased costs
|
12.1
|
Unlawfulness
|
|
If it is or becomes contrary to any law or regulation for any Bank to contribute to an Advance or to maintain its Commitment or fund its Contribution, such Bank shall promptly, through the Agent, give notice to the Borrowers whereupon (a) such Bank's Commitment shall be reduced to zero and (b) the Borrowers shall be obliged to prepay such Bank's Contribution either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrowers under this Agreement and/or the Master Swap Agreement.
|
12.2
|
Increased costs
|
|
If the result of any change in, or in the interpretation or application of, or the introduction of, any Capital Adequacy Law or of compliance by a Bank with any Capital Adequacy Law, is to:
|
12.2.1
|
subject any Bank to Taxes or change the basis of Taxation of any Bank with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of such Bank imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or
|
12.2.2
|
increase the cost to, or impose an additional cost on, any Bank or its holding company in making or keeping such Bank's Commitment available or maintaining or funding all or part of such Bank's Contribution; and/or
|
12.2.3
|
reduce the amount payable or the effective return to any Bank under any of the Security Documents; and/or
|
12.2.4
|
reduce any Bank's or its holding company's rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to such Bank's obligations under any of the Security Documents; and/or
|
12.2.5
|
require any Bank or its holding company to make a payment or forego a return on or calculated by reference to any amount received or receivable by such Bank under any of the Security Documents; and/or
|
12.2.6
|
require any Bank or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of its Commitment or the Loan from its capital for regulatory purposes,
|
|
then and in each such case (subject to clause
12.3
):
|
|
(a)
|
such Bank shall (through the Agent) notify the Borrowers in writing of such event promptly upon its becoming aware of the same; and
|
|
(b)
|
the Borrowers shall on demand made at any time whether or not such Bank's Contribution has been repaid, pay to the Agent for the account of such Bank the amount which such Bank specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Bank or its holding company regards as confidential) is required to compensate such Bank and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment , forgone return or loss.
|
|
For the purposes of this clause
12.2
"
holding company
" means, in relation to a Bank, the company or entity (if any) within the consolidated supervision of which such Bank is included.
|
12.3
|
Exception
|
|
Nothing in clause 12 shall entitle any Bank to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause
6.6
.
|
12.4
|
Mitigation
|
|
If circumstances arise which would, or would upon the giving of notice, result in an increased payment required to be made by the Borrowers under clause 6.6 or clause 12.2 then, without in any way limiting the obligations of the Borrowers under either of these clauses, the relevant Bank shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the other Security Documents to another of its offices not affected by the circumstances which gave rise to such increased payment, but no Bank shall be under any obligation to take any such action if in its opinion, to do so would or might:
|
12.4.1
|
be prejudicial to such Bank (or, as the case may be, its holding company); or
|
12.4.2
|
have an adverse effect on such Bank's or its holding company's business, operations, administration or financial condition; or
|
12.4.3
|
involve such Bank or its holding company in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent, with any regulation or such Bank's general banking policies; or
|
12.4.4
|
involve such Bank or its holding company in any expense (unless indemnified to its satisfaction) or tax disadvantage.
|
13
|
Security, set-off and pro-rata payments
|
13.1
|
Application of moneys
|
|
All moneys received by the Agent and/or the Security Agent under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause
13.1
shall be applied in the following manner:
|
13.1.1
|
first, in or towards payment of all unpaid costs and expenses which may be owing to the Creditors or any of them under any of the Security Documents;
|
13.1.2
|
secondly, in or towards payment of any unpaid fees and commissions payable to the Creditors or any of them;
|
13.1.3
|
thirdly, in or towards payment of any arrears of interest owing in respect of the Loan or any part thereof;
|
13.1.4
|
fourthly, in or towards repayment of the Loan (whether the same is due and payable or not);
|
13.1.5
|
fifthly, in or towards payment to any Bank for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid or prepaid and which amounts are so payable under this Agreement;
|
13.1.6
|
sixthly, in or towards payment to the Swap Provider of any amounts owing to it under the Master Swap Agreement;
|
13.1.7
|
seventhly, in or towards payment to any Creditor of any other sums owing to it under any of the Security Documents (and if such sums are owing to more than one Creditor, as between such Creditors on a pro-rata basis); and
|
13.1.8
|
eighthly, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may be entitled to receive such surplus.
|
13.2
|
Pro rata payments
|
13.2.1
|
If at any time any Bank (the "
Recovering Bank
") receives or recovers any amount owing to it by the Borrowers under this Agreement by direct payment, set-off or in any manner other than by payment through the Agent pursuant to clauses
6.1
or 6.9 (not being a payment received from a Transferee Bank or a sub-participant in such Bank's Contribution or any other payment of an amount due to the Recovering Bank for its sole account pursuant to clauses
3.6
,
5
,
6.6
,
11.1
,
11.2
,
12.1
, or
12.2
) the Recovering Bank shall, within two (2) Banking Days of such receipt or recovery (a "
Relevant Receipt
") notify the Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Bank would have received if the Relevant Receipt had been received by the Agent and distributed pursuant to clauses
6.1
or
6.9
(as the case may be) then:
|
|
(a)
|
within two (2) Banking Days of demand by the Agent, the Recovering Bank shall pay to the Agent an amount equal (or equivalent) to the excess;
|
|
(b)
|
the Agent shall treat the excess amount so paid by the Recovering Bank as if it were a payment made by the Borrowers and shall distribute the same to the Banks (other than the Recovering Bank) in accordance with clause
6.9
; and
|
|
(c)
|
as between the Borrowers and the Recovering Bank the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrowers to the other Banks shall, to the extent of the amount so re-distributed to them, be treated as discharged.
|
13.2.2
|
If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Bank (whether to a liquidator or otherwise) each Bank to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Bank repay to the Recovering Bank such Bank's pro-rata share of the amount which has to be refunded by the Recovering Bank.
|
13.2.3
|
Each Bank shall on request supply to the Agent such information as the Agent may from time to time request for the purpose of this clause 13.2.
|
13.2.4
|
Notwithstanding the foregoing provisions of this clause 13.2, no Recovering Bank shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to legal proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such proceedings or commence and diligently pursue separate proceedings to enforce its rights in the same or another court (unless the proceedings instituted by the Recovering Bank are instituted by it without prior notice having been given to such party through the Agent).
