o |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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x |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
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December 31, 2010 |
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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|
to
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OR
|
o
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Date of event requiring this shell company report
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|
Commission file number
001-33283
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EUROSEAS LTD.
|
(Exact name of Registrant as specified in its charter)
|
(Translation of Registrant's name into English)
|
Marshall Islands
|
(Jurisdiction of incorporation or organization)
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4 Messogiou & Evropis Street, 151 25 Maroussi Greece
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(Address of principal executive offices)
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Tasos Aslidis, Tel: (908) 301-9091, Euroseas Ltd. c/o Tasos Aslidis,
11 Canterbury Lane, Watchung, NJ 07069
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(Name, Telephone, E-mail and/or Facsimile, and address of Company Contact Person)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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1
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||
Part I
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||
Item 1.
|
Identity of Directors, Senior Management and Advisers
|
2
|
Item 2.
|
Offer Statistics and Expected Timetable
|
2
|
Item 3.
|
Key Information
|
2
|
Item 4.
|
Information on the Company
|
35
|
Item 4A.
|
Unresolved Staff Comments
|
52
|
Item 5.
|
Operating and Financial Review and Prospects
|
52
|
Item 6.
|
Directors, Senior Management and Employees
|
67
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
73
|
Item 8.
|
Financial Information
|
76
|
Item 9.
|
The Offer and Listing
|
78
|
Item 10.
|
Additional Information
|
80
|
Item 11.
|
Quantitative and Qualitative Disclosures about Market Risk
|
90
|
Item 12.
|
Description of Securities Other than Equity Securities
|
92
|
Part II
|
||
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
93
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
93
|
Item 15.
|
Controls and Procedures
|
93
|
Item 16A
|
Audit Committee Financial Expert
|
95
|
Item 16B
|
Code of Ethics
|
96
|
Item 16C
|
Principal Accountant Fees and Services
|
96
|
Item 16D
|
Exemptions from the Listing Standards for Audit Committees
|
96
|
Item 16E
|
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
|
96
|
Item 16 F
|
Change in Registrant's Certifying Accountant
|
96
|
Item 16 G
|
Corporate Governance
|
96
|
Part III
|
||
Item 17.
|
Financial Statements
|
98
|
Item 18.
|
Financial Statements
|
98
|
Item 19.
|
Exhibits
|
99
|
·
|
our future operating or financial results;
|
·
|
future, pending or recent acquisitions, joint ventures, business strategy, areas of possible expansion, and expected capital spending or operating expenses;
|
·
|
drybulk and container shipping industry trends, including charter rates and factors affecting vessel supply and demand;
|
·
|
our financial condition and liquidity, including our ability to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities;
|
·
|
availability of crew, number of off-hire days, drydocking requirements and insurance costs;
|
·
|
our expectations about the availability of vessels to purchase or the useful lives of our vessels;
|
·
|
our expectations relating to dividend payments and our ability to make such payments;
|
·
|
our ability to leverage to our advantage our manager's relationships and reputations in the drybulk and container shipping industry;
|
·
|
changes in seaborne and other transportation patterns;
|
·
|
changes in governmental rules and regulations or actions taken by regulatory authorities;
|
·
|
potential liability from future litigation;
|
·
|
global and regional political conditions;
|
·
|
acts of terrorism and other hostilities, including piracy; and
|
·
|
other factors discussed in the section titled "Risk Factors."
|
Item 1.
|
Identity of Directors, Senior Management and Advisers
|
Item 2.
|
Offer Statistics and Expected Timetable
|
Item 3.
|
Key Information
|
A.
|
Selected Financial Data
|
Euroseas Ltd. – Summary of Selected Historical Financials
|
||||||||||||||||||||
Year Ended December 31,
|
||||||||||||||||||||
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||||||
Income Statement Data
|
||||||||||||||||||||
Voyage revenues
|
42,143,361 | 86,104,365 | 132,243,918 | 66,215,669 | 54,422,489 | |||||||||||||||
Commissions
|
(1,829,534 | ) | (4,024,032 | ) | (5,940,460 | ) | (2.433.776 | ) | (1,944,473 | ) | ||||||||||
Net revenue
|
40,313,827 | 82,080,333 | 126,303,458 | 63,781,893 | 52,478,016 | |||||||||||||||
Voyage expenses
|
(1,154,738 | ) | (897,463 | ) | (3,092,323 | ) | (1,510,551 | ) | (1,596,569 | ) | ||||||||||
Vessel operating expenses
|
(10,368,817 | ) | (17,240,132 | ) | (27,521,194 | ) | (23,763,480 | ) | (21,507,192 | ) | ||||||||||
Drydocking expenses
(4)
|
(821,198 | ) | (5,770,007 | ) | (6,129,257 | ) | (1,912,474 | ) | (6,537,733 | ) | ||||||||||
Vessel depreciation
(1)
|
(6,277,328 | ) | (16,423,092 | ) | (28,284,752 | ) | (19,092,384 | ) | (17,979,750 | ) | ||||||||||
Management fees
|
(2,266,589 | ) | (3,669,137 | ) | (5,387,415 | ) | (5,074,297 | ) | (4,892,006 | ) | ||||||||||
Other general and administration expenses
|
(1,076,884 | ) | (2,656,176 | ) | (4,057,736 | ) | (3,640,534 | ) | (3,026,941 | ) | ||||||||||
Impairment loss
|
- | - | (25,113,364 | ) | - | - | ||||||||||||||
Net gain (loss) on sale of vessels
|
4,892,177 | 3,440,681 | - | (8,959,321 | ) | - | ||||||||||||||
Other operating income
|
- | - | - | - | 2,352,946 | |||||||||||||||
Operating income / (loss)
|
23,240,450 | 38,865,007 | 26,717,417 | 22,429 | (709,229 | ) | ||||||||||||||
Interest and other financing costs
|
(3,398,858 | ) | (4,850,239 | ) | (2,930,737 | ) | (1,437,637 | ) | (1,498,216 | ) | ||||||||||
Interest income
|
870,046 | 2,357,633 | 3,168,501 | 1,123,317 | 538,820 | |||||||||||||||
Equity loss in joint venture
|
- | - | - | - | (538,833 | ) | ||||||||||||||
Other (loss) / income
|
(1,598 | ) | 90,920 | (5,464,271 | ) | (15,335,613 | ) | (4,398,392 | ) | |||||||||||
Net income / (loss)
|
20,710,040 | 36,463,321 | 21,490,910 | (15,627,504 | ) | (6,605,850 | ) | |||||||||||||
Balance Sheet Data
|
||||||||||||||||||||
Current assets
|
9,975,596 | 118,307,463 | 92,538,220 | 58,933,240 | 46,404,826 | |||||||||||||||
Vessels, net
|
95,494,342 | 238,248,984 | 231,963,606 | 257,270,824 | 255,412,434 | |||||||||||||||
Deferred assets and other long term assets
|
11,021,531 | 9,419,852 | 8,716,960 | 7,214,230 | 5,399,374 | |||||||||||||||
Investment in Joint Venture
|
- | - | - | - | 14,461,167 | |||||||||||||||
Total assets
|
116,491,469 | 365,976,299 | 333.218,786 | 323,418,294 | 321,677,801 | |||||||||||||||
Current liabilities including current portion of long term debt
|
21,665,399 | 35,182,511 | 21,417,515 | 30,443,552 | 25,214,542 | |||||||||||||||
Long term debt, including current portion
|
74,950,000 | 81,590,000 | 56,015,000 | 71,515,000 | 88,385,000 | |||||||||||||||
Total liabilities
|
79,493,599 | 99,400,483 | 76,387,354 | 91,965,031 | 102,982,809 | |||||||||||||||
Common shares outstanding (adjusted for the 1-for-3 split)
|
12,620,150 | 30,261,113 | 30,575,611 | 30,849,711 | 31,002,211 | |||||||||||||||
Share capital
|
378,605 | 907,834 | 917,269 | 925,492 | 930,067 | |||||||||||||||
Total shareholders' equity
|
36,997,869 | 266,575,816 | 256,831,432 | 231,453,263 | 218,694,992 | |||||||||||||||
Other Financial Data
|
||||||||||||||||||||
Net cash provided by operating activities
|
20,968,824 | 48,958,771 | 74,283,741 | 7,837,660 | 12,748,989 | |||||||||||||||
Net cash used in investing activities
|
(55,367,015 | ) | (146,671,991 | ) | (46,145,503 | ) | (45,598,765 | ) | (29,206,844 | ) | ||||||||||
Net cash provided by (used in) financing activities
|
16,741,997 | 199,057,433 | (58,422,367 | ) | 4,894,463 | 9,746,824 |
Earnings / (loss) per share, basic
|
1.65 | 1.69 | 0.71 | (0.51 | ) | (0.21 | ) | |||||||||||||
Earnings / (loss) per share, diluted
|
1.65 | 1.68 | 0.70 | (0.51 | ) | (0.21 | ) | |||||||||||||
Dividends declared
|
9,465,082 | 20,278,538 | 34,664,699 | 10,779,609 | 6,848,536 | |||||||||||||||
Cash dividends / return of capital, declared per common share
|
0.75 | 1.00 | 1.13 | 0.35 | 0.22 | |||||||||||||||
Weighted average number of shares outstanding during period, basic
|
12,535,365 | 21,566,619 | 30,437,107 | 30,648,991 | 30,900,122 | |||||||||||||||
Weighted average number of shares outstanding during period, diluted
|
12,535,365 | 21,644,920 | 30,505,476 | 30,648,991 | 30,900,122 |
2006
|
2007
|
2008
|
2009
|
2010
|
||||||||||||||||
Other Fleet Data
(2)
|
||||||||||||||||||||
Number of vessels
|
8.09 | 11.48 | 15.61 | 16.30 | 15.53 | |||||||||||||||
Calendar days
|
2,942 | 4,190 | 5,714 | 5,949 | 5,669 | |||||||||||||||
Available days
|
2,895 | 3,980 | 5,563 | 4,983 | 4,953 | |||||||||||||||
Voyage days
|
2,864 | 3,969 | 5,451 | 4,724 | 4,914 | |||||||||||||||
Utilization Rate (percent)
|
98.9 | % | 99.7 | % | 98.0 | % | 94.8 | % | 99.2 | % | ||||||||||
(In U.S. dollars per day per vessel)
|
||||||||||||||||||||
Average TCE rate
(3)
|
14,312 | 21,468 | 23,695 | 13,698 | 11,201 | |||||||||||||||
Vessel Operating Expenses
|
3,524 | 4,115 | 4,816 | 3,979 | 3,794 | |||||||||||||||
Management Fees
|
770 | 875 | 943 | 853 | 863 | |||||||||||||||
G&A Expenses
|
366 | 634 | 710 | 612 | 534 | |||||||||||||||
Total Operating Expenses excluding drydocking expenses
|
4,660 | 5,624 | 6,469 | 5,444 | 5,191 | |||||||||||||||
Drydocking expenses
|
279 | 1,377 | 1,073 | 321 | 1,153 |
2006
|
2007
|
2008
|
2009
|
2010
|
||||||||||||||||
(In U.S. dollars, except for voyage days and TCE rates which are expressed in U.S. dollars per day)
|
||||||||||||||||||||
Voyage revenues
|
42,143,361 | 86,104,365 | 132,243,918 | 66,215,669 | 54,422,489 | |||||||||||||||
Loss of hire insurance income
(1)
|
- | - | - | - | 2,214,179 | |||||||||||||||
Voyage expenses
|
(1,154,738 | ) | (897,463 | ) | (3,092,323 | ) | (1,510,551 | ) | (1,596,569 | ) | ||||||||||
Time Charter Equivalent ("TCE") Revenues
|
40,988,623 | 85,206,902 | 129,151,595 | 64,705,118 | 55,040,099 | |||||||||||||||
Voyage days
(1)
|
2,864 | 3,969 | 5,451 | 4,724 | 4,914 | |||||||||||||||
Average TCE rate
(1)
|
14,313 | 21,468 | 23,695 | 13,698 | 11,201 |
C.
|
Reasons for the Offer and Use of Proceeds
|
D.
|
Risk Factors
|
|
·
|
supply of, and demand for, drybulk commodities and containerized cargo;
|
|
·
|
changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products, and the resulting changes in the international pattern of trade;
|
|
·
|
global and regional economic and political conditions, including armed conflicts and terrorist activities; embargoes and strikes;
|
|
·
|
the location of regional and global exploration, production and manufacturing facilities;
|
|
·
|
availability of credit to finance international trade;
|
|
·
|
the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;
|
|
·
|
the distance drybulk and containerized commodities are to be moved by sea;
|
|
·
|
environmental and other regulatory developments;
|
|
·
|
currency exchange rates;
|
|
·
|
changes in global production and manufacturing distribution patterns of finished goods that utilize drybulk and other containerized commodities;
|
|
·
|
changes in seaborne and other transportation patterns; and
|
|
·
|
weather and other natural phenomena.
|
|
·
|
the number of newbuilding deliveries;
|
|
·
|
the scrapping rate of older vessels;
|
|
·
|
the price of steel and other materials;
|
|
·
|
port and canal congestion;
|
|
·
|
changes in environmental and other regulations that may limit the useful life of vessels;
|
|
·
|
vessel casualties;
|
|
·
|
the number of vessels that are out of service; and
|
·
|
changes in global commodity production.
|
|
·
|
general economic and market conditions affecting the shipping industry in general;
|
|
·
|
supply of drybulk, container and multipurpose vessels, including newbuildings;
|
|
·
|
demand for drybulk, container and multipurpose vessels;
|
|
·
|
types and sizes of vessels;
|
|
·
|
scrap values;
|
· | other modes of transportation; |
|
·
|
cost of newbuildings;
|
|
·
|
technological advances;
|
· | new regulatory requirements from governments or self-regulated organizations; |
|
·
|
locating and acquiring suitable vessels;
|
|
·
|
identifying and consummating acquisitions or joint ventures;
|
|
·
|
integrating any acquired business successfully with our existing operations;
|
|
·
|
enhancing our customer base;
|
|
·
|
managing our expansion; and
|
|
·
|
obtaining required financing on acceptable terms.
|
|
·
|
incur additional indebtedness;
|
|
·
|
create liens on our assets;
|
|
·
|
sell capital stock of our subsidiaries;
|
|
·
|
make investments;
|
|
·
|
engage in mergers or acquisitions;
|
|
·
|
pay dividends;
|
|
·
|
make capital expenditures;
|
|
·
|
change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and
|
|
·
|
sell our vessels.
|
|
·
|
marine disaster;
|
|
·
|
piracy;
|
|
·
|
environmental accidents;
|
|
·
|
grounding, fire, explosions and collisions;
|
|
·
|
cargo and property losses or damage;
|
|
·
|
business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and
|
|
·
|
work stoppages or other labor problems with crew members serving on our vessels including crew strikes and/or boycotts.
|
|
·
|
actual or anticipated fluctuations in quarterly and annual variations in our results of operations;
|
|
·
|
changes in market valuations or sales or earnings estimates or publication of research reports by analysts;
|
|
·
|
changes in earnings estimates or shortfalls in our operating results from levels forecasted by securities analysts;
|
|
·
|
speculation in the press or investment community about our business or the shipping industry;
|
|
·
|
changes in market valuations of similar companies and stock market price and volume fluctuations generally;
|
|
·
|
payment of dividends;
|
|
·
|
strategic actions by us or our competitors such as mergers, acquisitions, joint ventures, strategic alliances or restructurings;
|
|
·
|
changes in government and other regulatory developments;
|
|
·
|
additions or departures of key personnel;
|
|
·
|
general market conditions and the state of the securities markets; and
|
|
·
|
domestic and international economic, market and currency factors unrelated to our performance.
|
Item 4.
|
Information on the Company
|
A.
|
History and Development of the Company
|
B.
|
Business Overview
|
Name
|
Type
|
Dwt
|
TEU
|
Year Built
|
Employment (*)
|
TCE Rate ($/day)
|
Dry Bulk Vessels
|
|
|
|
|
|
|
PANTELIS
|
Panamax
|
74,020
|
2000
|
TC 'til Mar-12
|
$17,500
|
|
ELENI P
|
Panamax
|
72,119
|
1997
|
TC 'til Jan-13
|
$16,500
|
|
IRINI
|
Panamax
|
69,734
|
1988
|
TC 'til Apr-13
|
$14,000
|
|
ARISTIDES N.P.
|
Panamax
|
69,268
|
1993
|
TC 'til May-12
|
$14,950
|
|
MONICA P (**)
|
Handymax
|
46,667
|
1998
|
Bulkhandling Pool
|
||
Total Dry Bulk Vessels
|
5
|
331,808
|
||||
Multipurpose Dry Cargo Vessels
|
||||||
TASMAN TRADER
|
1
|
22,568
|
950
|
1990
|
TC 'til Mar-12
|
$9,000 'til Mar-12
|
Container Carriers
|
||||||
MAERSK NOUMEA
|
Intermediate
|
34,677
|
2,556
|
2001
|
TC 'til Jun-11
|
$16,800 'til Aug 11
|
TIGER BRIDGE
|
Intermediate
|
31,627
|
2,228
|
1990
|
TC 'til Mar-12
|
$7,500
|
AGGELIKI P
|
Intermediate
|
30,360
|
2,008
|
1998
|
TC 'til May-11
|
$7,000
|
DESPINA P
|
Handy size
|
33,667
|
1,932
|
1990
|
TC 'til Jan-12
|
$8,500
|
JONATHAN P
(ex- OEL INTEGRITY)
|
Handy size
|
33,667
|
1,932
|
1990
|
TC 'til Nov-11
|
$11,750
|
CAPTAIN COSTAS
(ex-OEL TRANSWORLD)
|
Handy size
|
30,007
|
1,742
|
1992
|
TC 'til Aug-11
|
$10,250
|
YM PORT KELANG (ex-MASTRO NICOS, ex- YM XINGANG I)
|
Handy size
|
23,596
|
1,599
|
1993
|
TC 'til Oct-11
|
$5,900
|
MANOLIS P
|
Handy size
|
20,346
|
1,452
|
1995
|
TC 'til May-11
|
$7,699
|
NINOS
(ex-YM QINGDAO I)
|
Feeder
|
18,253
|
1,169
|
1990
|
TC 'til Jun-11
Then 'til Jun-12
|
$6,800
Then $11,200
|
KUO HSIUNG
|
Feeder
|
18,154
|
1,169
|
1993
|
TC 'til Jun-11
Then 'til Jun-12
|
$5,300 'til Jun-11
Then $11,200
|
Total Container Carriers
|
10
|
274,354
|
17,787
|
|||
Fleet Grand Total
|
16
|
628,730
|
18,737
|
(*)
|
TC denotes time charter. All dates listed are the earliest redelivery dates under each TC.
|
(**)
|
"Monica P" is employed in the Bulkhandling spot pool that is managed by Klaveness, a major global charterer in the drybulk sector. We have concluded a Forward Freight Agreement(FFA) option contract on the Panamax index for calendar 2011 for a modern Panamax. Such a contract serves as an approximate hedge to "Monica P" for 2011 effectively locking in a rate between $16,500 and $23,500.
|
|
·
|
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.
|
Name
|
Capacity
|
Purchase
Date |
Carrying Value as of
December 31, 2010 |
Dry Bulk Vessels
|
(dwt)
|
(million USD)
|
|
PANTELIS
|
74,020
|
Jul-2009
|
$25.21
|
ELENI P
|
72,119
|
Mar-2009
|
16.15
|
IRINI
|
69,734
|
Oct-2002
|
3.92
|
ARISTIDES N.P.
|
69,268
|
Sep-2006
|
16.04
|
MONICA P
|
46,667
|
Jan-2009
|
15.87
|
Total Dry Bulk Vessels
|
331,808
|
$77.19
|
|
Multipurpose Dry Cargo Vessels
|
(dwt/teu)
|
||
TASMAN TRADER
|
22,568
|
Apr-2006
|
$8.29
|
Container Carriers
|
(teu)
|
||
MAERSK NOUMEA
|
2,556
|
May-2008
|
$47.23 (*)
|
TIGER BRIDGE
|
2,228
|
Oct-2007
|
19.36 (*)
|
AGGELIKI P
|
2,008
|
Jun-2010
|
15.71
|
DESPINA P
|
1,932
|
Aug-2007
|
14.32 (*)
|
JONATHAN P
|
1,932
|
Aug-2007
|
14.21 (*)
|
CAPTAIN COSTAS
|
1,742
|
Jun-2007
|
19.31 (*)
|
YM PORT KELANG
|
1,599
|
Nov-2006
|
14.15 (*)
|
MANOLIS P
|
1,452
|
Apr-2007
|
15.12 (*)
|
NINOS
|
1,169
|
Feb-2001
|
5.16
|
KUO HSIUNG
|
1,169
|
May-2002
|
5.36
|
Total Container Carriers
|
17,787
|
$169.93
|
|
Fleet Total
|
$255.41
|
Our Competitive Strengths
|
|
·
|
Experienced Management Team
. Our management team has significant experience in all aspects of commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from the Massachusetts Institute of Technology. He has worked in various technical, shipyard and ship management capacities and since 1991 has focused on the ownership and operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 20 years of experience, primarily as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry.
|
|
·
|
Cost Effective Vessel Operations
. We believe that because of the efficiencies afforded to us through Eurobulk, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Despite the average age of our fleet being approximately 17 years during 2010, our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses were $5,191 per day for the year ended December 31, 2010. We consider this amount to be among the lowest of the publicly listed drybulk shipping companies in the U.S. even after accounting for the lower operating expenses of our 2 laid-up vessels during part of the year. Our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize off-hire days. Our professional, well-trained masters, officers and on board crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2010, our operational fleet utilization was 99.3% and since 2006 our operational utilization rate has averaged approximately 99.0%. Our commercial utilization rate (without including laid-up vessels) increased to 99.9% in 2010 from 95.5% in 2009.
|
|
·
|
Strong Relationships with Customers and Financial Institutions
. We believe Eurobulk and the Pittas family have developed strong industry relationships and have gained acceptance with charterers, lenders and insurers because of their long-standing reputation for safe and reliable service and financial responsibility through various shipping cycles. Through Eurobulk, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of Eurobulk and the Pittas family helps us to secure favorable employment for our vessels with well known charterers.
|
Our Business Strategy
|
|
·
|
Renew and Expand our Fleet
. We expect to grow our fleet in a disciplined manner through timely and selective acquisitions of quality vessels. We perform in-depth technical review and financial analysis of each potential acquisition and only purchase vessels as market conditions and developments present themselves. We continue to be focused on purchasing well-maintained secondhand vessels, which should provide a significant value proposition given the depressed price levels that exist currently. However, we will also consider purchasing newbuildings or newbuilding resales if the value proposition exists at the time. Furthermore, as part of our fleet renewal, we will continue to sell certain vessels when we believe it is in the best interests of the Company and our shareholders.
|
|
·
|
Maintain Balanced Employment
. We intend to strategically employ our fleet between time and spot charters. We actively pursue time charters to obtain adequate cash flow to cover as much as possible of our fleet's fixed costs, consisting of vessel operating expenses, management fees, general and administrative expenses, interest expense and drydocking costs for the upcoming 12-month period. We also use FFA contracts – as a substitute for time charter employment - to partly provide coverage for our drybulk vessels in order to increase the predictability of our revenues. We look to deploy the remainder of our fleet through spot charters, shipping pools or contracts of affreightment depending on our view of the direction of the markets and other tactical or strategic considerations. We believe this balanced employment strategy will provide us with more predictable operating cash flows and sufficient downside protection, while allowing us to participate in the potential upside of the spot market during periods of rising charter rates. As of May 25, 2011, on the basis of our existing time charters and FFA contracts, approximately 84% of our vessel capacity in 2011 and approximately 24% in 2012 are fixed, which will help protect us from market fluctuations, enable us to make significant principal and interest payments on our debt and pay dividends to our shareholders.
|
|
·
|
Operate a Fleet in Two Sectors
. While remaining focused on the dry cargo segment of the shipping industry, we intend to continue to develop a diversified fleet of drybulk carriers and containerships of up to Panamax size. A diversified drybulk fleet profile will allow us to better serve our customers in both major and minor drybulk trades, as well as to reduce any dependency on any one cargo, trade route or customer. We will remain focused on the smaller size ship segment of the container market, which has not experienced the same level of expansion in vessel supply that has occurred with larger containerships. A diversified fleet, in addition to enhancing the stability of our cash flows, will also help us to reduce our exposure to unfavorable developments in any one shipping sector and to benefit from upswings in any one shipping sector experiencing rising charter rates.
|
|
·
|
Optimize Use of Financial Leverage
. We will use bank debt to partly fund our vessel acquisitions and increase financial returns for our shareholders. We actively assess the level of debt we incur in light of our ability to repay that debt based on the level of cash flow generated from our balanced chartering strategy and efficient operating cost structure. Our debt repayment schedule as of December 31, 2010 calls for a reduction of more than 30% of our debt by the end of 2012. We expect this will increase our ability to borrow funds to make additional vessel acquisitions in order to grow our fleet and continue pay dividends to our shareholders.
|
|
·
|
natural resources damage and related assessment costs;
|
|
·
|
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.
|
|
·
|
on-board installation of automatic identification systems, or AIS, 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.
|
Vessel
|
Next
|
Type
|
||
TASMAN TRADER
|
June 2013
|
Drydocking
|
||
NINOS
|
July 2013
|
Drydocking
|
||
YM PORT KELANG
|
February 2013
|
Special Survey
|
||
ARISTIDES N.P.
|
February 2013
|
Special Survey
|
||
KUO HSIUNG
|
July 2011
|
Special Survey
|
||
IRINI
|
July 2013
|
Special Survey
|
||
MANOLIS P
|
May 2013
|
Drydocking
|
||
CAPTAIN COSTAS
|
June 2012
|
Special Survey
|
||
DESPINA P
|
December 2013
|
Drydocking
|
||
JONATHAN P
|
October 2013
|
Drydocking
|
||
TIGER BRIDGE
|
November 2013
|
Drydocking
|
||
MAERSK NOUMEA
|
June 2011
|
Special Survey
|
||
MONICA P
|
April 2013
|
Special Survey
|
||
ELENI P
|
February 2014
|
Drydocking
|
||
PANTELIS
|
January 2013
|
Drydocking
|
||
AGGELIKI P
|
October 2012
|
Special Survey
|
D.
|
Property, plants and equipment
|
·
|
Searoute Maritime Ltd. incorporated in Cyprus on May 20, 1992, owner of the Cyprus flag 33,712 dwt drybulk carrier motor vessel
Ariel
, which was built in 1977 and acquired on March 5, 1993.
Ariel
was sold on February 22, 2007.
|
·
|
Oceanopera Shipping Ltd. incorporated in Cyprus on June 26, 1995, owner of the Cyprus flag 34,750 dwt drybulk carrier motor vessel
Nikolaos P
, which was built in 1984 and acquired on July 22, 1996.
Nikolaos P
was sold on February 12, 2009.
|
·
|
Oceanpride Shipping Ltd. incorporated in Cyprus on March 7, 1998, owner of the Cyprus flag 26,354 dwt drybulk carrier motor vessel
John P
, which was built in 1981 and acquired on March 7, 1998.
John P
was sold on July 5, 2006.
|
·
|
Alcinoe Shipping Ltd. incorporated in Cyprus on March 20, 1997, owner of the Cyprus flag 26,354 dwt drybulk carrier motor vessel
Pantelis P
, which was built in 1981 and acquired on June 4, 1997.
Pantelis P
was sold on May 31, 2006. On February 22, 2007, Alcinoe Shipping Ltd. acquired the 38,691 dwt Cyprus flag drybulk motor vessel
Gregos
, which was built in 1984. On June 13, 2007, m/v
Gregos
was transferred to Gregos Shipping Limited incorporated in the Marshall Islands and its flag was changed to the flag of the Marshall Islands.
Gregos
was sold on December 16, 2009.
|
·
|
Alterwall Business Inc. incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 dwt container carrier motor vessel
Ninos
(ex
YM Qingdao 1
), which was built in 1990 and acquired on February 16, 2001.
|
·
|
Allendale Investment S.A. incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 dwt container carrier motor vessel
Kuo Hsiung
, which was built in 1993 and acquired on May 13, 2002.
|
·
|
Diana Trading Ltd. incorporated in the Marshall Islands on September 25, 2002, owner of the Marshall Islands flag 69,734 dwt drybulk carrier motor vessel
Irini
, which was built in 1988 and acquired on October 15, 2002.
|
·
|
Salina Shipholding Corp., incorporated in the Marshall Islands on October 20, 2005, owner of the Marshall Islands flag 29,693 dwt container carrier motor vessel
Artemis
, which was built in 1987 and acquired on November 25, 2005.
Artemis
was sold on December 17, 2009.
|
·
|
Xenia International Corp., incorporated in the Marshall Islands on April 6, 2006, owner of the Marshall Islands flag 22,568 dwt / 950 teu multipurpose motor vessel
Tasman Trader
, which was built in 1990 and acquired on April 27, 2006.
|
·
|
Prospero Maritime Inc., incorporated in the Marshall Islands on July 21, 2006, owner of the Marshall Islands flag 69,268 dwt drybulk motor vessel
Aristides N.P.
, which was built in 1993 and acquired on September 4, 2006.
|
·
|
Xingang Shipping Ltd., incorporated in Liberia on October 16, 2006, owner of the Liberian flag 23,596 dwt container carrier
YM Xingang I
, which was built in February 1993 and acquired on November 15, 2006. On July 11, 2009,
YM Xingang I
was renamed
Mastro Nicos
and on November 5, 2009, it was renamed
YM Port Kelang
.
|
·
|
Manolis Shipping Ltd., incorporated in Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 dwt container carrier motor vessel
Manolis P
, which was built in 1995 and acquired on April 12, 2007.
|
·
|
Eternity Shipping Company, incorporated in the Marshall Islands on May 17, 2007, owner of the Marshall Islands flag 30,007 dwt / 1,742 teu container carrier motor vessel
OEL Transworld
(ex
Clan Gladiator)
, which was built in 1992 and acquired on June 13, 2007. On August 31, 2009,
OEL Transworld
was renamed
Captain Costas
.
|
·
|
Emmentaly Business Inc., incorporated in Panama on July 4, 2007, owner of the Panamanian flag 33,667 dwt / 1,932 teu container carrier motor vessel
Jonathan P
, which was built in 1990 and acquired on August 7, 2007. On April 16, 2008, motor vessel
Jonathan P
was renamed to
OEL Intergrity
;
OEL Intergrity
was renamed back to
Jonathan P
on March 5, 2009.
|
·
|
Pilory Associates Corp., incorporated in Panama on July 4, 2007, owner of the Panamanian flag 33,667 dwt / 1,932 teu container carrier motor vessel
Despina P
, which was built in 1990 and acquired on August 13, 2007.
|
·
|
Tiger Navigation Corp., incorporated in Marshall Islands on August 29, 2007, owner of the Marshall Islands flag 31,627 dwt / 2,228 teu container carrier motor vessel
Tiger Bridge
, which was built in 1990 and acquired on October 4, 2007.
|
·
|
Trust Navigation Corp., incorporated in Liberia on October 1, 2007, owner of the Liberian flag 64,873 dwt drybulk carrier motor vessel
Ioanna P
, which was built in 1984 and acquired on November 1, 2007.
Ioanna P
was sold on January 12, 2009.
|
·
|
Noumea Shipping Ltd, incorporated in Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 dwt / 2,556 teu container vessel motor vessel
Maersk Noumea
, which was built in 2001 and acquired on May 22, 2008.
|
·
|
Saf-Concord Shipping Ltd., incorporated in Liberia on June 8, 2008, owner of the Liberian flag 46,667 dwt drybulk carrier motor vessel
Monica P
, which was built in 1998 and acquired on January 19, 2009.
|
·
|
Eleni Shipping Ltd., incorporated in Liberia on February 11, 2009, owner of the Liberian flag 72,119 dwt drybulk carrier motor vessel
Eleni P
, which was built in 1997 and acquired on March 6, 2009.
|
·
|
Pantelis Shipping Ltd., incorporated in the Republic of Malta on July 2, 2009, was the owner of the Maltese flag 74,020 dwt drybulk carrier motor vessel
Pantelis
which was built in 2000 and acquired on July 23, 2009. On December 15, 2009, ownership of the vessel was transferred to Pantelis Shipping Corp., incorporated in Liberia, and the vessel changed its flag to the Liberian flag.
|
·
|
Aggeliki Shipping Ltd., incorporated in Liberia on May 21, 2010, owner of the Liberian flag 30,306 dwt / 2,008 teu container vessel
Aggeliki P
which was built in 1998 and acquired on June 21, 2010.
|
·
|
m/v
Ninos
and m/v
Kuo Hsiung,
were collateral for a loan with an outstanding principal balance of $1,900,000.
|
·
|
m/v
Tasman Trader
, was collateral for a loan with an outstanding principal balance of $3,480,000.
|
·
|
m/v
Aristides N.P.
, was collateral for a loan with an outstanding principal balance of $7,975,000
|
·
|
m/v
YM Port Kelang
and m/v
Irini
, were collateral for a loan with an outstanding principal balance of $8,000,000.
|
·
|
m/v
Monica P,
was collateral for a loan with an outstanding principal balance of $8,250,000.
|
·
|
m/v
Manolis P,
to a loan with an outstanding principal balance of $7,760,000.
|
·
|
m/v
Tiger Bridge,
to a loan with an outstanding principal balance of $2,400,000.
|
·
|
m/v
Eleni P,
was collateral for a loan with an outstanding principal balance of $9,400,000.
|
·
|
m/v
Pantelis,
was collateral for a loan with an outstanding principal balance of $10,720,000.
|
·
|
m/v
Aggeliki P,
was collateral for a loan with an outstanding principal balance of $8,500,000.
|
·
|
m/v
Maersk Noumea,
was collateral for a loan with an outstanding principal balance of $20,000,000.
|
Item 5.
|
Operating and Financial Review and Prospects
|
A.
|
Operating results
|
B.
|
Liquidity and Capital Resources
|
C.
|
Research and development, patents and licenses, etc.
|
D.
|
Trend information
|
E.
|
Off-balance Sheet Arrangements
|
F.
|
Tabular Disclosure of Contractual Obligations
|
Contractual Obligations and Commitments
|
In U.S. dollars
|
Total
|
Less Than
One
Year
|
One to Three Years
|
Three to
Five Years
|
More Than
Five Years
|
|||||||||||||||
Bank debt
|
$ | 88,385,000 | $ | 13,472,000 | $ | 34,269,000 | $ | 27,724,000 | $ | 12,920,000 | ||||||||||
Interest Payments (1)
|
$ | 14,211,119 | $ | 3,877,102 | $ | 6,547,709 | $ | 2,804,864 | $ | 981,444 | ||||||||||
Vessel Management fees (2)
|
$ | 31,786,553 | $ | 5,927,600 | $ | 12,484,859 | $ | 13,374,093 | — | |||||||||||
Other Management fees (3)
|
$ | 6,569,021 | $ | 1,225,000 | $ | 2,580,126 | $ | 2,763,895 | — | |||||||||||
Derivative contracts (4)
|
— | — | — | — | — |
A.
|
Directors and Senior Management
|
Name
|
Age
|
Position
|
Aristides J. Pittas
|
51
|
Chairman, President and CEO; Class A Director
|
Dr. Anastasios Aslidis
|
59
|
CFO and Treasurer; Class A Director
|
Aristides P. Pittas
|
51
|
Vice Chairman; Class A Director
|
Stephania Karmiri
|
43
|
Secretary
|
Panagiotis Kyriakopoulos
|
50
|
Class B Director
|
George Skarvelis
|
50
|
Class B Director
|
George Taniskidis
|
50
|
Class C Director
|
Gerald Turner
|
63
|
Class C Director
|
B.
|
Compensation
|
C.
|
Board Practices
|
·
|
We are not required under Marshall Islands law to maintain a Board of Directors with a majority of independent directors, and we may not be able to maintain a Board of Directors with a majority of independent directors in the future.