|
13.3
|
Set-off
|
13.3.1
|
Each Borrower authorises each Creditor (without prejudice to any of such Creditor's rights at law, in equity or otherwise), at any time and without notice to such Borrower, to apply any credit balance to which such Borrower is then entitled standing upon any account of such Borrower with any branch of such Creditor in or towards satisfaction of any sum due and payable from such Borrower to such Creditor under any of the Security Documents. For this purpose, each Creditor 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.
|
13.3.2
|
No Creditor shall be obliged to exercise any right given to it by this clause 13.2. Each Creditor shall notify the Agent and the relevant Borrower forthwith upon the exercise or purported exercise of any right of set-off giving full details in relation thereto and the Agent shall inform the other Creditors.
|
13.4
|
No release
|
|
For the avoidance of doubt it is hereby declared that failure by any Recovering Bank to comply with the provisions of clause 13.2 shall not release any other Recovering Bank from any of its obligations or liabilities under clause 13.2.
|
13.5
|
No charge
|
|
The provisions of this clause
13
shall not, and shall not be construed so as to, constitute a charge or other security interest by a Creditor over all or any part of a sum received or recovered by it in the circumstances mentioned in clause 13.2.
|
13.6
|
Further assurance
|
|
The Borrowers jointly and severally undertake that the Security Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Security Documents be valid and binding obligations of the respective parties thereto and rights of each Creditor enforceable in accordance with their respective terms and that they will, at their expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Majority Banks may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents.
|
13.7
|
Conflicts
|
|
In the event of any conflict between this Agreement and any of the other Borrowers' Security Documents, the provisions of this Agreement shall prevail.
|
14
|
Operating Accounts
|
14.1
|
General
|
|
The Borrowers jointly and severally undertake with each Creditor that they will:
|
14.1.1
|
on or before the Drawdown Date of the first Advance to be drawn down, open each of the Operating Accounts; and
|
14.1.2
|
procure that all moneys payable to a Borrower in respect of the Earnings (as defined in the relevant General Assignment) of such Borrower's Ship shall, unless and until the Agent (acting on the instructions of the Majority Banks) directs to the contrary pursuant to clause 2.1 of each of the General Assignment relevant to such Ship, be paid to such Borrower's Operating Account Provided however that if any of the moneys paid to either of the Operating Accounts are payable in a currency other than Dollars, the Account Bank shall (and the Borrowers hereby irrevocably and unconditionally instruct the Account Bank to) convert such moneys into Dollars at the Account Bank's 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.
|
14.2
|
Account terms
|
|
Amounts standing to the credit of the Operating Accounts shall (unless otherwise agreed between the Account Bank and the Borrowers) bear interest at the rates from time to time offered by the Account Bank to its customers for Dollar deposits in comparable amounts for comparable periods. Interest shall accrue on the Operating Accounts from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year and shall be credited to the Operating Accounts at such times as the Account Bank and the Borrowers shall agree.
|
14.3
|
Withdrawals
|
|
Unless and until a Default shall occur and the Agent (acting on the instructions of the Majority Banks) shall direct to the contrary, each Borrower may withdraw moneys from its Operating Account for any purpose but subject always, to complying with clause 8.1.16 at all times.
|
14.4
|
Application of accounts
|
|
At any time after the occurrence of an Event of Default, the Agent may (and on the instructions of the Majority Banks shall), without notice to the Borrowers, instruct the Account Bank to apply all moneys then standing to the credit of the Operating Accounts or either of them (together with interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums due to the Creditors or any of them under the Security Documents in the manner specified in clause
13.1
.
|
14.5
|
Charging of Operating Accounts
|
|
The Operating Accounts and all amounts from time to time standing to the credit thereof shall be subject to the security constituted and the rights conferred by the Operating Account Assignments.
|
15
|
Assignment, transfer and lending office
|
15.1
|
Benefit and burden
|
|
This Agreement shall be binding upon, and enure for the benefit of, the Creditors and the Borrowers and their respective successors in title.
|
15.2
|
No assignment by Borrowers
|
|
Neither Borrower may assign or transfer any of its rights or obligations under this Agreement.
|
15.3
|
Transfers by Banks
|
|
Subject to the prior written consent of the Agent, any Bank (the "
Transferor Bank
") may at any time cause all or any part of its rights, benefits and/or obligations under this Agreement and the Security Documents to be transferred to any other bank, financial institution or other person whatsoever (a "
Transferee Bank
") by delivering to the Agent a Transfer Certificate duly completed and duly executed by the Transferor Bank and the Transferee Bank. No such transfer is binding on, or effective in relation to, the Borrowers, the Agent or the other Creditors unless (i) it is effected or evidenced by a Transfer Certificate which complies with the provisions of this clause 15.3 and is signed by or on behalf of the Transferor Bank, the Transferee Bank and the Agent (on behalf of itself, the Borrowers and the other Creditors) and (ii) such transfer of rights under the other Security Documents has been effected and registered to the satisfaction of the Agent. Upon signature of any such Transfer Certificate by the Agent, which signature shall be effected as promptly as is practicable after such Transfer Certificate has been delivered to the Agent, and subject to the terms of such Transfer Certificate, such Transfer Certificate shall have effect as set out below.
|
|
The following further provisions shall have effect in relation to any Transfer Certificate:
|
15.3.1
|
a Transfer Certificate may be in respect of a Bank's rights in respect of all, or part of, its Commitment and shall be in respect of the same proportion of its Contribution;
|
15.3.2
|
a Transfer Certificate shall only be in respect of rights and obligations of the Transferor Bank in its capacity as a Bank and shall not transfer its rights and obligations as Agent, Security Agent or in any other capacity, as the case may be and such other rights and obligations may only be transferred in accordance with any applicable provisions of this Agreement;
|
15.3.3
|
a Transfer Certificate shall take effect in accordance with English law as follows:
|
|
(a)
|
to the extent specified in the Transfer Certificate, the Transferor Bank's payment rights and all its other rights (other than those referred to in sub-clause 15.3.2 above) under this Agreement are assigned to the Transferee Bank absolutely, free of any defects in the Transferor Bank's title and of any rights or equities which the Borrowers or either of them had against the Transferor Bank;
|
|
(b)
|
the Transferor Bank's Commitment is discharged to the extent specified in the Transfer Certificate;
|
|
(c)
|
the Transferee Bank becomes a Bank with a Contribution and a Commitment of the amounts specified in the Transfer Certificate;
|
|
(d)
|
the Transferee Bank becomes bound by all the provisions of this Agreement and the Security Documents which are applicable to the Banks generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent, the Security Agent, the Swap Provider and the Arrangers in accordance with the provisions of clause 16 and to the extent that the Transferee Bank becomes bound by those provisions, the Transferor Bank ceases to be bound by them;
|
|
(e)
|
an Advance or part of an Advance which the Transferee Bank makes after the Transfer Certificate comes into effect ranks in point of priority and security in the same way as it would have ranked had it been made by the Transferor Bank, assuming that any defects in the Transferor Bank's title and any rights or equities of any Security Party against the Transferor Bank had not existed; and
|
|
(f)
|
the Transferee Bank becomes entitled to all the rights under this Agreement which are applicable to the Banks generally, including but not limited to those relating to the Majority Banks and those under clauses
3.6
, 5 and 12 and to the extent that the Transferee Bank becomes entitled to such rights, the Transferor Bank ceases to be entitled to them;
|
15.3.4
|
the rights and equities of the Borrowers or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim; and
|
15.3.5
|
the Borrowers, the Account Bank, the Security Agent, the Arrangers, the Swap Provider and the Banks hereby irrevocably authorise and instruct the Agent to sign any such Transfer Certificate on their behalf and undertake not to withdraw, revoke or qualify such authority or instruction at any time. Promptly upon its signature of any Transfer Certificate, the Agent shall notify the Borrowers, the Security Agent, the Swap Provider, the Account Bank, the Arrangers, the Transferor Bank, the Transferee Bank and the other Banks.
|
15.4
|
Reliance on Transfer Certificate
|
15.4.1
|
The Agent shall be entitled to rely on any Transfer Certificate believed by it to be genuine and correct and to have been presented or signed by the persons by whom it purports to have been presented or signed, and shall not be liable to any of the parties to this Agreement and the Security Documents for the consequences of such reliance.
|
15.4.3
|
The entries on the said register shall, in the absence of manifest error, be conclusive in determining the identities of the Commitments, the Contributions and the Transfer Certificates held by the Banks from time to time and the principal amounts of such Transfer Certificates and may be relied upon by the Agent, the other Creditors and the Security Parties for all purposes in connection with this Agreement and the Security Documents.
|
15.5
|
Transfer fees and expenses
|
|
If any Bank causes the transfer of all or any part of its rights, benefits and/or obligations under the Security Documents, it shall pay to the Agent and/or the Security Agent on demand all costs, fees and expenses (including, but not limited to, legal fees and expenses), and all value added tax thereon, verified by the Agent or, as the case may be, the Security Agent as having been incurred by it in connection with such transfer.
|
15.6
|
Documenting transfers
|
|
If any Bank transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3, the Borrowers jointly and severally undertake with each Creditor, immediately on being requested to do so by the Agent and at the cost of the Transferor Bank, to enter into, and procure that the other Security Parties shall (at the cost of the Transferor Bank) enter into, such documents as may be necessary or desirable to transfer to the Transferee Bank all or the relevant part of such Bank's interest in the Security Documents and all relevant references in this Agreement to such Bank shall thereafter be construed as a reference to the Transferor Bank and/or its Transferee Bank (as the case may be) to the extent of their respective interests.
|
15.7
|
Sub-participation
|
|
A Bank may sub-participate to any other bank or financial institution all or any part of its rights and/or obligations under the Security Documents without the consent of, or notice to, the Borrowers but with the prior written consent of the Agent (acting on the instructions of the Majority Banks).
|
15.8
|
Lending offices
|
|
Each Bank shall lend through its office at the address specified in schedule 1 or, as the case may be, in any relevant Transfer Certificate or through any other office of such Bank selected from time to time by such Bank through which such Bank wishes to lend for the purposes of this Agreement. If the office through which a Bank is lending is changed pursuant to this clause 15.8, such Bank shall notify the Agent promptly of such change and the Agent shall notify the Borrowers, the Security Agent, the Swap Provider, the Account Bank and the other Banks.
|
15.9
|
Disclosure of information
|
|
Any Bank may, with the prior written consent of the Agent, disclose to a prospective Transferee Bank or to any other person who may propose entering into contractual relations with such Bank in relation to this Agreement such information about the Borrowers, the other Security Parties or any of them as such Bank shall consider appropriate.
|
16
|
Arrangers, Agent and Security Agent
|
16.1
|
Appointment of the Agent
|
|
Each Bank and the Swap Provider irrevocably appoints the Agent as its agent for the purposes of this Agreement and such of the Security Documents to which it may be appropriate for the Agent to be party. By virtue of such appointment, each of the Banks and the Swap Provider hereby authorises the Agent:
|
16.1.1
|
to execute such documents as may be approved by the Majority Banks for execution by the Agent; and
|
16.1.2
|
(whether or not by or through employees or agents) to take such action on such Bank's or, as the case may be, the Swap Provider's behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Agent by this Agreement and/or any other Security Document, together with such powers and discretions as are reasonably incidental thereto.
|
16.2
|
Agent's actions
|
|
Any action taken by the Agent under or in relation to this Agreement or any of the other Security Documents whether with requisite authority, or on the basis of appropriate instructions, received from the Banks (or as otherwise duly authorised) shall be binding on all the Banks, the Swap Provider and the other Creditors.
|
16.3
|
Agent's duties
|
|
The Agent shall:
|
16.3.1
|
promptly notify each Bank and the Swap Provider of the contents of each notice, certificate or other document received by it from the Borrowers under or pursuant to clauses 8.1.1, 8.1.5, 8.1.6 and 8.1.7; and
|
16.3.2
|
(subject to the other provisions of this clause 16) take (or instruct the Security Agent to take) such action or, as the case may be, refrain from taking (or authorise the Security Agent to refrain from taking) such action with respect to the exercise of any of its rights, remedies, powers and discretions as agent, as the Majority Banks may direct.