|
·
|
In lieu of a compensation committee comprised of independent directors, our Board of Directors will be responsible for establishing the executive officers' compensation and benefits. Under Marshall Islands law, compensation of the executive officers is not required to be determined by an independent committee.
|
·
|
In lieu of a nomination committee comprised of independent directors, our Board of Directors will be responsible for identifying and recommending potential candidates to become board members and recommending directors for appointment to board committees. Shareholders may also identify and recommend potential candidates to become candidates to become board members in writing. No formal written charter has been prepared or adopted because this process is outlined in our bylaws.
|
·
|
In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Marshall Islands law requirements, a related party transaction will be permitted if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors and the Board of Directors in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board of Directors as defined in Section 55 of the Marshall Islands Business Corporations Act, by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest are disclosed and the shareholders are entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a simple majority vote of the shareholders; or (iii) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
|
·
|
As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to NASDAQ pursuant to NASDAQ corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bylaws also provide that shareholders may designate in writing a proxy to act on their behalf.
|
·
|
In lieu of holding regular meetings at which only independent directors are present, our entire Board of Directors, a majority of whom are independent, will hold regular meetings as is consistent with the laws of the Republic of the Marshall Islands.
|
·
|
The Board of Directors adopted a new equity incentive plan in May 2010. Shareholder approval was not necessary since Marshall Islands law permits the Board of Directors to take these actions. The Company has filed the appropriate documentation with the Nasdaq Global Market reflecting this event.
|
·
|
As a foreign private issuer, we are not required to obtain shareholder approval if any of our directors, officers or 5% or greater shareholders has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction(s) and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common stock or voting power of 5% or more.
|
·
|
In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company will comply with provisions of the Marshall Islands Business Corporations Act, providing that the Board of Directors approves share issuances.
|
D.
|
Employees
|
E.
|
Share Ownership
|
Name of Beneficial Owner(1)
|
Number of Shares
of Voting Stock
Beneficially
Owned
|
Percent of
Voting Stock(12)
|
||
Friends Investment Company Inc.(2)
|
10,854,559
|
34.7%
|
||
Aristides J. Pittas(3)
|
190,000
|
*
|
||
George Skarvelis(4)
|
22,000
|
*
|
||
George Taniskidis(5)
|
25,000
|
*
|
||
Gerald Turner(6)
|
25,000
|
*
|
||
Panagiotis Kyriakopoulos(7)
|
25,000
|
*
|
||
Aristides P. Pittas(8)
|
35,000
|
*
|
||
Anastasios Aslidis(9)
|
98,000
|
*
|
||
Stefania Karmiri(10)
|
—
|
*
|
||
Symeon Pariaros(11)
|
17,200
|
*
|
||
All directors and officers as a group
|
11,291,759
|
36.1%
|
*
|
Indicates less than 1.0%.
|
(1)
|
Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him/her.
|
(2)
|
Includes 10,854,559 shares of common stock held of record by Friends. A majority of the shareholders of Friends are members of the Pittas family. Investment power and voting control by Friends resides in its Board of Directors which consists of five directors, a majority of whom are members of the Pittas family. Actions by Friends may be taken by a majority of the members on its Board of Directors.
|
(3)
|
Does not include 1,419,210 shares of common stock held of record by Friends, by virtue of Mr. Pittas' ownership interest in Friends. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 20,000 shares vesting on July 1, 2011, 20,000 shares vesting on November 16, 2011 and 20,000 shares vesting on November 16, 2012.
|
(4)
|
Does not include 587,487 shares of common stock held of record by Friends, by virtue of Mr. Skarvelis' ownership interest in Friends. Mr. Skarvelis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(5)
|
Does not include 39,727 shares of common stock held of record by Friends, by virtue of Mr. Taniskidis' ownership in Friends. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(6)
|
Does not include 159,542 shares of common stock held of record by Friends, by virtue of Mr. Turner's ownership interest in Friends. Mr. Turner disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(7)
|
Does not include 67,412 shares of common stock held of record by Friends, by virtue of Mr. Kyriakopoulos' ownership in Friends. Mr. Kyriakopoulos disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(8)
|
Does not include 968,139 shares of common stock held of record by Friends, by virtue of Mr. Pittas' ownership interest in Friends. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 5,000 shares vesting on July 1, 2011, 5,000 shares vesting on July 1, 2011 and 5,000 shares vesting on July 1, 2012.
|
(9)
|
Includes 12,500 shares vesting on July 1, 2011, 12,500 shares vesting on July 1, 2011 and 12,500 shares vesting on July 1, 2012.
|
(10)
|
Does not include 2,361 shares of common stock held of records by Friends, by virtue of Mrs. Karmiri's ownership in Friends. Mrs. Karmiri disclaims beneficial ownership except to the extent of her pecuniary interest.
|
(11)
|
Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(12)
|
Voting stock includes 247,500 unvested shares in addition to the 31,002,211 issued and outstanding shares of the Company as of May 25, 2011.
|
A.
|
Major Stockholders
|
Name of Beneficial Owner(1)
|
Number of Shares
of Voting Stock
Beneficially
Owned
|
Percent of
Voting Stock(14)
|
||
Friends Investment Company Inc.(2)
|
10,854,559
|
34.7%
|
||
Royce & Associates, LLC(3)
|
2,363,346
|
7. 6%
|
||
Wellington Management Co. LLP(4)
|
1,776,600
|
5.7%
|
||
Aristides J. Pittas(5)
|
190,000
|
*
|
||
George Skarvelis(6)
|
22,000
|
*
|
||
George Taniskidis(7)
|
25,000
|
*
|
||
Gerald Turner(8)
|
25,000
|
*
|
||
Panagiotis Kyriakopoulos(9)
|
25,000
|
*
|
||
Aristides P. Pittas(10)
|
35,000
|
*
|
||
Anastasios Aslidis(11)
|
98,000
|
*
|
||
Stefania Karmiri(12)
|
—
|
*
|
||
Symeon Pariaros(13)
|
17,200
|
*
|
||
All directors and officers and 5% owners as a group
|
15,431,705
|
49.4%
|
*
|
Indicates less than 1.0%.
|
(1)
|
Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him/her.
|
(2)
|
Includes 10,854,559 shares of common stock held of record by Friends. A majority of the shareholders of Friends are members of the Pittas family. Investment power and voting control by Friends resides in its Board of Directors which consists of five directors, a majority of whom are members of the Pittas family. Actions by Friends may be taken by a majority of the members on its Board of Directors.
|
(3)
|
As disclosed on Schedule 13G filed on January 26, 2011.
|
(4)
|
As disclosed on Schedule 13F filed on May 19, 2010.
|
(5)
|
Does not include 1,419,210 shares of common stock held of record by Friends, by virtue of Mr. Pittas' ownership interest in Friends. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 20,000 shares vesting on July 1, 2011, 20,000 shares vesting on November 16, 2011 and 20,000 shares vesting on November 16, 2012.
|
(6)
|
Does not include 587,487 shares of common stock held of record by Friends, by virtue of Mr. Skarvelis' ownership interest in Friends. Mr. Skarvelis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(7)
|
Does not include 39,727 shares of common stock held of record by Friends, by virtue of Mr. Taniskidis' ownership in Friends. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(8)
|
Does not include 159,542 shares of common stock held of record by Friends, by virtue of Mr. Turner's ownership interest in Friends. Mr. Turner disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(9)
|
Does not include 67,412 shares of common stock held of record by Friends, by virtue of Mr. Kyriakopoulos' ownership in Friends. Mr. Kyriakopoulos disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(10)
|
Does not include 968,139 shares of common stock held of record by Friends, by virtue of Mr. Pittas' ownership interest in Friends. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 5,000 shares vesting on July 1, 2011, 5,000 shares vesting on July 1, 2011 and 5,000 shares vesting on July 1, 2012.
|
(11)
|
Includes 12,500 shares vesting on July 1, 2011, 12,500 shares vesting on July 1, 2011 and 12,500 shares vesting on July 1, 2012.
|
(12)
|
Does not include 2,361 shares of common stock held of records by Friends, by virtue of Mrs. Karmiri's ownership in Friends. Mrs. Karmiri disclaims beneficial ownership except to the extent of her pecuniary interest.
|
(13)
|
Includes 2,500 shares vesting on July 1, 2011, 2,500 shares vesting on July 1, 2011 and 2,500 shares vesting on July 1, 2012.
|
(14)
|
Voting stock includes 247,500 unvested shares in addition to the 31,002,211 issued and outstanding shares of the Company as of May 25, 2011.
|
C.
|
Interests of Experts and Counsel
|
Item 8.
|
Financial Information
|
A.
|
Consolidated Statements and Other Financial Information
|
B.
|
Significant Changes
|
Item 9.
|
The Offer and Listing
|
A.
|
Offer and Listing Details
|
Period
|
Low
|
High
|
||||||
Year ended Dec. 31, 2007
|
7.00 | 20.79 | ||||||
Year ended Dec. 31, 2008
|
12.00 | 16.80 | ||||||
Year Ended Dec. 31, 2009
|
3.51 | 6.05 | ||||||
1
st
quarter 2009
|
3.51 | 5.82 | ||||||
2
nd
quarter 2009
|
3.57 | 6.05 | ||||||
3
rd
quarter 2009
|
4.23 | 5.30 | ||||||
4
th
quarter 2009
|
3.82 | 5.02 | ||||||
Year Ended Dec. 31, 2010
|
3.31 | 4.50 | ||||||
1
st
quarter 2010
|
3.75 | 4.50 | ||||||
2
nd
quarter 2010
|
3.41 | 4.17 | ||||||
3
rd
quarter 2010
|
3.31 | 4.09 | ||||||
4
th
quarter 2010
|
3.51 | 4.15 | ||||||
October 2010
|
3.91 | 4.09 | ||||||
November 2010
|
3.86 | 4.15 | ||||||
December 2010
|
3.51 | 3.92 | ||||||
Year 2011(*)
|
3.58 | 4.85 | ||||||
1
st
quarter 2011
|
3.56 | 4.83 | ||||||
2
nd
quarter 2011
|
4.26 | 4.85 | ||||||
January 2011
|
3.58 | 3.92 | ||||||
February 2011
|
3.56 | 4.03 | ||||||
March 2011
|
3.76 | 4.83 | ||||||
April 2011
|
4.26 | 4.85 | ||||||
May 2011 (*)
|
4.26 | 4.67 |
B.
|
Plan of Distribution
|
C.
|
Markets
|
D.
|
Selling Shareholders
|
E.
|
Dilution
|
F.
|
Expenses of the Issue
|
Item 10.
|
Additional Information
|
A.
|
Share Capital
|
B.
|
Amended and Restated Articles of Incorporation and Bylaws, as amended
|
D.
|
Exchange Controls
|
E.
|
Taxation
|
·
|
we are organized in a foreign country (our "country of organization") that grants an "equivalent exemption" to corporations organized in the United States; and
|
·
|
more than 50% of the value of our stock is owned, directly or indirectly, by "qualified stockholders," individuals who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, which we refer to as the "50% Ownership Test," or
|
·
|
our stock is "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test."
|
·
|
We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and
|
·
|
substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.
|
·
|
at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or
|
·
|
at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income, which we refer to as "passive assets".
|
·
|
such 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, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or
|
·
|
the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.
|
·
|
fail to provide an accurate taxpayer identification number;
|
·
|
are notified by the IRS that you have failed to report all interest or dividends required to be shown on your U.S. federal income tax returns; or
|
·
|
in certain circumstances, fail to comply with applicable certification requirements.
|
G.
|
Statement by experts
|
H.
|
Documents on display
|
I.
|
Subsidiary Information
|
Item 11.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Year Ended December 31,
|
Amount in $(loans)
|
Amount in $ (swap)
|
2011
|
816,000
|
(595,000)
|
2012
|
677,000
|
(600,000)
|
2013
|
534,000
|
(484,000)
|
2014
|
302,000
|
(229,000)
|
2015 and thereafter
|
324,000
|
(105,000)
|
Year Ended December 31,
|
Change in Fair Value in $
|
|||
2011
|
(360,000 | ) | ||
Margin
|
Amount in $
|
|||
Maximum increase in margin
|
360,000 |
Item 12.
|
Description of Securities Other than Equity Securities
|
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
Item 15.
|
Controls and Procedures
|
2010
(dollars in thousands)
|
2009
(dollars in thousands)
|
|
Audit Fees
|
$ 405
|
$ 531
|
Further assurance / audit related fees
|
_
|
_
|
Tax fees
|
_
|
_
|
Other fees / expenses
|
-
|
-
|
Total
|
$ 405
|
$ 531
|
Item 17.
|
Financial Statements
|
Item 18.
|
Financial Statements
|
1.1
|
|
Amended and Restated Articles of Incorporation of Euroseas Ltd.(12)
|
1.2
|
|
Bylaws of Euroseas Ltd.(11)
|
1.3
|
Amendment to Bylaws of Euroseas Ltd.(11)
|
|
2.1
|
|
Specimen Common Stock Certificate(7)
|
2.2
|
|
Form of Securities Purchase Agreement(1)
|
2.3
|
|
Form of Registration Rights Agreement(1)
|
2.4
|
|
Form of Warrant(1)
|
2.5
|
|
Registration Rights Agreement between Euroseas Ltd. and Friends Investment Company Inc., dated November 2, 2005(2)
|
2.6
|
Registration Rights Agreement among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd. and All Seas Investors III LP dated March 25, 2010(11)
|
|
3.1
|
Shareholder Voting Agreement among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd., All Seas Investors III LP, Friends Investment Company Inc. and Aristides J. Pittas dated March 25, 2010(11)
|
|
4.1
|
|
Form of Lock-up Agreement(1)
|
4.2
|
|
Secured Loan Facility Agreement dated May 24, 2005 between Allendale Investments S.A. and Alterwall Business Inc. as borrowers, Fortis Bank (Nederland) N.V. and others as lenders, and Fortis Bank (Nederland) N.V. as agent and security trustee for US$20,000,000(1)
|
4.3
|
|
Form of Standard Ship Management Agreement(1)
|
4.4
|
|
Agreement between Eurobulk Ltd. and Eurochart S.A., for the provision of exclusive brokerage services, dated December 20, 2004(1)
|
4.5
|
|
Form of Current Time Charter(1)
|
4.6
|
Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of July 17, 2007, as amended February 7, 2008 (6)
|
|
4.7
|
Addendum No. 1 to Amendment to Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of February 7, 2009 (9)
|
|
4.8
|
Loan Agreement between Xenia International Corp., as borrower, and Fortis Bank N.V./S.A., Athens Branch and others, as lenders, for the amount of US$8,250,000 dated June 30, 2006(3)
|
|
4.9
|
Loan Agreement between Prospero Maritime Inc., as borrower, and Calyon, as lender, for the amount of US$15,500,000 dated August 30, 2006(3)
|
|
4.10
|
Euroseas 2007 Equity Incentive Plan(8)
|
|
4.11
|
Loan Agreement between Xingang Shipping Ltd., as borrower, and HSBC Bank plc, as lender, for the amount of US$20,000,000 dated November 14, 2006(4)
|
|
4.12
|
Amendment to Loan Agreement among Xingang Shipping Ltd., as borrower, HSBC Bank plc, as lender, and Diana Trading Ltd. and Euroseas Ltd., as corporate guarantors, dated April 14, 2010(11)
|
|
4.13
|
Form of Right of First Refusal(5)
|
|
4.14
|
Form of Advisory Agreement(5)
|
|
4.15
|
Loan Agreement between Manolis Shipping Limited, as borrower, and EFG Eurobank Ergasias S.A., as lender, for the amount of US$10,000,000 dated June 7, 2007(6)
|
|
4.16
|
Supplemental Agreement to Loan Agreement between Manolis Shipping Limited, as borrower, and EFG Eurobank Ergasias S.A., as lender, dated August 5, 2009(11)
|
|
4.17
|
Loan Agreement between Trust Navigation Corp., as borrower and EFG Eurobank Ergasias S.A., as lender, for the amount of US$15,000,000 dated October 29, 2007 (6)
|
4.18
|
Amendment to Loan Agreement between Trust Navigation Corp., as borrower and EFG Eurobank Ergasias S.A., as lender, dated December 29, 2008 (9)
|
|
4.19
|
Amendment to Loan Agreement between Trust Navigation Corp., as borrower, and EFG Eurobank Ergasias S.A, as lender, dated October 26, 2010(12)
|
|
4.20
|
Form of Senior Security Debt Indenture(7)
|
|
4.21
|
Form of Subordinated Debt Security Indenture(7)
|
|
4.22
|
Loan Agreement between Saf-Concord Shipping Ltd., as borrower and EFG Eurobank Ergasias S.A., as lender, for the amount of US$10,000,000 dated January 9, 2009 (9)
|
|
4.23
|
Loan Agreement between Eleni Shipping Ltd., as borrower and Calyon, as lender, for the amount of US$10,000,000 dated April 30, 2009 (9)
|
|
4.24
|
Shareholders Rights Agreement between Euroseas Ltd. and American Stock Transfer and Trust Company, LLC dated May 18, 2009(10)
|
|
4.25
|
Amendment to Shareholders Rights Agreement between Euroseas Ltd. and American Stock Transfer and Trust Company, LLC dated March 25, 2010(11)
|
|
4.26
|
Loan Agreement between Pantelis Shipping Corp., as borrower, and HSBC Bank plc, as lender, for the amount of US$13,000,000 dated December 14, 2009(11)
|
|
4.27
|
Amendment to Loan Agreement between Pantelis Shipping Corp., as borrower, and HSBC Bank plc, as lender, dated April 14, 2010 (11)
|
|
4.28
|
Limited Liability Company Agreement for Euromar LLC, a Marshall Islands Limited Liability Company, among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd. and All Seas Investors III LP dated March 25, 2010(11)
|
|
4.29
|
Management Agreement among Euromar LLC, the vessel owning subsidiaries of Euromar LLC, Euroseas Ltd., Eurobulk Ltd. and Eurochart S.A. dated March 25, 2010(11)
|
|
4.30
|
Agreement Regarding Vessel Opportunities among Euroseas Ltd., Eurobulk Ltd., Eurochart S.A., Aristides J. Pittas and Euromar LLC dated March 25, 2010(11)
|
|
4.31
|
Euroseas 2010 Equity Incentive Plan(11)
|
|
4.32
|
Loan Agreement between Noumea Shipping Ltd, as borrower, and Crédit Agricole Corporate and Investment Bank, as lender, for the amount of US$20,000,000 dated December 28, 2010(12)
|
|
4.33
|
Loan Agreement between Aggeliki Shipping Ltd., as borrower, and DVB Bank SE, as lender, for the amount of US$8,500,000 dated November 5, 2010(12)
|
|
8.1
|
|
Subsidiaries of the Registrant(12)
|
12.1
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer(12)
|
|
12.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer(12)
|
|
13.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(12)
|
|
13.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(12)
|
|
15.1
|
Consent of Deloitte, Hadjipavlou, Sofianos & Cambanis S.A.(12)
|
(1)
|
Filed as an Exhibit to the Company's Registration Statement (File No. 333-129145) on October 20, 2005.