|
16.4
|
Agent's rights
|
|
The Agent may:
|
16.4.1
|
in the exercise of any right, remedy, power or discretion in relation to any matter, or in any context, not expressly provided for by this Agreement or any of the other Security Documents, act or, as the case may be, refrain from acting (or authorise the Security Agent to act or refrain from acting) in accordance with the instructions of the Banks, and shall be fully protected in so doing;
|
16.4.2
|
unless and until it shall have received directions from the Majority Banks, take such action or, as the case may be, refrain from taking such action (or authorise the Security Agent to take or refrain from taking such action) in respect of a Default of which the Agent has actual knowledge as it shall deem advisable in the best interests of the Banks and the Swap Provider (but shall not be obliged to do so);
|
16.4.3
|
refrain from acting (or authorise the Security Agent to refrain from acting) in accordance with any instructions of the Banks to institute any legal proceedings arising out of or in connection with this Agreement or any of the other Security Documents until it and/or the Security Agent has been indemnified and/or secured to its satisfaction against any and all costs, expenses or liabilities (including legal fees) which it would or might incur as a result;
|
16.4.4
|
deem and treat (i) each Bank as the person entitled to the benefit of the Contribution of such Bank for all purposes of this Agreement unless and until a Transfer Certificate shall have been filed with the Agent pursuant to clause 15.3 and shall have become effective, and (ii) the office set opposite the name of each of the Banks in schedule 1 or, as the case may be, in any relevant Transfer Certificate as such Bank's lending office unless and until a written notice of change of lending office shall have been received by the Agent and the Agent may act upon any such notice unless and until the same is superseded by a further such notice;
|
16.4.5
|
rely as to matters of fact which might reasonably be expected to be within the knowledge of any Security Party upon a certificate signed by any director or officer of the relevant Security Party on behalf of the relevant Security Party; and
|
16.4.6
|
do anything which is in its opinion necessary or desirable to comply with any law or regulation in any jurisdiction.
|
16.5
|
No liability of Arrangers or Agent
|
|
None of the Arrangers nor the Agent nor any of their respective employees and agents shall:
|
16.5.1
|
be obliged to make any enquiry as to the use of any of the proceeds of any Advance unless (in the case of the Agent) so required in writing by a Bank, in which case the Agent shall promptly make the appropriate request to the Borrowers; or
|
16.5.2
|
be obliged to make any enquiry as to any breach or default by either of the Borrowers or any other Security Party in the performance or observance of any of the provisions of this Agreement or any of the other Security Documents or as to the existence of a Default unless the Agent has actual knowledge thereof or has been notified in writing thereof by a Bank or the Swap Provider, in which case the Agent shall promptly notify the Banks of the relevant event or circumstance; or
|
16.5.3
|
be obliged to enquire whether or not any representation or warranty made by either of the Borrowers or any other Security Party pursuant to this Agreement or any of the other Security Documents is true; or
|
16.5.4
|
be obliged to do anything (including, without limitation, disclosing any document or information) which would, or might in its opinion, be contrary to any law or regulation or be a breach of any duty of confidentiality or otherwise be actionable or render it liable to any person; or
|
16.5.5
|
be obliged to account to any Bank or the Swap Provider for any sum or the profit element of any sum received by it for its own account; or
|
16.5.6
|
be obliged to institute any legal proceedings arising out of or in connection with this Agreement or any of the other Security Documents other than on the instructions of the Majority Banks; or
|
16.5.7
|
be liable to any Bank or the Swap Provider for any action taken or omitted under or in connection with this Agreement or any of the other Security Documents unless caused by its gross negligence or wilful misconduct.
|
|
For the purposes of this clause 16, none of the Arrangers nor the Agent shall be treated as having actual knowledge of any matter of which the corporate finance or any other division outside the agency or loan administration department of any Arranger or the person for the time being acting as the Agent may become aware in the context of corporate finance, advisory or lending activities from time to time undertaken by any Arranger or, as the case may be, the Agent for any Security Party or any other person which may be a trade competitor of any Security Party or may otherwise have commercial interests similar to those of any Security Party.
|
16.6
|
Non-reliance on Arrangers or Agent
|
|
Each Bank and the Swap Provider acknowledges that it has not relied on any statement, opinion, forecast or other representation made by any Arranger or the Agent to induce it to enter into this Agreement or any of the other Security Documents and that it has made and will continue to make, without reliance on the Arrangers or the Agent and based on such documents as it considers appropriate, its own appraisal of the creditworthiness of the Security Parties and its own independent investigation of the financial condition, prospects and affairs of the Security Parties in connection with the making and continuation of such Bank's Commitment or Contribution under this Agreement. None of the Arrangers nor the Agent shall have any duty or responsibility, either initially or on a continuing basis, to provide any other Creditor with any credit or other information with respect to any Security Party whether coming into its possession before the making of any Advance or at any time or times thereafter other than as provided in clause
16.3.1
.
|
16.7
|
No responsibility on Arrangers or Agent for Borrowers' performance
|
|
None of the Arrangers nor the Agent shall have any responsibility or liability to any other Creditor:
|
16.7.1
|
on account of the failure of any Security Party to perform its obligations under any of the Security Documents; or
|
16.7.2
|
for the financial condition of any Security Party; or
|
16.7.3
|
for the completeness or accuracy of any statements, representations or warranties in any of the Security Documents or any document delivered under any of the Security Documents; or
|
16.7.4
|
for the execution, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of any of the Security Documents or of any certificate, report or other document executed or delivered under any of the Security Documents; or
|
16.7.5
|
to investigate or make any enquiry into the title of either of the Borrowers or any other Security Party to the Ships or any other security or any part thereof; or
|
16.7.6
|
for the failure to register any of the Security Documents with any official or regulatory body or office or elsewhere; or
|
16.7.7
|
for taking or omitting to take any other action under or in relation to any of the Security Documents or any aspect of any of the Security Documents; or
|
16.7.8
|
on account of the failure of the Security Agent to perform or discharge any of its duties or obligations under the Security Documents; or
|
16.7.9
|
otherwise in connection with this Agreement or its negotiation or for acting (or, as the case may be, refraining from acting) in accordance with the instructions of the Banks.
|
16.8
|
Reliance on documents and professional advice
|
|
Each of the Arrangers and the Agent shall be entitled to rely on any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person and shall be entitled to rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers selected or approved by it (including those in an Arranger's or, as the case may be, the Agent's employment).
|
16.9
|
Other dealings
|
|
Each of the Arrangers and the Agent may, without any liability to account to any other Creditor, accept deposits from, lend money to, and generally engage in any kind of banking or other business with, and provide advisory or other services to, any Security Party or any of its Related Companies or any of the other Creditors as if it was not an Arranger or, as the case may be, the Agent.
|
16.10
|
Rights of Agent as Bank; no partnership
|
|
With respect to its own Commitment and Contribution (if any) the Agent shall have the same rights and powers under the Security Documents as any other Bank and may exercise the same as though it were not performing the duties and functions delegated to it under this Agreement and the term "
Banks
" shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity as a Bank. This Agreement shall not and shall not be construed so as to constitute a partnership between the parties or any of them.
|
16.11
|
Amendments and waivers
|
16.11.1
|
Subject to clause
16.11.2
, the Agent may, with the written consent of the Majority Banks (or if and to the extent expressly authorised by the other provisions of any of the Security Documents) and, if so instructed by the Majority Banks, shall:
|
|
(a)
|
agree (or authorise the Security Agent to agree) amendments or modifications to any of the Security Documents with any Security Party; and/or
|
|
(b)
|
waive breaches of, or defaults under, or otherwise excuse performance of, any provision of any of the other Security Documents by any Security Party (or authorise the Security Agent to do so).
|
|
Any such action so authorised and effected by the Agent shall be documented in such manner as the Agent shall (with the approval of the Majority Banks) determine, shall be promptly notified to the Banks by the Agent and (without prejudice to the generality of clause
16.2
) shall be binding on all the other Creditors.
|
16.11.2
|
Except with the prior written consent of all the Banks, the Agent shall have no authority on behalf of the Banks to agree (or authorise the Security Agent to agree) with any Security Party any amendment or modification to any of the Security Documents or to grant (or authorise the Security Agent to grant) waivers in respect of breaches or defaults or to vary or excuse (or authorise the Security Agent to vary or excuse) performance of or under any of the Security Documents by any Security Party, if the effect of such amendment, modification, waiver or excuse would be to:
|
|
(a)
|
reduce the Margin;
|
|
(b)
|
vary or postpone the due date or reduce the amount of any payment of principal, interest or other amount payable by any Security Party under any of the Security Documents;
|
|
(c)
|
change the currency in which any amount is payable by any Security Party under any of the Security Documents;
|
|
(d)
|
increase any Bank's Commitment;
|
|
(e)
|
extend the Termination Date;
|
|
(f)
|
change any provision of any of the Security Documents which expressly or implied requires the approval or consent of all the Banks such that the relevant approval or consent may be given otherwise than with the sanction of all the Banks;
|
|
(g)
|
change the order of distribution under clause 6.9 or clause 13.1;
|
|
(h)
|
change this clause
16.11
;
|
|
(i)
|
change the definition of "
Majority Banks
" in clause 1.2; or
|
|
(j)
|
release any Security Party from the security constituted by any Security Document (except as required by the terms thereof or by law) or change the terms and conditions upon which such security or guarantee may be, or is required to be, released.
|
16.12
|
Reimbursement and indemnity by Banks
|
|
Each Bank shall reimburse the Agent (rateably in accordance with such Bank's Commitment or, following the first drawdown, Contribution), to the extent that the Agent is not reimbursed by the Borrowers, for the costs, charges and expenses incurred by the Agent which are expressed to be payable by the Borrowers under clause 5.2 including (in each case) the fees and expenses of legal or other professional advisers. Each Bank shall on demand indemnify the Agent (rateably in accordance with such Bank's Commitment or, following the first drawdown, Contribution) against all liabilities, damages, costs and claims whatsoever incurred by the Agent in connection with any of the Security Documents or the performance of its duties under any of the Security Documents or any action taken or omitted by the Agent under any of the Security Documents, unless such liabilities, damages, costs or claims arise from the Agent's own gross negligence or wilful misconduct.
|
16.13
|
Retirement of Agent
|
16.13.1
|
The Agent may, (having given to the Borrowers, each of the Banks and the Swap Provider not less than fifteen (15) days' notice of its intention to do so), retire from its appointment as Agent under this Agreement, provided that no such retirement shall take effect unless there has been appointed by the Banks and the Swap Provider as a successor agent:
|
|
(a)
|
a Related Company of the Agent nominated by the Agent which the Banks hereby irrevocably and unconditionally agree to appoint or, failing such a nomination,
|
|
(b)
|
a Bank nominated within a period of twenty eight (28) days by the Majority Banks or, failing such a nomination,
|
|
(c)
|
any reputable bank or financial institution experienced in shipping finance nominated by the retiring Agent.
|
|
Any corporation into which the retiring Agent may be merged or converted or any corporation with which the Agent may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Agent shall be a party shall, to the extent permitted by applicable law, be the successor Agent under this Agreement and the other Security Documents without the execution or filing of any document or any further act on the part of any of the parties to this Agreement and the other Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party, the Banks and the Swap Provider. Prior to any such successor being appointed, the Agent agrees to consult with the Borrowers as to the identity of the proposed successor and to take account of any reasonable objections which the Borrowers may raise to such successor being appointed.
|
16.13.2
|
Upon any such successor as aforesaid being appointed, the retiring Agent shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Agent. The retiring Agent shall (at the expense of the Borrowers) provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under the Security Documents.
|
16.14
|
Appointment and retirement of Security Agent
|
16.14.1
|
Appointment
|
|
Each of the Agent, the Swap Provider and the Banks irrevocably appoints the Security Agent as its security agent and trustee for the purposes of this Agreement and the other Security Documents on the terms set out in this Agreement. By virtue of such appointment, the Agent, the Swap Provider and each of the Banks hereby authorises the Security Agent (whether or not by or through employees or agents) to take such action on its behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Security Agent by this Agreement and/or any of the other Security Documents together with such powers and discretions as are reasonably incidental thereto.
|
16.14.2
|
Retirement
|
|
(a)
|
Without prejudice to clause 16.13, the Security Agent may, having given to the Borrowers and each of the Banks and the Swap Provider not less than fifteen (15) days' notice of its intention to do so, retire from its appointment as Security Agent under this Agreement and any Trust Deed, provided that no such retirement shall take effect unless there has been appointed by the Banks, the Agent and the Swap Provider as a successor security agent and trustee:
|
|
(i)
|
a Related Company of the Security Agent nominated by the Security Agent which the Banks hereby irrevocably and unconditionally agree to appoint or, failing such nomination,
|
|
(ii)
|
a bank or trust corporation nominated by the Majority Banks or, failing such a nomination,
|
|
(iii)
|
any bank or trust corporation nominated by the retiring Security Agent,
|
|
and, in any case (A) such successor security agent and trustee shall have duly accepted such appointment by delivering to the Agent (1) written confirmation (in a form acceptable to the Agent) of such acceptance agreeing to be bound by this Agreement in the capacity of Security Agent as if it had been an original party to this Agreement and (2) a duly executed Trust Deed and (B) such successor security agent and trustee shall have duly entered into, whether with the retiring Security Agent and/or with the Borrowers and/or with the Creditors or with any of them, such documents in connection with the Security Documents as the Agent shall require in its absolute discretion.