|
(2)
|
Filed as an Exhibit to the Company's Amendment No.1 to Registration Statement (File No. 333-129145) on December 5, 2005.
|
(3)
|
Filed as an Exhibit to the Company's Post-Effective Amendment No. 1 to Registration Statement (File No. 333-12945) on September 12, 2006.
|
(4)
|
Filed as an Exhibit to the Company's Registration Statement (File No. 333-138780) on November 17, 2006.
|
(5)
|
Filed as an Exhibit to the Company's Amendment No. 4 to Registration Statement (File No. 333-138780) on January 29, 2007.
|
(6)
|
Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 13, 2008.
|
(7)
|
Filed as an Exhibit to the Company's Registration Statement (File No. 333-152089) on July 2, 2008.
|
(8)
|
Filed as an Exhibit to the Company's Post-Effective Amendment No. 1 to Registration Statement (File No. 333-148124) on July 17, 2008.
|
(9)
|
Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 18, 2009.
|
(10)
|
Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on May 18, 2009.
|
(11)
|
Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 28, 2010.
|
(12)
|
Filed herewith.
|
EUROSEAS LTD.
|
||
(Registrant)
|
By:
|
/s/ Aristides J. Pittas | ||
Aristides J. Pittas
|
|||
Chairman, President and CEO
|
Pages
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets as of December 31, 2009 and 2010
|
F-3
|
Consolidated Statements of Operations for the Years Ended December 31, 2008, 2009 and 2010
|
F-5
|
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2008, 2009 and 2010
|
F-6
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2009 and 2010
|
F-7
|
Notes to the Consolidated Financial Statements
|
F-9
|
Notes
|
December 31, 2009
|
December 31, 2010
|
||||||||||
Assets
|
||||||||||||
Current assets
|
||||||||||||
Cash and cash equivalents
|
40,984,549 | 34,273,518 | ||||||||||
Trade accounts receivable, net
|
1,650,713 | 1,563,761 | ||||||||||
Other receivables
|
239,656 | 6,693,985 | ||||||||||
Inventories
|
3 | 1,869,238 | 1,788,256 | |||||||||
Restricted cash
|
9 | 1,191,230 | 976,714 | |||||||||
Other deposits
|
16 | 12,376,119 | - | |||||||||
Trading securities
|
15 | 436,598 | 263,223 | |||||||||
Derivatives
|
15, 16 | - | 574,336 | |||||||||
Prepaid expenses
|
185,137 | 271,033 | ||||||||||
Total current assets
|
58,933,240 | 46,404,826 | ||||||||||
Fixed assets
|
||||||||||||
Vessels, net
|
4 | 257,270,824 | 255,412,434 | |||||||||
Long-term assets
|
||||||||||||
Restricted cash
|
9 | 6,500,000 | 4,800,000 | |||||||||
Deferred charges, net
|
5 | 327,694 | 599,374 | |||||||||
Derivatives
|
15, 16 | 386,536 | - | |||||||||
Investment in joint venture
|
17 | - | 14,461,167 | |||||||||
Total long-term assets
|
264,485,054 | 275,272,975 | ||||||||||
Total assets
|
323,418,294 | 321,677,801 | ||||||||||
Liabilities and shareholders' equity
|
||||||||||||
Current liabilities
|
||||||||||||
Long-term debt, current portion
|
9 | 14,030,000 | 13,472,000 | |||||||||
Trade accounts payable
|
1,843,182 | 3,950,934 | ||||||||||
Accrued expenses
|
6 | 1,060,326 | 2,212,401 | |||||||||
Accrued dividends
|
12 | 46,750 | 32,175 | |||||||||
Due to related companies
|
8 | 1,416,380 | 1,594,773 | |||||||||
Deferred revenues
|
1,247,782 | 2,114,335 | ||||||||||
Derivatives
|
15, 16 | 10,799,132 | 1,837,924 | |||||||||
Total current liabilities
|
30,443,552 | 25,214,542 |
Notes | December 31, 2009 |
December 31
, 2010
|
||||||||||
Long-term liabilities
|
||||||||||||
Long-term debt, net of current portion
|
9 | 57,485,000 | 74,913,000 | |||||||||
Derivatives
|
15, 16 | 611,852 | 1,537,056 | |||||||||
Fair value of below market time charters acquired
|
7 | 3,424,627 | 1,318,211 | |||||||||
Total long-term liabilities
|
61,521,479 | 77,768,267 | ||||||||||
Total liabilities
|
91,965,031 | 102,982,809 | ||||||||||
Commitments and contingencies
|
11 | |||||||||||
Shareholders' equity
|
||||||||||||
Common stock (par value $0.03, 200,000,000 shares authorized, 30,849,711
and 31,002,211 issued and outstanding)
|
925,492 | 930,067 | ||||||||||
Preferred shares (par value $0.01, 20,000,000 shares authorized, no shares issued and outstanding)
|
- | - | ||||||||||
Additional paid-in capital
|
235,588,391 | 236,279,931 | ||||||||||
Accumulated deficit
|
(5,060,620 | ) | (18,515,006 | ) | ||||||||
Total shareholders' equity
|
231,453,263 | 218,694,992 | ||||||||||
Total liabilities and shareholders' equity
|
323,418,294 | 321,677,801 |
Notes
|
2008
|
2009
|
2010
|
|||||||||||||
Revenues
|
||||||||||||||||
Voyage revenue
|
7 | 132,243,918 | 66,215,669 | 54,422,489 | ||||||||||||
Commissions
|
8, 14 | (5,940,460 | ) | (2,433,776 | ) | (1,944,473 | ) | |||||||||
Net revenue
|
126,303,458 | 63,781,893 | 52,478,016 | |||||||||||||
|
||||||||||||||||
Operating expenses
|
||||||||||||||||
Voyage expenses
|
14 | 3,092,323 | 1,510,551 | 1,596,569 | ||||||||||||
Vessel operating expenses
|
14 | 27,521,194 | 23,673,480 | 21, 507,192 | ||||||||||||
Drydocking expenses
|
6,129,257 | 1,912,474 | 6,537,733 | |||||||||||||
Vessel depreciation
|
4 | 28,284,752 | 19,092,384 | 17,979,750 | ||||||||||||
Impairment loss
|
4 | 25,113,364 | - | - | ||||||||||||
Management fees
|
8 | 5,387,415 | 5,074,297 | 4,892,006 | ||||||||||||
Other general and administrative expenses
|
4,057,736 | 3,640,534 | 3,026,941 | |||||||||||||
Net loss on sale of vessels
|
4 | - | 8,959,321 | - | ||||||||||||
Charter termination fee and other income
|
18 | - | (103,577 | ) | (2,352,946 | ) | ||||||||||
Total operating expenses
|
99,586,041 | 63,759,464 | 53,187,245 | |||||||||||||
Operating income / (loss)
|
26,717,417 | 22,429 | (709,229 | ) | ||||||||||||
Other income/(expenses)
|
||||||||||||||||
Interest and other financing costs
|
(2,930,737 | ) | (1,437,637 | ) | (1,498,216 | ) | ||||||||||
Change in fair value of derivatives
|
16 | (3,474,635 | ) | (15,778,209 | ) | (4,221,817 | ) | |||||||||
Foreign exchange gain/(loss)
|
7,888 | 36,477 | (3,200 | ) | ||||||||||||
Realized gain on investments
|
81,193 | 411,444 | - | |||||||||||||
Unrealized loss on investments
|
(2,393,983 | ) | (5,325 | ) | (173,375 | ) | ||||||||||
Dividend income
|
315,266 | - | - | |||||||||||||
Interest income
|
3,168,501 | 1,123,317 | 538,820 | |||||||||||||
Other expenses, net
|
(5,226,507 | ) | (15,649,933 | ) | (5,357,788 | ) | ||||||||||
Equity loss in joint venture
|
- | - | (538,833 | ) | ||||||||||||
Net income / (loss)
|
21,490,910 | (15,627,504 | ) | (6,605,850 | ) | |||||||||||
Earnings / (loss) per share - basic
|
13 | 0.71 | (0.51 | ) | (0.21 | ) | ||||||||||
Weighted average number of shares outstanding during the year, basic
|
13 | 30,437,107 | 30,648,991 | 30,900,122 | ||||||||||||
Earnings / (loss) per share - diluted
|
13 | 0.70 | (0.51 | ) | (0.21 | ) | ||||||||||
Weighted average number of shares outstanding during the year,
diluted
|
13 | 30,505,476 | 30,648,991 | 30,900,122 |
Comprehensive
Income / (loss)
|
Number of
Shares
|
Common Stock Amount
|
Preferred Shares Amount
|
Additional Paid – in Capital
|
Retained Earnings /Accumulated Deficit
|
Total
|
||||||||||||||||||||||
Balance,
January 1, 2008
|
30,261,113 | 907,834 | - | 231,147,700 | 34,520,282 | 266,575,816 | ||||||||||||||||||||||
Net income
|
21,490,910 | 21,490,910 | 21,490,910 | |||||||||||||||||||||||||
Issuance of shares for warrants exercised
|
171,998 | 5,160 | - | 1,805,762 | - | 1,810,922 | ||||||||||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation
|
142,500 | 4,275 | - | 1,614,208 | - | 1,618,483 | ||||||||||||||||||||||
Dividends declared ($1.13 per share) (see Note 13)
|
- | - | (34,664,699 | ) | (34,664,699 | ) | ||||||||||||||||||||||
Balance,
December 31, 2008
|
30,575,611 | 917,269 | - | 234,567,670 | 21,346,493 | 256,831,432 | ||||||||||||||||||||||
Net loss
|
(15,627,504 | ) | (15,627,504 | ) | (15,627,504 | ) | ||||||||||||||||||||||
Issuance of shares in "Continuous Offering Program, net of issuance costs"
|
134,100 | 4,023 | - | 204,732 | - | 208,755 | ||||||||||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation
|
140,000 | 4,200 | - | 815,989 | - | 820,189 | ||||||||||||||||||||||
Dividends declared ($0.35 per share) (see Note 13)
|
- | - | (10,779,609 | ) | (10,779,609 | ) | ||||||||||||||||||||||
Balance,
December 31, 2009
|
30,849,711 | 925,492 | - | 235,588,391 | (5,060,620 | ) | 231,453,263 | |||||||||||||||||||||
Net loss
|
(6,605,850 | ) | (6,605,850 | ) | (6,605,850 | ) | ||||||||||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation
|
152,500 | 4,575 | - | 691,540 | - | 696,115 | ||||||||||||||||||||||
Dividends declared ($0.22 per share) (see Note 13)
|
- | - | (6,848,536 | ) | (6,848,536 | ) | ||||||||||||||||||||||
Balance,
December 31, 2010
|
31,002,211 | 930,067 | - | 236,279,931 | (18,515,006 | ) | 218,694,992 |
2008
|
2009
|
2010
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income / (loss)
|
21,490,910 | (15,627,504 | ) | (6,605,850 | ) | |||||||
Adjustments to reconcile net income / (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation of vessels
|
28,284,752 | 19,092,384 | 17,979,750 | |||||||||
Impairment loss
|
25,113,364 | - | - | |||||||||
Amortization of deferred charges
|
85,141 | 110,504 | 108,569 | |||||||||
Amortization of fair value of time charters
|
(6,144,507 | ) | (3,626,762 | ) | (2,106,416 | ) | ||||||
Loss on sale of vessels
|
- | 8,959,321 | - | |||||||||
Share-based compensation
|
1,618,484 | 820,189 | 696,117 | |||||||||
Investment in trading securities, net
|
(192,859 | ) | 741,248 | - | ||||||||
Loss / (gain) on trading securities
|
2,312,790 | (406,118 | ) | 173,375 | ||||||||
Unrealized loss / (gain) on derivatives
|
3,397,530 | 7,626,918 | (8,223,804 | ) | ||||||||
Loss in investment in joint venture
|
- | - | 538,833 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
(Increase)/decrease in:
|
||||||||||||
Trade accounts receivable
|
(183,791 | ) | (416,818 | ) | 86,952 | |||||||
Prepaid expenses
|
189,503 | 55,965 | (85,896 | ) | ||||||||
Other receivables
|
(698,547 | ) | 532,133 | (6,454,329 | ) | |||||||
Inventories
|
(108,295 | ) | 142,735 | 80,982 | ||||||||
Other deposits
|
- | (12,376,119 | ) | 12,376,119 | ||||||||
Due from related companies
|
612,446 | 4,678,750 | - | |||||||||
Increase/(decrease) in:
|
||||||||||||
Due to related companies
|
- | 1,416,380 | 178,393 | |||||||||
Trade accounts payable
|
(1,506,276 | ) | (243,112 | ) | 2,207,566 | |||||||
Accrued expenses
|
(870,284 | ) | (356,615 | ) | 932,075 | |||||||
Deferred revenue
|
883,380 | (3,285,819 | ) | 866,553 | ||||||||
Net cash provided by operating activities
|
74,283,741 | 7,837,660 | 12,748,989 | |||||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of vessels including improvements
|
(43,582,320 | ) | (62,224,639 | ) | (16,121,360 | ) | ||||||
Advance for vessel acquisition
|
(1,821,798 | ) | - | - | ||||||||
Investment in joint venture
|
- | - | (15,000,000 | ) | ||||||||
Insurance proceeds
|
- | 667,839 | - | |||||||||
Change in restricted cash
|
(741,385 | ) | (709,966 | ) | 1,914,516 | |||||||
Proceeds from sale of vessels
|
- | 16,668,001 | - | |||||||||
Net cash used in investing activities
|
(46,145,503 | ) | (45,598,765 | ) | (29,206,844 | ) |
2008
|
2009
|
2010 | ||||||||||
Cash flows from financing activities:
|
||||||||||||
Issuance of share capital
|
5,030 | 4,023 | - | |||||||||
Proceeds from shares issued
|
1,805,892 | 645,242 | - | |||||||||
Offering expenses paid
|
(110,340 | ) | (197,193 | ) | (99,814 | ) | ||||||
Dividends paid
|
(34,547,949 | ) | (10,849,609 | ) | (6,863,112 | ) | ||||||
Loan arrangement fees paid
|
- | (208,000 | ) | (160,250 | ) | |||||||
Proceeds from long-term debts
|
- | 33,000,000 | 28,500,000 | |||||||||
Repayment of long-term debts
|
(25,575,000 | ) | (17,500,000 | ) | (11,630,000 | ) | ||||||
Net cash (used in) / provided by financing activities
|
(58,422,367 | ) | 4,894,463 | 9,746,824 | ||||||||
Net decrease in cash and cash equivalents
|
(30,284,129 | ) | (32,866,642 | ) | (6,711,031 | ) | ||||||
Cash and cash equivalents at beginning of year
|
104,135,320 | 73,851,191 | 40,984,549 | |||||||||
Cash and cash equivalents at end of year
|
73,851,191 | 40,984,549 | 34,273,518 | |||||||||
Cash paid for interest
|
3,161,197 | 1,421,193 | 1,328,563 | |||||||||
Non cash items:
|
||||||||||||
Other increase in accrued expenses and deferred charges
|
143,505 | 297,008 | 220,000 | |||||||||
Fair value of below market charters acquired
|
9,597,438 | - | - |
·
|
Searoute Maritime Ltd. incorporated in Cyprus on May 20, 1992, owner of the Cyprus flag 33,712 deadweight ton ("DWT" – a measure of the carrying capacity in tons) bulk carrier motor vessel (M/V) "Ariel", which was built in 1977 and acquired on March 5, 1993. M/V "Ariel" was sold in February, 2007.
|
·
|
Oceanopera Shipping Ltd. incorporated in Cyprus on June 26, 1995, owner of the Cyprus flag 34,750 DWT bulk carrier M/V "Nikolaos P", which was built in 1984 and acquired on July 22, 1996. M/V "Nikolaos P" was sold in February 2009.
|
·
|
Alcinoe Shipping Ltd. incorporated in Cyprus on March 20, 1997, owner of the Cyprus flag 26,354 DWT bulk carrier M/V "Pantelis P", which was built in 1981 and acquired on June 4, 1997. M/V "Pantelis P" was sold on May 31, 2006. On February 22, 2007, Alcinoe Shipping Ltd. acquired the 38,691 DWT Cyprus flag drybulk carrier M/V "Gregos", which was built in 1984. On June 13, 2007, M/V Gregos was transferred to Gregos Shipping Limited incorporated in the Marshall Islands and its flag was changed to the flag of the Marshall Islands. M/V "Gregos" was sold in December 2009.
|
·
|
Allendale Investment S.A. incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 DWT / 1,169 twenty-foot equivalent ("TEU" – a measure of carrying capacity in containers) container carrier M/V "Kuo Hsiung", which was built in 1993 and acquired on May 13, 2002.
|
·
|
Alterwall Business Inc. incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 DWT / 1,169 TEU container carrier M/V "Ninos" (previously named M/V "Quingdao I") which was built in 1990 and acquired on February 16, 2001.
|
·
|
Diana Trading Ltd. incorporated in the Marshall Islands on September 25, 2002, owner of the Marshall Islands flag 69,734 DWT bulk carrier M/V "Irini", which was built in 1988 and acquired on October 15, 2002.