|
|
(b)
|
Any corporation into which the retiring Security Agent may be merged or converted or any corporation with which the Security Agent may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Security Agent shall be a party shall, to the extent permitted by applicable law, be the successor Security Agent under this Agreement, any Trust Deed and the other Security Documents without the execution or filing of any document or any further act on the part of any of the parties to this Agreement, any Trust Deed and the other Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party, the Banks, the Agent and the Swap Provider. Prior to any such successor being appointed, the Security Agent agrees to consult with the Borrowers as to the identity of the proposed successor and to take account of any reasonable objections which the Borrowers may raise to such successor being appointed.
|
|
(c)
|
Upon any such successor as aforesaid being appointed, the retiring Security Agent shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Security Agent. The retiring Security Agent shall (at the expense of the Borrowers) provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under the Security Documents.
|
16.15
|
Powers and duties of the Security Agent
|
16.15.1
|
The Security Agent shall have no duties, obligations or liabilities to the Agent, the Swap Provider or any of the Banks beyond those expressly stated in any of the Security Documents. The Agent, the Swap Provider and each of the Banks hereby authorises the Security Agent to enter into and execute:
|
|
(a)
|
each of the Security Documents to which the Security Agent is or is intended to be a party; and
|
|
(b)
|
any and all such other Security Documents as may be approved by the Agent in writing (acting on the instructions of the Majority Banks) for entry into by the Security Agent,
|
|
and, in each and every case, to hold any and all security thereby created upon trust for the Banks, the Agent and the Swap Provider in the manner contemplated by this Agreement.
|
16.15.2
|
Subject to clause
16.15.3
the Security Agent may, with the prior consent of the Majority Banks communicated in writing by the Agent, concur with any of the Security Parties to:
|
|
(a)
|
amend, modify or otherwise vary any provision of the Security Documents to which the Security Agent is or is intended to be a party; or
|
|
(a)
|
waive breaches of, or defaults under, or otherwise excuse performance of, any provision of the Security Documents to which the Security Agent is or is intended to be a party.
|
|
Any such action so authorised and effected by the Security Agent shall be promptly notified to the Banks, the Agent and the Swap Provider by the Security Agent and shall be binding on all the Creditors.
|
16.15.3
|
The Security Agent shall not concur with any Security Party with respect to any of the matters described in clause
16.11.2
without the consent of all the Banks communicated in writing by the Agent.
|
16.15.4
|
The Security Agent shall (subject to the other provisions of this clause 16) take such action or, as the case may be, refrain from taking such action, with respect to any of its rights, powers and discretions as security agent and trustee, as the Agent may direct. Subject as provided in the foregoing provisions of this clause, unless and until the Security Agent shall have received such instructions from the Agent, the Security Agent may, but shall not be obliged to, take (or refrain from taking) such action under or pursuant to the Security Documents referred to in clause 16.15.1 as the Security Agent shall deem advisable in the best interests of the Creditors provided that (for the avoidance of doubt), to the extent that this clause might otherwise be construed as authorising the Security Agent to take, or refrain from taking, any action of the nature referred to in clause
16.15.2
- and for which the prior consent of the Banks is expressly required under clause
16.15.3
- clauses
16.15.2
and
16.15.3
shall apply to the exclusion of this clause.
|
16.15.5
|
None of the Banks nor the Swap Provider nor the Agent shall have any independent power to enforce any of the Security Documents referred to in clause 16.15.1 or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to such Security Documents or otherwise have direct recourse to the security and/or guarantees constituted by such Security Documents except through the Security Agent.
|
16.15.6
|
For the purpose of this clause 16, the Security Agent may, rely and act in reliance upon any information from time to time furnished to the Security Agent by the Agent (whether pursuant to clause
16.15.7
or otherwise) unless and until the same is superseded by further such information, so that the Security Agent shall have no liability or responsibility to any party as a consequence of placing reliance on and acting in reliance upon any such information unless the Security Agent has actual knowledge that such information is inaccurate or incorrect.
|
16.15.7
|
Without prejudice to the foregoing, each of the Agent, the Swap Provider and the Banks (whether directly or through the Agent) shall provide the Security Agent with such written information as it may reasonably require for the purpose of carrying out its duties and obligations under the Security Documents referred to in clause 16.15.1.
|
16.15.8
|
Each Bank shall reimburse the Security Agent (rateably in accordance with such Bank's Commitment or, following the first drawdown, Contribution), to the extent that the Security Agent is not reimbursed by the Borrowers, for the costs, charges and expenses incurred by the Agent which are expressed to be payable by the Borrowers under clause 5.2 including (in each case) the fees and expenses of legal or other professional advisers. Each Bank shall on demand indemnify the Security Agent (rateably in accordance with such Bank's Commitment or, following the first drawdown, Contribution) against all liabilities, damages, costs and claims whatsoever incurred by the Security Agent in connection with any of the Security Documents or the performance of its duties under any of the Security Documents or any action taken or omitted by the Security Agent under any of the Security Documents, unless such liabilities, damages, costs or claims arise from the Security Agent's own gross negligence or wilful misconduct.
|
16.16
|
Trust provisions
|
16.16.1
|
The trusts constituted or evidenced in or by this Agreement and the Trust Deed shall remain in full force and effect until whichever is the earlier of:
|
|
(a)
|
the expiration of a period of eighty (80) years from the date of this Agreement; and
|
|
(b)
|
receipt by the Security Agent of confirmation in writing by the Agent that there is no longer outstanding any Indebtedness (actual or contingent) which is secured or guaranteed or otherwise assured by or under any of the Security Documents, and the parties to this Agreement declare that the perpetuity period applicable to this Agreement and the trusts declared by the Trust Deed shall for the purposes of the Perpetuities and Accumulations Act 1964 be the period of eighty (80) years from the date of this Agreement.
|
16.16.2
|
In its capacity as trustee in relation to the Security Documents specified in clause 16.15.1 the Security Agent shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of any of those Security Documents), have all the same powers and discretions as a natural person acting as the beneficial owner of such property and/or as are conferred upon the Security Agent by any of those Security Documents.
|
16.16.3
|
It is expressly declared that, in its capacity as trustee in relation to the Security Documents specified in clause 16.15.1, the Security Agent shall be entitled to invest moneys forming part of the security and which, in the opinion of the Security Agent, may not be paid out promptly following receipt in the name or under the control of the Security Agent in any of the investments for the time being authorised by law for the investment by trustees of trust moneys or in any other property or investments whether similar to the aforesaid or not or by placing the same on deposit in the name or under the control of the Security Agent as the Security Agent may think fit without being under any duty to diversify its investments and the Security Agent may at any time vary or transpose any such property or investments for or into any others of a like nature and shall not be responsible for any loss due to depreciation in value or otherwise of such property or investments. Any investment of any part of all of the security may, at the discretion of the Security Agent, be made or retained in the names of nominees.