|
·
|
Salina Shipholding Corp., incorporated in the Marshall Islands on October 20, 2005, owner of the Marshall Islands flag 29,693 DWT / 2,098 TEU container carrier M/V "Artemis", which was built in 1987 and acquired on November 25, 2005. M/V Artemis was sold in December 2009.
|
·
|
Xenia International Corp., incorporated in the Marshall Islands on April 6, 2006, owner of the Marshall Islands flag 22,568 DWT / 950 TEU multipurpose M/V "Tasman Trader", which was built in 1990 and acquired on April 27, 2006.
|
·
|
Prospero Maritime Inc., incorporated in the Marshall Islands on July 21, 2006, owner of the Marshall Islands flag 69,268 DWT dry bulk M/V "Aristides N.P.", which was built in 1993 and acquired on September 4, 2006.
|
·
|
Xingang Shipping Ltd., incorporated in Liberia on October 16, 2006, owner of the Liberian flag 23,596 DWT / 1,599 TEU container carrier M/V "YM Xingang I" , which was built in February 1993 and acquired on November 15, 2006. On November 6, 2009 the vessel was renamed M/V "YN Port Kelang" (from July 11, 2009 to November 5, 2009 the vessel was named M/V "Mastro Nicos").
|
·
|
Manolis Shipping Ltd., incorporated in the Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container carrier M/V "Manolis P", which was built in 1995 and acquired on April 12, 2007.
|
·
|
Eternity Shipping Company, incorporated in the Marshall Islands on May 17, 2007, owner of the Marshall Islands flag 30,007 DWT / 1,742 TEU container carrier M/V "Clan Gladiator", which was built in 1992 and acquired on June 13, 2007. On May 9, 2008, M/V "Clan Gladiator" was renamed M/V "OEL Transworld" and on August 31, 2009 the vessel was renamed M/V "Captain Costas".
|
·
|
Emmentaly Business Inc., incorporated in Panama on July 4, 2007, owner of the Panamanian flag 33,667 DWT / 1,932 TEU container carrier M/V "Jonathan P", which was built in 1990 and acquired on August 7, 2007. On April 16, 2008, M/V "Jonathan P" was renamed M/V "OEL Integrity"; on March 5, 2009, the vessel was renamed again M/V "Jonathan P" upon the expiration of its charter with OEL.
|
·
|
Pilory Associates Corp., incorporated in Panama on July 4, 2007, owner of the Panamanian flag 33,667 DWT / 1,932 TEU container carrier M/V "Despina P", which was built in 1990 and acquired on August 13, 2007.
|
·
|
Tiger Navigation Corp., incorporated in Marshall Islands on August 29, 2007, owner of the Marshall Islands flag 31,627 DWT / 2,228 TEU container carrier M/V "Tiger Bridge", which was built in 1990 and acquired on October 4, 2007.
|
·
|
Trust Navigation Corp., incorporated in Liberia on October 1, 2007, owner of the Liberian flag 64,873 DWT bulk carrier M/V "Ioanna P", which was built in 1984 and acquired on November 1, 2007. M/V "Ioanna P" was sold in January 2009.
|
·
|
Noumea Shipping Ltd, incorporated in Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 DWT / 2,556 TEU container carrier M/V "Maersk Noumea", which was built in 2001 and acquired on May 22, 2008.
|
·
|
Saf-Concord Shipping Ltd., incorporated in Liberia on June 8, 2008, owner of the Liberian flag 46,667 DWT bulk carrier M/V "Monica P", which was built in 1998 and acquired on January 19, 2009.
|
·
|
Eleni Shipping Ltd., incorporated in Liberia on February 11, 2009, owner of the Liberian flag 72,119 DWT bulk carrier M/V "Eleni P", which was built in 1997 and acquired on March 6, 2009.
|
·
|
Pantelis Shipping Ltd., incorporated in the Republic of Malta on July 2, 2009, was the owner of the Maltese flag 74,020 DWT bulk carrier M/V "Pantelis" which was built in 2000 and acquired on July 23, 2009. On December 15, 2009, ownership of the vessel was transferred to Pantelis Shipping Corp., incorporated in Liberia, and the vessel changed its flag to the Liberian flag.
|
·
|
Aggeliki Shipping Ltd., incorporated in the Republic of Liberia on May 21, 2010, owner of the Liberian flag 30,306 DWT / 2008 TEU container carrier M/V "Aggeliki P" which was built in 1998 and acquired on June 21, 2010.
|
Year ended December 31,
|
||||||||||||
Charterer
|
2008
|
2009
|
2010
|
|||||||||
A (Klaveness)
|
8.81 | % | 16.84 | % | 30.29 | % | ||||||
B (Maersk Lines)
|
2.49 | % | 10.25 | % | 14.95 | % | ||||||
C (Sun Express)
|
- | - | 10.10 | % | ||||||||
D (Orient Express Lines)
|
6.05 | % | 10.33 | % | - | % | ||||||
E (Sinochart)
|
13.80 | % | 2.52 | % | - | % |
2.
|
Significant Accounting Policies - Continued
|
|
·
|
management has committed to a plan to sell the vessel;
|
|
·
|
the vessel is available for immediate sale in its present condition;
|
|
·
|
an active program to locate a buyer and other actions required to complete the plan to sell the vessel has been initiated;
|
|
·
|
the sale of the vessel is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within one year;
|
|
·
|
the vessel 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.
|
2.
|
Significant Accounting Policies - Continued
|
2.
|
Significant Accounting Policies - Continued
|
2.
|
Significant Accounting Policies - Continued
|
2.
|
Significant Accounting Policies - Continued
|
3.
|
Inventories
|
2009
|
2010
|
|||||||
Lubricants
|
1,346,502 | 1,430,809 | ||||||
Victualling
|
120,239 | 166,778 | ||||||
Bunkers
|
402,497 | 190,669 | ||||||
Total
|
1,869,238 | 1,788,256 |
4.
|
Vessels, net
|
Costs
|
Accumulated
Depreciation
|
Net Book
Value
|
||||||||||
Balance, January 1, 2008
|
272,708,509 | (34,459,525 | ) | 238,248,984 | ||||||||
-Depreciation for the year
|
- | (28,284,752 | ) | (28,284,752 | ) | |||||||
- Purchase of vessel
|
53,179,758 | - | 53,179,758 | |||||||||
- Vessels held for sale
|
(45,620,268 | ) | 14,439,884 | (31,180,384 | ) | |||||||
Balance, December 31, 2008
|
280,267,999 | (48,304,393 | ) | 231,963,606 | ||||||||
-Depreciation for the year
|
- | (19,092,384 | ) | (19,092,384 | ) | |||||||
- Purchase of vessels
|
64,046,437 | - | 64,046,437 | |||||||||
- Sale of vessels
|
(33,986,672 | ) | 14,339,837 | (19,646,835 | ) | |||||||
Balance, December 31, 2009
|
310,327,764 | (53,056,940 | ) | 257,270,824 | ||||||||
-Depreciation for the year
|
- | (17,979,750 | ) | (17,979,750 | ) | |||||||
- Purchase of vessels
|
16,121,360 | - | 16,121,360 | |||||||||
Balance, December 31, 2010
|
326,449,124 | (71,036,690 | ) | 255,412,434 |
4.
|
Vessels, net - Continued
|
5.
|
Deferred Charges, net
|
2008
|
2009
|
2010
|
||||||||||
Balance, beginning of year
|
315,338 | 373,702 | 327,694 | |||||||||
Additions, loan arrangement fees
|
- | 208,000 | 380,249 | |||||||||
Additions, deferred offering expenses
|
143,505 | 297,008 | - | |||||||||
Amortization of loan arrangement fees
|
(85,141 | ) | (110,504 | ) | (108,569 | ) | ||||||
Deferred offering expenses reclassified to paid-in capital
|
- | (440,513 | ) | - | ||||||||
Balance, end of year
|
373,702 | 327,694 | 599,374 |
As of December 31, 2009
|
As of December 31, 2010
|
|||||||
Accrued payroll expenses
|
190,384 | 255,194 | ||||||
Accrued interest
|
88,656 | 149,740 | ||||||
Accrued general and administrative expenses
|
415,510 | 400,172 | ||||||
Accrued commissions
|
97,630 | 102,921 | ||||||
Other accrued expenses
|
268,146 | 1,304,374 | ||||||
Total
|
1,060,326 | 2,212,401 |
7.
|
Fair Value of Above or Below Market Time Charters Acquired
|
7.
|
Fair Value of Above or Below Market Time Charters Acquired - continued
|
8.
|
Related Party Transactions
|
8.
|
Related Party Transactions - Continued
|
9.
|
Long-Term Debt
|
Borrower
|
December 31,
2009
|
December 31,
2010
|
|||||||
Alterwall Business Inc./
Allendale Investments S.A
|
(a)
|
3,700,000 | 1,900,000 | ||||||
Xenia International Corp
|
(b)
|
4,540,000 | 3,480,000 | ||||||
Prospero Maritime Inc.
|
(c)
|
9,625,000 | 7,975,000 | ||||||
Xingang Shipping Ltd. / Alcinoe Shipping Ltd
|
(d)
|
9,000,000 | 8,000,000 | ||||||
Manolis Shipping Ltd.
|
(e)
|
8,400,000 | 7,760,000 | ||||||
Trust Navigation Corp. / Tiger Navigation Co.
|
(f)
|
4,600,000 | 2,400,000 | ||||||
Saf-Concord Shipping Ltd.
|
(g)
|
9,250,000 | 8,250,000 | ||||||
Eleni Shipping Ltd.
|
(h)
|
9,900,000 | 9,400,000 | ||||||
Pantelis Shipping Corp.
|
(i)
|
12,500,000 | 10,720,000 | ||||||
Aggeliki Shipping Ltd.
|
(j)
|
- | 8,500,000 | ||||||
Noumea Shipping Ltd.
|
(k)
|
- | 20,000,000 | ||||||
71,515,000 | 88,385,000 | ||||||||
Less: Current portion
|
(14,030,000 | ) | (13,472,000 | ) | |||||
Long-term portion
|
$ | 57,485,000 | $ | 74,913,000 |
To December 31:
|
||||
2011
|
13,472,000 | |||
2012
|
13,332,000 | |||
2013
|
20,937,000 | |||
2014
|
16,312,000 | |||
2015
|
11,412,000 | |||
Thereafter
|
12,920,000 | |||
Total
|
$ | 88,385,000 |
|
(a)
|
Allendale Investments S.A. and Alterwall Business Inc. drew $20,000,000 on May 26, 2005 against a loan facility for which they are jointly and severally liable. The loan is payable in twenty-four unequal consecutive quarterly installments of $1,500,000 each in the first year, $1,125,000 each in the second year, $775,000 each in the third year, $450,000 each in the fourth through sixth years and a balloon payment of $1,000,000 payable with the final installment due in May 2011. The interest is based on LIBOR plus 1.25% per annum as long as the outstanding loan amount remains below 60% of the fair market value (FMV) of M/V "Ninos" and M/V "Kuo Hsiung" and plus 1.375% if the outstanding loan amount is above 60% of the FMV of such vessels.
|
|
(b)
|
This is an $8,250,000 loan drawn by Xenia International Corp. on June 30, 2006. The loan is payable in twenty three consecutive quarterly installments consisting of $265,000 each and a balloon payment of $2,155,000 payable with the final quarterly installment due in March 2012. The interest is based on LIBOR plus a margin of 0.95%. The loan is secured with the following: (i) first priority mortgage over M/V "Tasman Trader", (ii) first assignment of earnings and insurance of M/V "Tasman Trader", (iii) a corporate guarantee of Euroseas Ltd., and (iv) overall liquidity (cash and cash equivalents) of $300,000 for each of the Company's vessels throughout the life of the facility.
|
|
(c)
|
This is a $15,500,000 loan drawn by Prospero Maritime Inc. on September 4, 2006. The loan is payable in fourteen consecutive semi-annual installments consisting of two installments of $1,200,000 each, one installment of $1,000,000 each and eleven installments of $825,000 each and a balloon payment of $3,025,000 payable with the final semi-annual installment due in September 2013. The interest is based on LIBOR plus a margin that ranges between 0.9%-0.95%, depending on the asset cover ratio. The loan is secured with the following: (i) first priority mortgage over M/V "Aristides N.P.", (ii) first assignment of earnings and insurance of M/V "Aristides N.P.", (iii) a corporate guarantee of Euroseas Ltd., (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account Prospero Maritime Inc. maintains with the bank, and (v) overall liquidity (cash and cash equivalents) of $300,000 for each of the Company's vessels throughout the life of the facility.
|
|
(d)
|
This is a $20,000,000 loan drawn by Xingang Shipping Ltd. on November 15, 2006; Alcinoe Shipping Ltd., owner of the M/V "Gregos", became a guarantor to the loan in March 2007. Diana Shipping Ltd, owner of M/V "Irini" is a guarantor to this loan. After M/V Gregos was sold in December 2009, a cash collateral of $2,000,000 has been maintained with the bank in lieu of any repayment because of the sale. The loan is payable in eight consecutive quarterly installments of $1.0 million each, the first of which was due in February 2007, followed by four consecutive quarterly installments of $750,000 each, followed by sixteen consecutive installments of $250,000 each and a balloon payment of $5.0 million payable with the final quarterly installment due in November 2013. The interest was based on LIBOR plus a margin of 0.935% initially; after Alcinoe Shipping Ltd. became a guarantor the rate became 0.90%. The loan is secured with the following: (i) first priority mortgage over M/V "YM Xingang I", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a mortgage on M/V "Irini".
|
|
(e)
|
This is a $10,000,000 loan drawn by Manolis Shipping Ltd. on June 11, 2007. In August 2009, an additional guarantee was provided by the Company's wholly owned subsidiary, SAF-Concord Shipping Ltd., owner of M/V "Monica P" in order to ensure compliance with the hull cover ratio covenant (a similar guarantee was provided by SAF-Concord Shipping Ltd. to the loan drawn by Trust Navigation Corp. – see (g) below). On such date, SAF-Concord Shipping Ltd. also granted the lender a second priority mortgage over M/V "Monica" to secure the loan and its guarantee. In August 2010, the guarantee provided by SAF-Concord Shipping Ltd. expired and was not renewed. The loan is payable in thirty-two consecutive quarterly installments of $160,000 each, the first of which was due in September 2007, plus a balloon payment of $4,880,000 payable with the final quarterly installment in June 2015. The interest is based on LIBOR plus a margin of 0.80% if the ratio of the outstanding loan to the vessel value is below 55%, otherwise the margin is 0.90%. The loan is secured with the following: (i) first priority mortgage over M/V "Manolis P", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account Manolis Shipping Ltd. maintains with the bank. Other covenants and guarantees are similar to the rest of the loans of the Company.
|
|
(f)
|
This loan is a $15,000,000 loan drawn by Trust Navigation Corp. on November 1, 2007. The M/V "Ioanna P" secured the loan until the vessel was sold on January 12, 2009. In anticipation of such sale, on December 29, 2008, a replacement guarantee for the loan was put in place by Tiger Navigation Trust Corp., one of the Company's subsidiaries and the owner of M/V "Tiger Bridge". On such date, Tiger Navigation Trust Corp. also granted the lender a first priority mortgage over M/V "Tiger Bridge" to secure the loan and its guarantee. In August 2009, an additional guarantee was provided by the Company's wholly owned subsidiary, SAF-Concord Shipping Ltd., owner of M/V "Monica P" in order to ensure compliance with the hull cover ratio covenant (a similar guarantee was provided by SAF-Concord Shipping Ltd. to the loan drawn by Manolis Shipping Ltd. – see (f) above). On such date, SAF-Concord Shipping Ltd. also granted the lender a second priority mortgage over M/V "Monica" to secure the loan and its guarantee. In August 2010, the guarantee provided by SAF-Concord Shipping Ltd. expired and was not renewed. The loan is payable in four consecutive quarterly installments of $1,850,000 each, the first of which was due in February 2008, followed by four consecutive quarterly installments of $750,000 each, followed by four consecutive quarterly installments of $550,000 each, plus a balloon payment of $2,400,000 payable with the final quarterly installment in November 2010. The interest is based on LIBOR plus a margin of 0.90%. On October 29, 2010, Tiger Navigation Trust Corp. agreed to re-financed the balloon payment of $2,400,000 to be paid in ten consecutive quarterly installments of $50,000 each plus a balloon payment of $1,900,000 payable with the final instalment in April 2013. The interest rate is based on LIBOR plus 3.75%. The loan is secured with the following: (i) first priority mortgage over M/V "Tiger Bridge", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account Trust Navigation Corp. maintains with the bank. Other covenants and guarantees are similar to the rest of the loans of the Company.
|
|
(g)
|
This loan is a $10,000,000 loan drawn by SAF-Concord Shipping Ltd. on January 19, 2009. The loan is payable in twenty consecutive quarterly installments of $250,000 each, the first of which was due in April 2009, plus a balloon payment of $5,000,000 payable with the final quarterly installment in January 2014. The interest is based on LIBOR plus a margin of 2.50%. The loan is secured with the following: (i) first priority mortgage over M/V "Monica P", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account SAF-Concord Shipping Ltd. Shipping Ltd. maintains with the bank. Other covenants and guarantees are similar to the rest of the loans of the Company.
|
|
(h)
|
This loan is a $10,000,000 loan drawn by Eleni Shipping Ltd. on April 30, 2009.
The loan is payable in 10 consecutive semi-annual installments, two in the amount of $100,000, two in the amount of $400,000, two in the amount of $600,000 and four in the amount of $800,000, with a $4.6 million balloon payment to be paid together with the last installment. The margin of the loan is 2.50% above LIBOR for the $5.4 million repaid throughout the 5 years and 2.70% above LIBOR for the amount of the balloon payment.
The loan is secured with the following: (i) first priority mortgage over M/V "Eleni P", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account Eleni Shipping Ltd. maintains with the bank. Other covenants and guarantees are similar to the rest of the loans of the Company.
|
|
(i)
|
This loan is a $13,000,000 loan drawn by Pantelis Shipping Corp. on December 15, 2009.
The loan is payable in 32 consecutive quarterly installments, four in the amount of $500,000 and twenty-eight in the amount of $280,000, with a $3.16 million balloon payment to be paid together with the last installment. The margin of the loan is 2.70% above LIBOR.