|
16.17
|
Independent action by Creditors
|
|
None of the Creditors shall enforce, exercise any rights, remedies or powers or grant any consents or releases under or pursuant to, or otherwise have a direct recourse to the security and/or guarantees constituted by any of the Security Documents without the prior written consent of the Majority Banks but, Provided such consent has been obtained, it shall not be necessary for any other Creditor to be joined as an additional party in any proceedings for this purpose.
|
16.18
|
Common Agent and Security Agent
|
|
The Agent and the Security Agent have entered into the Security Documents in their separate capacities (a) as agent for the Banks and the Swap Provider under and pursuant to this Agreement (in the case of the Agent) and (b) as security agent and trustee for the Agent, the Banks and the Swap Provider, under and pursuant to this Agreement, to hold the guarantees and/or security created by the other Security Documents specified in clause 16.15.1 on the terms set out in such Security Documents (in the case of the Security Agent). However, from time to time the Agent and the Security Agent may be the same entity. When the Agent and the Security Agent are the same entity and any Security Document provides for the Agent to communicate with or provide instructions to the Security Agent (and vice versa), it will not be necessary for there to be any such formal communications or instructions on those occasions.
|
16.19
|
Co-operation to achieve agreed priorities of application
|
|
The Banks, the Agent, the Swap Provider and the Account Bank shall co-operate with each other and with the Security Agent and any receiver under the Security Documents in realising the property and assets subject to the Security Documents and in ensuring that the net proceeds realised under the Security Documents after deduction of the expenses of realisation are applied in accordance with clause
13.1
.
|
16.20
|
Prompt distribution of proceeds
|
|
Moneys received by any of the Creditors (whether from a receiver or otherwise) pursuant to the exercise of (or otherwise by virtue of the existence of) any rights and powers under or pursuant to any of the Security Documents shall (after providing for all costs, charges, expenses and liabilities and other payments ranking in priority) be paid to the Agent for distribution (in the case of moneys so received by any of the Creditors other than the Agent or the Security Agent) and shall be distributed by the Agent or, as the case may be, the Security Agent (in the case of moneys so received by the Agent or, as the case may be, the Security Agent) in each case in accordance with clause 13.1. The Agent or, as the case may be, the Security Agent shall make each such application and/or distribution as soon as is practicable after the relevant moneys are received by, or otherwise become available to, the Agent or, as the case may be, the Security Agent save that (without prejudice to any other provision contained in any of the Security Documents) the Agent or, as the case may be, the Security Agent (acting on the instructions of the Majority Banks) or any receiver may credit any moneys received by it to a suspense account for so long and in such manner as the Agent or such receiver may from time to time determine with a view to preserving the rights of the Agent and/or the Security Agent and/or the Account Bank and/or the Swap Provider and/or the Arrangers and/or the Banks or any of them to provide for the whole of their respective claims against the Borrowers or any other person liable.
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17
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Notices and other matters
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17.1
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Notices
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Every notice, request, demand or other communication under this Agreement or (unless otherwise provided therein) under any of the other Security Documents shall:
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17.1.1
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be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form;
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17.1.2
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be deemed to have been received, subject as otherwise provided in the relevant Security Document, in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and
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17.1.3
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be sent:
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(a)
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if to the Borrowers or either of them at:
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c/o Diana Shipping Services S.A.
Pendelis 16
Palaio Faliro
175 64 Athens
Greece
Fax no: +30 210 942 4975
Attention: Mr Andreas Michalopoulos
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(c)
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in the case of a Bank (or an Arranger who is also a Bank), to its address or facsimile number specified in schedule 1 or in any relevant Transfer Certificate; or
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(d)
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in the case of the Swap Provider, to its address or fax number specified in paragraph (a) of Part 4 of the Schedule to the Master Swap Agreement,
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or to such other address and/or numbers as is notified by one party to the other parties under this Agreement.
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17.2
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Notices through the Agent
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Every notice, request, demand or other communication under this Agreement to be given by the Borrowers to any other party (other than the Swap Provider) shall be given to the Agent for onward transmission as appropriate and if such notice, request, demand or other communication is to be given to the Borrowers it shall (except if otherwise provided in the Security Documents) be given through the Agent.
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17.3
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No implied waivers, remedies cumulative
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No.failure or delay on the part of any Creditor to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by any Creditor of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law.
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17.4
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English language
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All certificates, instruments and other documents to be delivered under or supplied in connection with any of the Security Documents shall be in the English language or shall be accompanied by a certified English translation upon which the Creditors or any of them shall be entitled to rely.
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17.5
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Borrowers' obligations
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17.5.1
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Joint and several
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Notwithstanding anything to the contrary contained in any of the Security Documents, the agreements, obligations and liabilities of the Borrowers herein contained are joint and several and shall be construed accordingly. Each of the Borrowers agrees and consents to be bound by the Security Documents to which it is, or is to be, a party notwithstanding that the other Borrower which is intended to sign or to be bound may not do so or be effectually bound and notwithstanding that any of the Security Documents may be invalid or unenforceable against the other Borrower, whether or not the deficiency is known to any of the Creditors.
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17.5.2
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Borrowers as principal debtors
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Each Borrower acknowledges and confirms that it is a principal and original debtor in respect of all amounts which may become payable by the Borrowers in accordance with the terms of this Agreement or any of the other Security Documents and agrees that the Creditors may also continue to treat it as such, whether or not any Creditor is or becomes aware that such Borrower is or has become a surety for the other Borrower.
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17.5.3
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Indemnity
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The Borrowers hereby agree jointly and severally to keep the Creditors fully indemnified on demand against all damages, losses, costs and expenses arising from any failure of either Borrower to perform or discharge any purported obligation or liability of a Borrower which would have been the subject of this Agreement or any other Security Document had it been valid and enforceable and which is not or ceases to be valid and enforceable against a Borrower on any ground whatsoever, whether or not known to a Creditor (including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of a Borrower (or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding up, administration, receivership, amalgamation, reconstruction or any other incapacity of any person whatsoever (including, in the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of any Security Party)).
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17.5.4
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Liability unconditional
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None of the obligations or liabilities of the Borrowers under this Agreement or any other Security Document shall be discharged or reduced by reason of:
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(a)
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the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of any person whatsoever (including, in the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of a Borrower or any other person liable;
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(b)
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the Agent (acting on the instructions of the Majority Banks) or the Security Agent granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of, a Borrower or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting, varying any compromise, arrangement or settlement or omitting to claim or enforce payment from a Borrower or any other person liable; or
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(c)
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anything done or omitted which but for this provision might operate to exonerate the Borrowers or either of them.