The loan is secured with the following: (i) first priority mortgage over M/V "Pantelis", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account Pantelis Shipping Corp. maintains with the bank. Other covenants and guarantees are similar to the rest of the loans of the Company.
|
|
(j)
|
This loan is a $8,500,000 loan drawn by Aggeliki Shipping Ltd. on November 5, 2010. The loan is payable in 20 equal consecutive quarterly installments of $303,000 each, with a $2.44 million balloon payment to be paid together with the last installment. The margin of the loan is 2.85% above LIBOR. The loan is secured with the following: (i) first priority mortgage over M/V "Aggeliki P.", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. Other covenants and guarantees are similar to the rest of the loans of the Company.
|
|
(k)
|
This loan is a $20,000,000 loan drawn by Noumea Shipping Ltd. on December 28, 2010. The loan consists of two tranches: Tranche A of $15,000,000 payable in 12 equal consecutive six-monthly installments of $720,000 each with a $6.36 million balloon payment to be paid together with the last installment; and, Tranche B of $5,000,000 payable in 8 equal consecutive six-monthly installments of $625,000 each running in parallel with Tranche A. The margin of both tranches is 2.65% above LIBOR, however, if the collateral vessel, M/V "Maersk Noumea", does not have a charter, the margin of Tranche B becomes 4% above LIBOR and any balance remaining thereof, to be repaid not later that the original Tranche B Maturity, as an Interim Balloon. The loan is secured with the following: (i) first priority mortgage over M/V "Maersk Noumea", (ii) second priority mortgage over M/V "Aristides N.P.", (iii) first assignment of earnings and insurance, (iv) a corporate guarantee of Euroseas Ltd. Other covenants and guarantees are similar to the rest of the loans of the Company.
|
·
|
first priority mortgage over the respective vessels on a joint and several basis.
|
·
|
first assignment of earnings and insurance.
|
·
|
a personal guarantee of one shareholder.
|
·
|
a corporate guarantee of Euroseas Ltd.
|
·
|
a pledge of all the issued shares of each borrower.
|
11.
|
Commitments and Contingencies
|
|
(a)
|
There are no material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation incidental to the Company's business. In the opinion of the management, the disposition of these lawsuits should not have a material impact on the consolidated results of operations, financial position and cash flows.
|
|
(b)
|
During the year ended December 31, 2009, the Company has recognized approximately $1.7 million of revenue upon resolution of a contingency related to the delivery date of a vessel.
|
|
(c)
|
Future minimum long-term time charter revenue net of commissions, based on non-cancelable time charter contracts as of December 31, 2010 will be $18.6 million for 2011, $12.1 million for 2012, and $3.2 million for 2013 assuming the scheduled drydockings and special surveys (20-25 days every two and a half years) and one additional off-hire day per quarter to account for any unscheduled off-hire time.
|
12.
|
Stock Incentive Plan
|
|
a)
|
On February 7, 2008, an award of 150,000 unvested restricted shares under the 2007 Plan was made to the same 12 key persons of which 50% vested on August 7, 2008 and the remaining 50% vested on August 7, 2009; awards to officers and directors amounted to 95,000 shares and the remaining 55,000 shares were awarded to employees of Eurobulk; of the latter 5,000 shares were forfeited.
|
|
b)
|
On November 12, 2008, an award of 160,000 unvested restricted shares under the 2007 Plan was made to the same 12 and an additional two (a total of 14) key persons of which 50% vested on November 16, 2009 and 50% on November 16, 2010; awards to officers and directors amounted to 100,000 shares and the remaining 60,000 shares were awarded to employees of Eurobulk; of the latter 20,000 shares were forfeited.
|
|
c)
|
On November 4, 2009, an award of 165,000 unvested restricted shares under the 2007 Plan was made to 14 key persons of which 50% vested on July 1, 2010 and 50% will vest on July 1, 2011; awards to officers and directors amounted to 100,000 shares and the remaining 65,000 shares were awarded to employees of Eurobulk.
|
|
d)
|
On November 4, 2010, an award of 165,000 unvested restricted shares, 15,000 shares under the 2007 Plan and 150,000 shares under the 2010 Plan, was made to 14 key persons of which 50% will vest on November 16, 2011 and 50% on November 16, 2012; awards to officers and directors amounted to 100,000 shares and the remaining 65,000 shares were awarded to employees of Eurobulk.
|
12.
|
Stock Incentive Plan - continued
|
Unvested Shares
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
||||||
Unvested on January 1, 2008
|
67,500 | $ | 801,225 | |||||
Granted
|
310,000 | $ | 2,290,000 | |||||
Vested
|
(142,500 | ) | $ | (1,626,225 | ) | |||
Forfeited
|
- | - | ||||||
Unvested on December 31, 2008
|
235,000 | $ | 1,465,000 | |||||
Granted
|
165,000 | $ | 658,350 | |||||
Vested
|
(140,000 | ) | $ | (1,050,000 | ) | |||
Forfeited
|
(25,000 | ) | $ | (135,000 | ) | |||
Unvested on December 31, 2009
|
235,000 | $ | 938,350 | |||||
Granted
|
165,000 | $ | 679,800 | |||||
Vested
|
(152,500 | ) | $ | (609,175 | ) | |||
Forfeited
|
- | - | ||||||
Unvested on December 31, 2010
|
247,500 | $ | 1,008,975 |
13.
|
Earnings / (Loss) Per Share
|
2008
|
2009
|
2010
|
||||||||||
Income:
|
||||||||||||
Net income / (loss)
|
21,490,910 | (15,627,504 | ) | (6,605,850 | ) | |||||||
Basic earnings per share:
|
||||||||||||
Weighted average common shares –
Outstanding
|
30,437,107 | 30,648,991 | 30,900,122 | |||||||||
Basic earnings / (loss) per share
|
0.71 | (0.51 | ) | (0.21 | ) | |||||||
Effect of dilutive securities
|
||||||||||||
Warrants
|
18,932 | - | - | |||||||||
Unvested incentive stock awards
|
49,437 | - | - | |||||||||
Weighted average common shares –
Outstanding
|
30,505,476 | 30,648,991 | 30,900,122 | |||||||||
Diluted earnings / (loss) per share
|
0.70 | (0.51 | ) | (0.21 | ) |
Year ended December 31,
|
||||||||||||
2008
|
2009
|
2010
|
||||||||||
Voyage expense
|
||||||||||||
Port charges and canal dues
|
817,415 | 816,222 | 578,520 | |||||||||
Laid-up vessel re-activation costs
|
- | - | 565,653 | |||||||||
Bunkers
|
2,274,908 | 694,329 | 452,396 | |||||||||
Total
|
3,092,323 | 1,510,551 | 1,596,569 | |||||||||
Vessel operating expenses
|
||||||||||||
Crew wages and related costs
|
11,012,931 | 10,349,699 | 12,144,125 | |||||||||
Insurance
|
3,517,437 | 2,866,665 | 2,521,256 | |||||||||
Repairs and maintenance
|
795,138 | 390,759 | 524,026 | |||||||||
Lubricants
|
2,583,617 | 2,290,034 | 2,187,351 | |||||||||
Spares and consumable stores
|
5,435,171 | 3,418,607 | 3,252,381 | |||||||||
Professional and legal fees
|
46,011 | 88,630 | 113,202 | |||||||||
Other
|
4,130,889 | 4,269,086 | 764,851 | |||||||||
Total
|
27,521,194 | 23,673,480 | 21,507,192 |
Year ended December 31,
|
||||||||||||
2008
|
2009
|
2010
|
||||||||||
Third parties
|
4,276,934 | 1,666,897 | 1,331,475 | |||||||||
Related parties (see Note 8)
|
1,663,526 | 766,879 | 612,998 | |||||||||
5,940,460 | 2,433,776 | 1,944,473 |
Fair Value Measurement at Reporting Date Using
|
||||||||||||||||
Total,
December 31, 2009
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Other Unobservable Inputs
(Level 3)
|
|||||||||||||
Assets
|
||||||||||||||||
Trading securities
|
$ | 436,598 | $ | 436,598 | - | - | ||||||||||
Derivatives, long-term
|
$ | 386,536 | - | $ | 386,536 | - | ||||||||||
Liabilities
|
||||||||||||||||
Derivatives, current and long-term portion
|
$ | 11,410,984 | $ | 9,118,119 | $ | 2,292,865 | - |
Derivatives not designated as hedging instruments
|
Balance Sheet Location
|
December 31, 2009
|
December 31, 2010
|
|||||||
FFA contracts
|
Current assets - Derivatives
|
- | 574,336 | |||||||
FFA contracts
|
Long-tem assets - Derivatives
|
- | - | |||||||
Interest rate contracts
|
Long-tem assets - Derivatives
|
386,536 | - | |||||||
Total derivative assets
|
386,536 | 574,336 | ||||||||
FFA contracts
|
Current liabilities - Derivatives
|
9,118,119 | - | |||||||
Interest rate contracts
|
Current liabilities - Derivatives
|
1,681,013 | 1,837,924 | |||||||
Total derivative current liabilities
|
10,799,132 | 1,837,924 | ||||||||
FFA contracts
|
Long-term liabilities - Derivatives
|
- | - | |||||||
Interest rate contracts
|
Long-term liabilities - Derivatives
|
611,852 | 1,537,056 | |||||||
Total derivative long-term liabilities
|
611,852 | 1,537,056 | ||||||||
Total derivative liabilities
|
11,410,984 | 3,374,980 |
Derivatives not designated as hedging instruments
|
Location of gain (loss) recognized
|
Year Ended December 31, 2009
|
Year Ended December 31, 2010
|
|||||||
FFA contracts – Fair value
|
Change in fair value of derivatives
|
(7,902,036 | ) | 9,692,455 | ||||||
FFA contracts - Realized loss
|
Change in fair value of derivatives
|
(7,474,279 | ) | (10,875,776 | ) | |||||
Interest rate – Fair value
|
Change in fair value of derivatives
|
275,117 | (1,468,650 | ) | ||||||
Interest rate contracts - Realized loss
|
Change in fair value of derivatives
|
(677,011 | ) | (1,569,846 | ) | |||||
Total loss on derivatives
|
(15,778,209 | ) | (4,221,817 | ) |
17.
|
Investment in joint venture
|
18.
|
Charter termination fees and other income
|
|
a)
|
On January 20, 2011, the Company entered into an interest rate swap contract for a notional amount of $10.0 million. Under the terms of the swap, the bank will make a quarterly payment to Euroseas based on 3-month LIBOR less 2.29% on the notional amount if the 3-month LIBOR is greater than 2.29%. If 3-month LIBOR is less than 2.29%, the bank will receive an amount from Euroseas based on 2.29% less the 3-month LIBOR for the relevant amount. If LIBOR is equal to 2.29% no amount is due or payable to the Company. The swap is effective from January 21, 2011 to January 21, 2016.
|
|
b)
|
On February 16, 2011, the Board of Directors declared a cash dividend of $0.06 per Euroseas Ltd. common share. Such cash dividend was paid on or about March 11, 2011 to the holders of record of Euroseas Ltd. common shares as of March 1, 2011.
|
|
c)
|
On May 16, 2011, the Board of Directors declared a cash dividend of $0.07 per Euroseas Ltd. common share. Such cash dividend was paid on or about June 10, 2011 to the holders of record of Euroseas Ltd. common shares as of June 1, 2011.
|
1.
|
The name of the Corporation is: EUROSEAS LTD.
|
2.
|
The Articles of Incorporation (the "Original Articles of Incorporation") were filed with the Registrar of Corporations as of the 5th day of May, 2005.
|
3.
|
The aggregate number of common shares that the Corporation was authorized to issue was 100,000,000.
|
4.
|
The Original Articles of Incorporation were amended on October 4, 2006 to increase the par value of the shares of common stock from $0.01 to $0.03 per share due to a reverse stock split (as amended, the "Existing Articles of Incorporation").
|
5.
|
The Existing Articles of Incorporation are amended and restated in their entirety and are replaced by the Amended and Restated Articles of Incorporation attached hereto, pursuant to which the aggregate number of common shares that the Corporation is authorized to issue shall be 200,000,000, par value $0.03 per share.
|
6.
|
The amendment to the Articles of Incorporation was proposed by the directors and adopted by the shareholders by vote of the holders of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders.
|
A.
|
The name of the Corporation shall be:
|
B.
|
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Marshall Islands Business Corporations Act (the "BCA") and without in any way limiting the generality of the foregoing, the corporation shall have the power:
|
(1)
|
To engage in ocean, coastwise and inland commerce, and generally in the carriage of freight, goods, cargo in bulk, passengers, mail and personal effects by water between the various ports of the world and to engage generally in waterborne commerce.
|
(2)
|
To act as ship's husband, ship brokers, custom house brokers, ship's agents, manager of shipping property, freight contractors, forwarding agents, warehousemen, wharfingers, ship chandlers, and general traders.
|
C.
|
The registered address of the Corporation in the Marshall Islands is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960. The name of the Corporation's registered agent at such address is The Trust Company of the Marshall Islands, Inc. However, the Board of Directors may establish branches, offices or agencies in any place in the world and may appoint legal representatives anywhere in the world.
|
D. |
(a)
|
The aggregate number of shares of stock that the Corporation is authorized to issue is two hundred twenty million (220,000,000) registered shares (of which twenty million (20,000,000) shall be registered preferred shares); all of the registered common shares shall have a par value of three cents (US$0.03) per share and all of the registered preferred shares have a par value of one cent (US$0.01) per share.
|
|
(b)
|
The Corporation is authorized, without further vote or action by the shareholders, to issue the said twenty million (20,000,000) registered preferred shares with a par value of one cent (US$0.01) per share. The Board of Directors shall have the authority to establish such series of preferred shares and with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions as shall be stated in the resolutions providing for the issue of such preferred shares.
|
|
(c)
|
The Corporation effectuated, effective with the commencement of business on October 6, 2006, a 1 for 3 reverse stock split as to its common stock outstanding, which decreased the number of outstanding shares from 37,860,341 to 12,620,114, subject to increase to the extent that the reverse stock split resulted in any holder of the Company's Common Stock receiving fractional shares, in which event such fractional share was rounded up to the next whole share. The reverse split did not change the number of registered shares of common stock the Corporation is authorized to issue. The par value of the shares of common stock was increased from $0.01 to $0.03 per share as set forth in paragraph D(a) above. No change was made to the number of registered shares of preferred stock the Corporation is authorized to issue or to the par value of the shares of preferred stock.
|
E.
|
No holder of shares of the Corporation shall, by reason thereof, have any preemptive or other preferential right to acquire, by subscription or otherwise, any unissued or treasury stock of the Corporation, or any other share of any class or series of the Corporation's shares to be issued because of an increase in the authorized capital stock of the Corporation, or any bonds, certificates of indebtedness, debentures or other securities convertible into shares of the Corporation. However, the Board of Directors may issue or dispose of any such unissued or treasury stock, or any such additional authorized issue of new shares or securities convertible into shares upon such terms as the Board of Directors may, in its discretion, determine, without offering to shareholders then of record, or any class of shareholders, any thereof, on the same terms or any terms.
|
F.
|
The Corporation shall have every power which a corporation now or hereafter organized under the BCA may have.
|
G.
|
The name and address of the incorporator is:
|
Name
|
Post Office Address
|
|
Majuro Nominees Ltd.
|
P.O. Box 1405
Majuro
Marshall Islands
|
|
H.
|
Corporate existence began upon the filing the Original Articles of Incorporation with the Registrar of Corporations.
|
I.
|
The Board of Directors of the Corporation shall consist of such number of Directors, not less than three, as shall be determined from time to time by the Board of Directors as provided in the by-laws. The Board shall be divided into three classes, each nearly equal in number as possible. Directors shall be elected by a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled to vote in the election. Cumulative voting, as defined in Division 7, Section 71(2) of the BCA, shall not be used to elect directors. Notwithstanding any other provisions of these Articles of Incorporation or the by-laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Articles of Incorporation or the by-laws of the Corporation), the affirmative vote of the holders of 51% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article I.
|
J.
|
The Board of Directors of the Corporation is expressly authorized to make, alter, amend or repeal by-laws of the Corporation by a vote of not less than 51% of the entire Board of Directors, and the shareholders may make additional by-laws and may alter, amend or repeal any by-law by a vote of not less than 51% of the outstanding shares of capital stock of the Corporation entitled to vote. Notwithstanding any other provisions of these Articles of Incorporation or the by-laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Articles of Incorporation or the by-laws of the Corporation), the affirmative vote of the holders of 51% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article J.
|
K. |
(a)
|
The Corporation may not engage in any Business Combination with any Interested Shareholder for a period of three years following the time of the transaction in which the person became an Interested Shareholder, unless:
|
(1)
|
prior to such time, the Board of Directors of the Corporation approved either the Business Combination or the transaction which resulted in the shareholder becoming an Interested Shareholder;
|
(2)
|
upon consummation of the transaction which resulted in the shareholder becoming an Interested Shareholder, the Interested Shareholder owned at least 85% of the voting stock of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
(3)
|
at or subsequent to such time, the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of shareholders, and not by written consent, by the affirmative vote of at least 51% of the outstanding voting stock that is not owned by the interested shareholder; or
|
(4)
|
the shareholder became an Interested Shareholder prior to the consummation of the initial public offering of the Corporation's common stock under the United States Securities Act of 1933, as amended.
|
(b)
|
The restrictions contained in this section shall not apply if:
|
(1)
|
A shareholder becomes an Interested Shareholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the shareholder ceases to be an Interested Shareholder; and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Corporation and such shareholder, have been an Interested Shareholder but for the inadvertent acquisition of ownership; or
|
(2)
|
The Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an Interested Shareholder during the previous three years or who became an Interested Shareholder with the approval of the Board; and (iii) is approved or not opposed by a majority of the members of the Board then in office (but not less than one) who were Directors prior to any person becoming an Interested Shareholder during the previous three years or were recommended for election or elected to succeed such Directors by a majority of such Directors. The proposed transactions referred to in the preceding sentence are limited to:
|
(i)
|
a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to the BCA, no vote of the shareholders of the Corporation is required);
|
(ii)
|
a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly-owned subsidiary or to the Corporation) having an aggregate market value equal to 50% or more of either that aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding shares; or
|
(iii)
|
a proposed tender or exchange offer for 50% or more of the outstanding voting shares of the Corporation.
|
(c)
|
For the purpose of this Article K only, the term:
|
(1)
|
"Affiliate" means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.
|
(2)
|
"Associate," when used to indicate a relationship with any person, means: (i) Any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting shares; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
|
(3)
|
"Business Combination," when used in reference to the Corporation and any Interested Shareholder of the Corporation, means:
|
(i)
|
Any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation with (A) the Interested Shareholder or any of its affiliates, or (B) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the Interested Shareholder.
|
(ii)
|
Any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a shareholder of the Corporation, to or with the Interested Shareholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding shares;
|
(iii)
|
Any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any shares, or any share of such subsidiary, to the Interested Shareholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares, or shares of any such subsidiary, which securities were outstanding prior to the time that the Interested Shareholder became such; (B) pursuant to a merger with a direct or indirect wholly-owned subsidiary of the Corporation solely for purposes of forming a holding company; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares, or shares of any such subsidiary, which security is distributed, pro rata to all holders of a class or series of shares subsequent to the time the Interested Shareholder became such; (D) pursuant to an exchange offer by the Corporation to purchase shares made on the same terms to all holders of said shares; or (E) any issuance or transfer of shares by the Corporation; provided however, that in no case under items (C)-(E) of this subparagraph shall there be an increase in the Interested Shareholder's proportionate share of the any class or series of shares;
|
(iv)
|
Any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of any class or series of shares, or securities convertible into any class or series of shares, or shares of any such subsidiary, or securities convertible into such shares, which is owned by the Interested Shareholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares not caused, directly or indirectly, by the Interested Shareholder; or
|
(v)
|
Any receipt by the Interested Shareholder of the benefit, directly or indirectly (except proportionately as a shareholder of the Corporation), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted in subparagraphs (i)-(iv) of this paragraph) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.
|
(4)
|
"Control," including the terms "controlling," "controlled by" and "under common control with," means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise. A person who is the owner of 20 percent or more of the outstanding voting shares of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting shares, in good faith and not for the purpose of circumventing this provision, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
|
(5)
|
"Interested Shareholder" means any person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting shares of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting shares of the Corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Shareholder; and the affiliates and associates of such person; provided, however, that the term "Interested Shareholder" shall not include any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of action taken solely by the Corporation; provided that such person shall be an Interested Shareholder if thereafter such person acquires additional shares of voting shares of the Corporation, except as a result of further Company action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an Interested Shareholder, the voting shares of the Corporation deemed to be outstanding shall include voting shares deemed to be owned by the person through application of paragraph (8) below, but shall not include any other unissued shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
|
(6)
|
"Person" means any individual, corporation, partnership, unincorporated association or other entity.
|
(7)
|
"Voting stock" means, with respect to any corporation, shares of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity.
|
(8)
|
"Owner," including the terms "own" and "owned," when used with respect to any shares, means a person that individually or with or through any of its affiliates or associates:
|
(i)
|
Beneficially owns such shares, directly or indirectly; or
|
(ii)
|
Has (A) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of shares tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered shares is accepted for purchase or exchange; or (B) the right to vote such shares pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any shares because of such person's right to vote such shares if the agreement, arrangement or understanding to vote such shares arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or
|
(iii)
|
Has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subparagraph (ii) of this paragraph), or disposing of such shares with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such shares.
|
(d)
|
Any amendment of this Article K shall not be effective until 12 months after the approval of such amendment at a meeting of the shareholders of the Corporation and shall not apply to any Business Combination between the Corporation and any person who became an Interested Shareholder of the Corporation at or prior to the time of such approval.
|
(e)
|
Notwithstanding any other provisions of these Articles of Incorporation or the by-laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, these Articles of Incorporation or the by-laws of the Corporation), the affirmative vote of the holders of 51% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal this Article K.
|
L.
|
The Corporation may transfer its corporate domicile from the Marshall Islands to any other place in the world.
|
THIRD SUPPLEMENTAL AGREEMENT To
|
A LOAN AGREEMENT DATED 29
TH
OCTOBER 2007
|
(1)
|
TRUST NAVIGATION CORP.,
being a company incorporated in accordance with the laws of the Republic of Liberia whose registered office is situated at 80, Broad Street, Monrovia, Liberia (referred to below as the "
Borrower
");
|
(2)
|
TIGER NAVIGATION CORP.,
being a company incorporated in accordance with the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, Republic of Marshall Islands (referred to below as the
"Additional Corporate Guarantor");
|
(3)
|
SAF-CONCORD SHIPPING LTD
, being a company incorporated in accordance with the laws of the Republic of Liberia whose registered office is situated at 80, Broad Street, Monrovia, Liberia (referred to below as the
"
Second Additional Corporate Guarantor
"); and
|
(4)
|
EFG EUROBANK ERGASIAS, S.A.,
a banking societe anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece (referred to below as the
"Bank").
|
(A)
|
The Borrower hereby acknowledges receipt of the whole amount of the Original Loan and further acknowledges that following the repayment of the 12
th
instalment referred to in Clause 7i of the Original Loan Agreement amounting to United States Dollars five hundred and fifty thousand (USD 550,000) on 29/10/2010, the total amount of principal outstanding of the Original Loan under the Loan Agreement will be amounting to United States Dollars Two Million Four Hundred Thousand (US$2,400,000) ("the
Loan
").
|
(B)
|
Pursuant to the Loan Agreement and as security for the prompt performance by the Borrower of all its obligations under the Loan Agreement and the Security Documents, there were executed
inter alia:
a first preferred ship mortgage on the m.v. loanna P made between the Borrower and the Bank dated 1
st
November 2007, a deed of assignment in respect of the m.v. loanna P dated November 1
st
, 2007, made between the Borrower and the Bank, a deed of charterparty assignment in respect of the m.v. loanna P dated November 1
st
, 2007, made between the Borrower and the Bank and a manager's undertaking dated October 25
th
, 2007 in relation to the m.v. loanna P which were released on, the 8
th
January 2009 from any obligations under or pursuant to the Loan Agreement and any other Security Document as well as (a) a corporate guarantee and indemnity executed by the Corporate Guarantor in favour of the Bank dated October 29
th
' 2007 as same was confirmed by a deed of confirmation dated 29 December 2008 (the "
Corporate Guarantee
"), (b) a corporate guarantee and indemnity executed by the Additional Corporate Guarantor in favour of the Bank dated December 29
th
, 2008 ("
Additional Corporate Guarantee
"), (c) a first preferred ship mortgage on the m.v. Tiger Bridge (the "
Vessel
") made between the Additional Corporate Guarantor and the Bank dated December 30
th
, 2008 (the "
Mortgage
"), (d) a deed of assignment of the Insurances, Earnings, Charter Rights and Requisition Compensation in respect of the Vessel dated December 30
th
, 2008 (the "
Assignment
"), (e) a manager's undertaking in relation to the Vessel dated December 23
rd
, 2008 (the
'Manager's Undertaking
"), (f) a corporate guarantee and indemnity made between the Bank and the Second Additional Corporate Guarantor, dated 5
th
of August 2009 ("
Second Additional Corporate Guarantee
"), (g) a second preferred ship mortgage on the m.v. Monica P. (the "
Second Collateral Vessel
") granted by the Second Additional Corporate Guarantor, dated 5
th
of August 2009 (the "
Second Collateral Mortgage
"), (h) a deed of assignment made between the Bank and the Second Additional Corporate Guarantor dated 5
th
of August 2009 of the Insurances, Earnings, Charter Rights and Requisition Compensation in respect the Second Collateral Vessel (the "
Second Collateral Assignment
"), and (i) a manager's undertaking in relation to the Second Collateral Vessel (the "
Second New Manager's Undertaking
").
|
(C)
|
Each of the Borrower and the other Security Parties have requested that the Bank give its consent to (inter alia), the rescheduling of the repayment of the Loan and to the extension of the final maturity date as well as to the Second Additional Corporate Guarantor and the Second Collateral Vessel owned by the Second Additional Corporate Guarantor being released from any obligations under or pursuant to the Loan Agreement, the Released Documents and any other Security Document related to the Loan Agreement to which the Second Additional Corporate Guarantor is a party and the Bank has agreed to give such consent subject to the condition of the Bank receiving the 12
th
instalment referred to in Clause 7.1 of the Original Loan Agreement amounting to United States Dollars five hundred and fifty thousand (USD 550,000) on 29/10/2010 and on the further condition that the calculation of the Interest Rate and certain other provisions of the Loan Agreement be varied and/or amended on the terms and subject to the conditions set forth herein.
|
1.1
|
Words and expressions defined in the Loan Agreement (as hereby supplemented and amended) and not otherwise defined herein shall have the same meanings when used in this Third Supplemental Agreement.
|
1.2
|
In this Supplemental Agreement the words and expressions specified below shall have the meaning attributed to them below:
|
1.3
|
Where the context so admits words importing the singular number only shall include the plural and vice versa and words importing persons shall include firms and corporations. Clause headings are inserted for convenience of reference only and shall be ignored in construing this Supplemental Agreement. References to Clauses are to clauses of this Supplemental Agreement save as may be otherwise expressly provided in this Supplemental Agreement.
|
2..1
|
Each of the Borrower and the Additional Corporate Guarantor hereby represents and warrants to the Bank, as of the date of this Supplemental Agreement, each of the representations and warranties contained in Clause 4 of the Original Loan Agreement and repeated pursuant to Clause 3 of the First Supplemental Agreement and the Second Supplemental Agreement shall be deemed repeated by the Borrower and the Additional Corporate Guarantor at the date of this Third Supplemental Agreement by reference to the facts and circumstances then pertaining, as if references to the Security Documents included this Third Supplemental Agreement and the Additional Security Documents and as if references to the Security Parties included the Additional Corporate Guarantor and excluded the Second Additional Corporate Guarantor.
|
2..2
|
Each of the Borrower and the Additional Corporate Guarantor hereby expressly agrees and acknowledges and represents and warrants to the Bank that the Loan Agreement as amended hereby shall remain in full force and effect and the security constituted by the Security Documents, including the Additional Security Documents, executed by the Borrower, the Corporate Guarantor and the Additional Corporate Guarantor and/or the Manager shall continue to remain valid and enforceable and in full force and effect.
|
2.3
|
Each of the Borrower and the Additional Corporate Guarantor hereby further represents and warrants to the Bank that, as of the date of this Supplemental Agreement:
|
|
(a)
|
each of the Borrower and the Additional Corporate Guarantor is a body corporate duly formed and validly existing in good standing under the laws of its respective jurisdiction;
|
|
(b)
|
each of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor and/or the Manager has full power to enter into and perform their respective obligations under this Third Supplemental Agreement and all documents required to be executed thereunder, has complied with all statutory and other requirements relative to its business and does not have an established place of business in the United Kingdom or the United States of America;
|
|
(c)
|
all necessary governmental authorisations, approvals, licences, consents or waivers for the execution, delivery, performance, validity and/or enforceability of this Supplemental Agreement and all documents required to be executed thereunder, have been obtained and will be maintained in full force and effect throughout the Facility Period;
|
|
(d)
|
each of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, and/or the Manager has taken all necessary action to authorise the execution, delivery and performance of its/his obligations under this Third Supplemental Agreement and all documents required to be executed hereunder and such documents do or will upon execution thereof constitute, valid and binding obligations of each of them enforceable in accordance with their respective terms, subject to any applicable bankruptcy, insolvency, re-organisation, moratorium or other laws relating to the enforcement of creditors' rights;
|
|
(e)
|
the execution, delivery and performance of this Third Supplemental Agreement and all documents required to be executed hereunder do not and will not during the Security Period constitute a breach of any contractual restriction or any existing applicable law, regulation, consent or authorisation binding on the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, and/or the Manager on any of their property or assets and will not result in the creation or imposition of any security interest, lien, charge or encumbrance on any of such property or assets, save in favour of the Bank;
|
|
(f)
|
at the date of this Third Supplemental Agreement, none of the Borrower and the Additional Corporate Guarantor is liable under or in respect of any Indebtedness other than in relation to the financing contemplated by and under the Loan Agreement, the Security Documents to which it is a party, and such Indebtedness as shall have been notified to, and approved by, the Bank on or prior to the date of this Third Supplemental Agreement;
|
|
(g)
|
each of the Borrower, and the Additional Corporate Guarantor has fully disclosed in writing to the Bank all facts which they know or which they should reasonably know and which are material for disclosure to the Bank in the context of this Third Supplemental Agreement and all information furnished by them or on their behalf relating to its business and affairs in connection with this Third Supplemental Agreement was and remains true correct and complete in all material respects and there are no other material facts or considerations the omission of which would render any such information misleading.
|
4.1
|
The agreement of the Bank contained in Clause 3 shall be expressly subject to the condition that the Borrower shall have paid to the Bank on 29/10/2010 the 12
th
instalment referred to in Clause 7.1 of the Original Loan Agreement amounting to United States Dollars five hundred and fifty thousand (USD 550,000) and the Extension/ Restructuring Fee and that the Bank shall have received the following documents and evidence in form and substance satisfactory to the Bank and its legal advisors on or before 29 October 2010:
|
|
(a)
|
In the case of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager:
|
|
(i)
|
a recent certificate of good standing in relation to of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager issued by the relevant authorities of the country of its incorporation together with certified copies of the Articles of Incorporation (or equivalent documents) and all amendments thereto and any other documents required to be filed or registered or issued under the laws of the country of its respective incorporation to establish the incorporation and/or good standing (as the case may be) of each of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager under the laws of such country;
|
|
(ii)
|
certified and duly legalised copies of resolutions passed at a meeting of the Board of Directors of, and of the resolutions passed at a meeting of the Shareholders of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager evidencing approval to the variation of the Loan Agreement pursuant to Clause 5 and the execution of all documents contemplated hereby to which each of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager is a party and authorising appropriate officers or attorneys to execute the same and to sign any other documents, notices, letters or other communications required to be given by it pursuant hereto and thereto or other evidence of such approvals and authorisations as shall be acceptable to the Bank;
|
|
(iii)
|
the original of a duly legalised power(s) of attorney issued by each of the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager, pursuant to the resolutions referred to in Clause 4.1 (a)(ii);
|
|
(iv)
|
a list (certified by the Secretary or a Director or other appropriate officer of the the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager to be true and complete) of the directors and officers (together with signature specimen) of each of them stating also the authorised and issued capital and the number, value and type of shares, the names of the shareholders and the number of shares held by each;
|
|
(v)
|
copies of all governmental and other consents, licenses, approvals and authorisations as may be necessary to authorise the performance by the Borrower, the Corporate Guarantor, the Additional Corporate Guarantor, the Second Additional Corporate Guarantor and/or the Manager of their respective obligations under those of this Third Supplemental Agreement and the Additional Security Documents to which each of the above entities is a party and the execution, validity and enforceability of this Third Supplemental Agreement and the Additional Security Documents;
|
|
(b)
|
the Additional Security Documents together with all items and documents to be delivered pursuant thereto;
|
|
(c)
|
evidence that the Vessel continues to be:
|
|
(i)
|
duly and permanently registered in the name of the Additional Corporate Guarantor under the Marshall Islands flag;
|
|
(ii)
|
in the absolute and unencumbered ownership of the Additional Corporate Guarantor save for the Mortgage and save as contemplated by this Third Supplemental Agreement and continues to trade in full compliance with all applicable laws;
|
|
(iii)
|
managed by the Manager pursuant to the terms of the relevant management agreement copy of which will have been delivered to and approved by the Bank.
|
|
(d)
|
evidence that the Additional Corporate Guarantor and the Manager are in current compliance with the requirements of the International Management Code for the Safe Operation of Ships and for Pollution Prevention (as adopted by the International Maritime Organisation as Resolution A.741 (18) (the "
ISM Code
");
|
|
(e)
|
evidence that the Additional Corporate Guarantor and the Manager are in current compliance with the provisions of the International Ship and Port Facilities Security (ISPS) Code and the other respective amendments of SOLAS and will maintain at all times throughout the Facility Period a valid International Ship Security Certificate (ISSC) in respect of the Vessel and all other valid certificates evidencing compliance with this Clause;
|
|
(f)
|
confirmation from the relevant insurance brokers that the interest of the Bank as Mortgagee and Assignee of the Vessel has been duly endorsed;
|
|
(g)
|
updated class maintenance certificate issued by the classification society of the Vessel which will be at all terms satisfactory to the Bank;
|
|
(h)
|
evidence that the person(s) referred to in Clause 25 of the Loan Agreement has accepted his/their appointment as Process Agent
(antiklitos);
|
|
(i)
|
such favourable legal opinions from lawyers acceptable to the Bank and its legal advisors on such matters concerning the laws of the Republic of the Marshall Islands, the Republic of Liberia and such other relevant jurisdiction as the Bank shall require;
|
|
(j)
|
evidence that the Bank has received the amount required for settlement of the fees and costs relating to the execution of this Third Supplemental Agreement and all other documents contemplated hereby including those relating to all necessary filings, registrations and legalisations thereof.
|
4.2
|
Without prejudice to the provisions of Clause 4.1, each of the Borrower, the Additional Corporate Guarantor hereby jointly and severally undertakes with the Bank to make or procure to be made such amendments and/or additions to any of the documents delivered to the Bank in accordance with Clause 4.1 and to execute and/or deliver to the Bank or procure to be executed and/or delivered to the Bank such further documents as the Bank and its legal advisors may reasonably require to satisfy themselves that all the terms and requirements of this Third Supplemental Agreement have been complied with.
|
4.3
|
Without prejudice to the provisions of Clause 4.1 and 4.2, in the event of any of the conditions referred to in this Clause 4 not being satisfied (whether with the express or implied agreement of the Bank or otherwise), the Borrower will comply or procure compliance with all such conditions by no later than fourteen (14) days from the date hereof or within such longer period as the Bank shall agree to.