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The Creditors shall not be obliged to make any claim or demand or to resort to any Security Document or other means of payment now or hereafter held by or available to it for enforcing this Agreement or any of the Security Documents against a Borrower or any other person liable and no action taken or omitted by any Creditor in connection with any such Security Document or other means of payment will discharge, reduce, prejudice or affect the liability of the Borrowers under this Agreement and the Security Documents to which either of them is, or is to be, a party.
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17.5.6
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Waiver of Borrowers' rights
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Each Borrower agrees with each Creditor that, from the date of this Agreement and so long as any moneys are owing under any of the Security Documents and while all or any part of the Total Commitment remains outstanding, it will not, without the prior written consent of the Agent (acting on the instructions of the Majority Banks):
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(a)
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exercise any right of subrogation, reimbursement and indemnity against the other Borrower or any other person liable under the Security Documents;
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(b)
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demand or accept repayment in whole or in part of any Indebtedness now or hereafter due to such Borrower from the other Borrower or from any other person liable or demand or accept any guarantee, indemnity or other assurance against financial loss or any document or instrument created or evidencing an Encumbrance in respect of the same or dispose of the same;
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(c)
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take any steps to enforce any right against any other Borrower or any other person liable in respect of any such moneys; or
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(d)
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claim any set-off or counterclaim against the other Borrower or any other person liable or claiming or proving in competition with any Creditor in the liquidation of any other Borrower or any other person liable or have the benefit of, or share in, any payment from or composition with, the other Borrower or any other person liable or any other Security Document now or hereafter held by any Creditor for any moneys owing under this Agreement or for the obligations or liabilities of any other person liable but so that, if so directed by the Agent, it will prove for the whole or any part of its claim in the liquidation of any other Borrower or other person liable on terms that the benefit of such proof and all money received by it in respect thereof shall be held on trust for the Banks and applied in or towards discharge of any moneys owing under this Agreement in such manner as the Agent (acting on the instructions of the Majority Banks) shall deem appropriate.
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18
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Governing law and jurisdiction
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18.1
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Law
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This Agreement and any non-contractual obligations connected with it are governed by, and shall be construed in accordance with, English law.
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18.2
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Submission to jurisdiction
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The Borrowers jointly and severally agree, for the benefit of each Creditor, that any legal action or proceedings arising out of or in connection with this Agreement (including any non-contractual obligations connected with this Agreement) against the Borrowers or either of them or any of their assets may be brought in the English courts. Each of the Borrowers irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers A. Nicolaou & Co at present of Heath Drive, Potters Road, Herts EN6 1EN, England to receive for it and on its behalf, service of process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of any Creditor to take proceedings against either of the Borrowers in the courts of any other competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.
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The parties further agree that only the courts of England and not those of any other State shall have jurisdiction to determine any claim which either of the Borrowers may have against any Creditor arising out of or in connection with this Agreement (including any non-contractual obligations connected with this Agreement).
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18.3
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Contracts (Rights of Third Parties) Act 1999
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No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.
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SIGNED
by Andre-Nikolaos Michalopoulos
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)
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for and on behalf of
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)
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/s/ Andre-Nikolaos Michalopoulos
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LAE SHIPPING COMPANY INC.
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)
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Attorney-in-fact
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as Borrower
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)
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SIGNED
by Ioannis Zafirakis
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)
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for and on behalf of
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)
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/s/ Ioannis Zafirakis
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NAMU SHIPPING COMPANY INC.
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)
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Attorney-in-fact
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as Borrower
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)
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SIGNED
by Yianni Cheilas
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)
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for and on behalf of
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)
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/s/ Yianni Cheilas |
DNB NOR BANK ASA
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)
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Attorney-in-fact
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as Arranger, Agent, Security Agent,
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)
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Swap Provider and Account Bank
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)
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SIGNED
by Yianni Cheilas
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)
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for and on behalf of
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)
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/s/ Yianni Cheilas
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DNB NOR BANK ASA
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)
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Attorney-in-fact
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as Bank
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)
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SIGNED
by Li Ruogu
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)
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for and on behalf of
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)
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/s/ Li Ruogu
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THE EXPORT-IMPORT BANK OF CHINA
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)
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Chairman and President
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as Arranger
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)
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SIGNED
by Li Ruogu
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)
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for and on behalf of
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)
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/s/ Li Ruogu
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THE EXPORT-IMPORT BANK OF CHINA
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)
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Chairman and President
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as Bank
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)
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Subsidiary
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Country of Incorporation
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Ailuk Shipping Company Inc.
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Marshall Islands
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Bikini Shipping Company Inc.
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Marshall Islands
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Diana Containerships Inc. (*)
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Marshall Islands
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Gala Properties Inc.
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Marshall Islands
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Jaluit Shipping Company Inc.
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Marshall Islands
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Kili Shipping Company Inc.
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Marshall Islands
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Knox Shipping Company Inc.
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Marshall Islands
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Lae Shipping Company Inc.
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Marshall Islands
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Lib Shipping Company Inc.
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Marshall Islands
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Majuro Shipping Company Inc.
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Marshall Islands
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Namu Shipping Company Inc.
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Marshall Islands
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Taka Shipping Company Inc.
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Marshall Islands
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Husky Trading, S.A.
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Panama
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Buenos Aires Compania Armadora S.A.
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Panama
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Cerada International S.A.
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Panama
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Changame Compania Armadora S.A.
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Panama
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Chorrera Compania Armadora S.A.
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Panama
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Cypres Enterprises Corp.
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Panama
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Darien Compania Armadora S.A.
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Panama
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Diana Shipping Services S.A.
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Panama
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Eaton Marine S.A.
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Panama
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Panama Compania Armadora S.A.
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Panama
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Skyvan Shipping Company S.A.
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Panama
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Texford Maritime S.A.
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Panama
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Urbina Bay Trading, S.A.
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Panama
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Vesta Commercial, S.A.
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Panama
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Marfort Navigation Company Limited
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Cyprus
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Silver Chandra Shipping Company Limited
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Cyprus
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Bulk Carriers (USA) LLC
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United States (Delaware)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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(1)
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Registration Statement (Form F-3D No. 333-150406) of Diana Shipping Inc., and
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(2)
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Registration Statement (Form F-3ASR No. 333-159016) of Diana Shipping Inc.
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