|
5.1
|
In consideration of the agreement of the Bank contained in Clause 3 hereof each of the Borrower, the Additional Corporate Guarantor and the Second Additional Corporate Guarantor jointly and severally agree with the Bank that (subject to the satisfaction of the conditions contained in Clause 4) the provisions of the Loan Agreement will be and are hereby agreed to be varied and/or amended and/or supplemented as follows:
|
|
(a)
|
by reading and construing hereafter the definition of "Security Documents" in Clause 1. of the Loan Agreement so as to include each of the Additional Security Documents, exclude the Released Documents contemplated hereby and by construing all references to each of the Security Documents as being references to each such document as it is from time to time supplemented and/or amended;
|
|
(b)
|
by deleting all references in the Loan Agreement and the other Security Documents to any of the Released Documents;
|
|
(c)
|
by adding as additional defined terms in Clause 1. of the Loan Agreement each of the Additional Security Documents as the same are defined in Clause 1.1 hereof;
|
|
(d)
|
by deleting all references in the Loan Agreement and the other Security Documents to "Second Additional Corporate Guarantor" and by construing all references in the Loan Agreement to the "Security Parties", "each Security Party", "a Security Party" so as to include the Second Additional Corporate Guarantor";
|
|
(e)
|
by deleting all references in the Loan Agreement and the other Security Documents to "Vessels", "each Vessel", "a Vessel", "Collateral Vessel" and "Second Collateral Vessel" and substituting same in Clause 1 of the Original Loan Agreement and wherever else applied in the Loan Agreement or the other Security Documents so as to mean the Vessel as herein defined;
|
|
(f)
|
by reading and construing hereafter the definition of "
Margin
" in Clause 1.
|
|
of the Loan Agreement so as to mean, with effect from 29 October 2010, a margin of three point seventy five percent (3.75%) per annum;
|
|
(g)
|
by amending the definition of "
Repayment Dates
" in Clause 1. of the Original Loan Agreement as follows:
|
|
(h)
|
by adding at the end of Clause 5 of the Loan Agreement one new subparagraph to read as follows:
|
|
(i)
|
by amending Clause 7.1 of the Original Loan Agreement as follows:
|
|
(j)
|
by amending the first sentence of Clause 7.3.2 of the Original Loan Agreement as follows:
|
|
(k)
|
by amending Clause 8.2 of the Original Loan Agreement as follows: "
|
|
(l)
|
by construing all references in the Loan Agreement to "
this Agreement
", "hereunder" and the like and in the Security Documents to "
the Loan Agreement
" as references to the Loan Agreement as amended and/or supplemented by this Third Supplemental Agreement;
|
|
(m)
|
by construing definitions and references in the Loan Agreement to "General Assignments or either of them", "Mortgages", "Mortgages or either of them" and respective definitions and the like to "Assignment", "Mortgage" as defined in Clause 1 of this Supplemental Agreement;
|
|
(n)
|
the definitions set out in Clause 1. of this Supplemental Agreement shall be included mutatis mutandis, in Clause 1. of the Loan Agreement replacing the relevant definitions where the context permits.
|
SIGNED
by Mrs Stephania Karmiri
duly authorised
attorney for and on behalf of
TRUST NAVIGATION CORP.
in the presence of:-
Katerina Avramidou
|
)
)
)
/s/Stephania Karmiri
)
)
/s/Katerina Avramidou
)
|
SIGNED
by Mrs Stephania Karmiri
duly authorised
attorney for and on behalf of
TIGER NAVIGATION CORP
in the presence of:-
Katerina Avramidou
|
)
)
)
/s/Stephania Karmiri
)
)
/s/Katerina Avramidou
)
|
SIGNED
by Mrs Stephania Karmiri
duly authorised
attorney for and on behalf of
SAF-CONCORD SHIPPING LTD
in the presence of:-
Katerina Avramidou
|
)
)
)
/s/Stephania Karmiri
)
)
/s/Katerina Avramidou
)
|
SIGNED
by Stavroula-Sotiria Hydreou
and John Tsirikos
duly authorised
attorney for and on behalf of
EFG EUROBANK ERGASIAS S.A.
in the presence of:-
Katerina Avramidou
|
)
)
/s/Stavroula-Sotiria Hydreou
)
)
/s/John Tsirikos
)
)
/s/Katerina Avramidou
)
|
Clause | Page |
1
|
INTERPRETATION
|
1
|
2
|
FACILITY
|
13
|
3
|
DRAWDOWN
|
13
|
4
|
INTEREST
|
14
|
5
|
INTEREST PERIODS
|
14
|
6
|
DEFAULT INTEREST
|
15
|
7
|
REPAYMENT AND PREPAYMENT
|
16
|
8
|
CONDITIONS PRECEDENT
|
18
|
9
|
REPRESENTATIONS AND WARRANTIES
|
19
|
10
|
GENERAL UNDERTAKINGS
|
21
|
11
|
CORPORATE UNDERTAKINGS
|
24
|
12
|
INSURANCE
|
25
|
13
|
SHIP COVENANTS
|
29
|
14
|
SECURITY COVER
|
32
|
15
|
PAYMENTS AND CALCULATIONS
|
34
|
16
|
APPLICATION OF RECEIPTS
|
35
|
17
|
APPLICATION OF EARNINGS
|
36
|
18
|
EVENTS OF DEFAULT
|
37
|
19
|
FEES AND EXPENSES
|
41
|
20
|
INDEMNITIES
|
42
|
21
|
NO SET-OFF OR TAX DEDUCTION
|
43
|
22
|
ILLEGALITY, ETC
|
44
|
23
|
INCREASED COSTS
|
44
|
24
|
SET OFF
|
46
|
25
|
TRANSFERS AND CHANGES IN LENDING OFFICE
|
46
|
26
|
VARIATIONS AND WAIVERS
|
47
|
27
|
NOTICES
|
47
|
28
|
SUPPLEMENTAL
|
49
|
29
|
LAW AND JURISDICTION
|
49
|
SCHEDULE 1 DRAWDOWN NOTICE
|
51
|
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS
|
52
|
EXECUTION PAGE
|
55
|
(1)
|
NOUMEA SHIPPING LTD
, a corporation incorporated in the Republic of Liberia and having its registered office at 80 Broad Street, Monrovia, Liberia (the "
Borrower
"); and
|
(2)
|
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
, acting through its office at 9 Quai du President Paul Doumer, 92400 Courbevoie, La Defense, Paris, France (the "
Lender
").
|
1
|
INTERPRETATION
|
1.1
|
Definitions.
Subject to Clause 1.5, in this Agreement:
|
|
(a)
|
31 January 2011 (or such later date as the Lender may agree with the Borrower); or
|
|
(b)
|
if earlier, the date on which the Loan is fully borrowed or the Lender's obligation to advance the Loan is cancelled or terminated;
|
|
(a)
|
all freight, hire and passage moneys, compensation payable to the relevant Owner in the event of requisition of that Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship;
|
|
(c)
|
all moneys which are at any time payable under Insurances in respect of loss of earnings; and
|
|
(d)
|
if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a) or (c) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship;
|
|
(a)
|
any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Law;
|
|
(b)
|
any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,
|
|
(a)
|
any release of Environmentally Sensitive Material from a Ship; or
|
|
(b)
|
any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship or the Borrower and/or any operator or manager is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
|
|
(c)
|
any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where the Borrower and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;
|
|
(a)
|
this Agreement;
|
|
(b)
|
the Corporate Guarantee;
|
|
(c)
|
the Collateral Finance Documents;
|
|
(d)
|
the Mortgage;
|
|
(e)
|
the General Assignment;
|
|
(f)
|
the Accounts Pledge;
|
|
(g)
|
the Negative Pledge;
|
|
(h)
|
any Time Charter Assignment;
|
|
(i)
|
the Manager's Undertaking; and
|
|
(j)
|
any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or any of the documents referred to in this definition;
|
|
(a)
|
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;
|
|
(b)
|
under any loan stock, bond, note or other security issued by the debtor;
|
|
(c)
|
under any acceptance credit, guarantee or letter of credit facility made available to the debtor;
|
|
(d)
|
under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;
|
|
(e)
|
under any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or
|
|
(f)
|
under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;
|
|
(a)
|
a first option to extend the duration from 21 August 2011 to 20 August 2012 at a net daily hire rate of $18,735;
|
|
(b)
|
a second option to extend the duration from 21 August 2012 to 20 August 2013 at a net daily hire rate of $19,240; and
|
|
(c)
|
a third option to extend the duration from 21 August 2013 to 20 August 2014 at a net daily hire rate of $19,750;
|
|
(a)
|
all policies and contracts of insurance, including entries of a Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to a Ship; and
|
|
(b)
|
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;
|
|
(a)
|
'The International Management Code for the Safe Operation of Ships and for Pollution Prevention', currently known or referred to as the 'ISM Code', adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
|
|
(b)
|
all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the 'Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations' produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 November 1995,
|
|
(a)
|
the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to a Ship within the periods specified by the ISM Code; and
|
|
(b)
|
all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require; and
|
|
(c)
|
any other documents which are prepared or which are otherwise relevant to establish and maintain the Ship's compliance or the compliance of its Owner with the ISM Code which the Lender may require;
|
|
"
ISPS Code Documentation
" includes:
|
|
(a)
|
the International Ship Security Certificate issued pursuant to the ISPS Code in relation to a Ship within the period specified in the ISPS Code; and
|
|
(e)
|
all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Lender may require;
|
|
(a)
|
Crédit Agricole Corporate and Investment Bank, acting through its branch at 9 Quai du President Paul Doumer, 92400 Courbevoie, La Defense, Paris, France (or through another branch notified to the Lender under Clause 25.6) or its direct or indirect successor;
|
|
(b)
|
a direct or indirect assignee of such bank or financial institution or of a successor of it; or
|
|
(c)
|
a direct or indirect successor of an assignee such as is mentioned in (b), unless any of the foregoing has assigned all its rights, and novated all its obligations and liabilities, under the Finance Documents;
|
(a)
|
Tranche A, 2.65 per cent. per annum; or
|
(b)
|
Tranche B:
|
|
(i)
|
2.65 per cent. per annum at all times when each of the Charter Conditions is satisfied; and
|
|
(ii)
|
4.00 per cent. per annum at all other times;
|
|
(a)
|
the Collateral Ship, the Collateral Owner; and
|
|
(b)
|
the Financed Ship, the Borrower,
|
|
(a)
|
England and Wales;
|
|
(b)
|
the country under the laws of which the company is incorporated or formed;
|
|
(c)
|
a country in which the company's central management and control is or has recently been exercised;
|
|
(d)
|
a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;
|
|
(e)
|
a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and
|
|
(f)
|
a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above;
|
|
(a)
|
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;
|
|
(b)
|
the rights of the plaintiff under an action
in rem
in which the vessel concerned has been arrested or a writ has been issued or similar step taken; and
|
|
(c)
|
any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;
|
|
(a)
|
all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;
|
|
(b)
|
no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;
|
|
(c)
|
neither the Borrower nor any Security Party has any future or contingent liability under Clause 19, 20 or 21 below or any other provision of this Agreement or another Finance Document; and
|
|
(d)
|
the Lender, in its reasonable judgement, does not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;
|
|
(a)
|
actual, constructive, compromised, agreed or arranged total loss of the Ship;
|
|
(b)
|
any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than the Ship's proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension;
|
|
(c)
|
any condemnation of that Ship by any tribunal or by any person or person claiming to be a tribunal; and
|
|
(d)
|
any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless she is within 30 days redelivered to the full control of the Borrower or the Collateral Owner (as the case may be);
|
|
(a)
|
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
|
|
(b)
|
in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earliest of:
|
(i) | the date on which a notice of abandonment is given to the insurers; and | |
(ii) | the date of any compromise, arrangement or agreement made by or on behalf of the Owner thereof with that Ship's insurers in which the insurers agree to treat that Ship as a total loss; and |
|
(c)
|
in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Lender that the event constituting the total loss occurred;
|
1.2
|
Construction of certain terms.
In this Agreement:
|
1.3
|
Meaning of "month".
A period of one or more "
months
" ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started ("
the numerically corresponding day
"), but:
|
(a)
|
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
|
(b)
|
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
and "
month
" and "
monthly
" shall be construed accordingly.
|
1.4
|
Meaning of "subsidiary".
A company (S) is a subsidiary of another company (P) if:
|
(a)
|
a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
|
(b)
|
P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or
|
(c)
|
P has the direct or indirect power to appoint or remove a majority of the directors of S; or
|
(d)
|
P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P,
|
1.5
|
General Interpretation.
|
(a)
|
In this Agreement:
|
|
(i)
|
references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;
|
|
(ii)
|
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and
|
|
(iii)
|
words denoting the singular number shall include the plural and vice versa;
|
(b)
|
Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears; and
|
(c)
|
The clause headings shall not affect the interpretation of this Agreement.
|
2
|
FACILITY
|
2.1
|
Amount of facility.
Subject to the other provisions of this Agreement, the Lender shall make available to the Borrower a loan facility of up to $20,000,000 divided into two Tranches, being each of Tranche A and Tranche B.
|
2.2
|
Purpose of Tranches.
The Borrower undertakes with the Lender to use each Tranche only for the purpose stated in the preamble to this Agreement.
|
3
|
DRAWDOWN
|
3.1
|
Request for Tranche.
Subject to the following conditions, the Borrower may request a Tranche to be advanced by ensuring that the Lender receives the completed Drawdown Notice not later than 11.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date.
|
3.2
|
Availability.
The conditions referred to in Clause 3.1 are that relative to the relevant Tranche:
|
(a)
|
each Drawdown Date has to be a Business Day during the Availability Period;
|
(b)
|
each Tranche shall be made available in a single amount and any amount undrawn under a Tranche shall be cancelled and may not be borrowed by the Borrower at a later date;
|
(c)
|
each Tranche shall not exceed:
|
|
(i)
|
in the case of Tranche A, an amount of up to the lesser of (a) $15,000,000 and (b) 55 per cent. of the Initial Market Value of the Financed Ship; and
|
|
(ii)
|
in the case of Tranche B, an amount of up to the lesser of (a) $5,000,000 and (b) 20 per cent. of the Initial Market Value of the Financed Ship; and
|
(d)
|
the aggregate principal amount of the Tranches shall not exceed $20,000,000.
|
3.3
|
Drawdown Notice irrevocable.
A Drawdown Notice must be signed by a director or a duly authorised attorney-in-fact of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender.
|
3.4
|
Disbursement of Tranche.
Subject to the provisions of this Agreement, the Lender shall on each Drawdown Date advance the relevant Tranche to the Borrower; and payment to the Borrower shall be made to the account which the Borrower specifies in the relevant Drawdown Notice.
|
4
|
INTEREST
|
4.1
|
Payment of normal interest.
Subject to the provisions of this Agreement, interest on each Tranche in respect of each Interest Period applicable to it shall be paid by the Borrower on the last day of that Interest Period.
|
4.2
|
Normal rate of interest.
Subject to the provisions of this Agreement, the rate of interest on each Tranche in respect of an Interest Period applicable to it shall be the aggregate of the applicable Margin and LIBOR for that Interest Period.
|
4.3
|
Payment of accrued interest.
In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.
|
4.4
|
Notification of market disruption.
The Lender shall promptly notify the Borrower if for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fund a Tranche (or any part of it) during any Interest Period, stating the circumstances which have caused such notice to be given.
|
4.5
|
Suspension of drawdown.
If the Lender's notice under Clause 4.4 is served before a Tranche is advanced, the Lender's obligation to advance that Tranche shall be suspended while the circumstances referred to in the Lender's notice continue.
|
4.6
|
Alternative rate of interest.
If, after a Tranche has been advanced, the Lender notifies that it is unable to obtain Dollars in the London Interbank Market to fund the Tranche (or any part of it) during any Interest Period or adequate and fair means do not exist for ascertaining the rate of interest, the Lender shall set an interest rate representing the cost of funding of the Lender in Dollars or in any available currency of the Tranche plus the applicable Margin.
|
5
|
INTEREST PERIODS
|
5.1
|
Commencement of Interest Periods.
The first Interest Period applicable to a Tranche shall commence on the Drawdown Date relative thereto and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.
|
5.2
|
Duration of normal Interest Periods.
Subject to Clauses 5.3 and 5.4, each Interest Period shall be:
|
(a)
|
3, 6 or 12 months as notified by the Borrower to the Lender not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or
|
(b)
|
in the case of the first Interest Period applicable to Tranche B, a period ending on the last day of the Interest Period applicable to Tranche A then current, whereupon both Tranches shall be consolidated and treated as a single Tranche;
|
(c)
|
3 months, if the Borrower fails to notify the Lender by the time specified in paragraph (a) above; or
|
(d)
|
such other period as the Lender may agree with the Borrower.
|
5.3
|
Duration of Interest Periods for Repayment Instalments.
In respect of an amount due to be repaid under Clause 7 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.
|
5.4
|
Non-availability of matching deposits for Interest Period selected.
If, after the Borrower has selected an Interest Period longer than 6 months, the Lender notifies the Borrower by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.
|
6
|
DEFAULT INTEREST
|
6.1
|
Payment of default interest on overdue amounts.
The Borrower shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrower under any Finance Document which the Lender does not receive on or before the relevant date, that is:
|
(a)
|
the date on which the Finance Documents provide that such amount is due for payment; or
|
(b)
|
if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or
|
(c)
|
if such amount has become immediately due and payable under Clause 18.5, the date on which it became immediately due and payable.
|
6.2
|
Default rate of interest.
Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Lender to be 1 per cent. above the applicable Margin plus LIBOR at which deposits in an amount equal to such overdue amount are offered on call or for successive periods of any duration of up to 3 months, as the Lender may determine from time to time.
|
6.3
|
Notification of interest periods and default rates.
The Lender shall promptly notify the Borrower of each interest rate determined by it under Clause 6.2 and of each period selected by it for the purposes of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Lender's notification.
|
6.4
|
Payment of accrued default interest.
Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.
|
6.5
|
Compounding of default interest.
Any such interest which is not paid at the end of the period by reference to which it was determined shall be compounded every 3 months.
|
7
|
REPAYMENT AND PREPAYMENT
|
7.1
|
Amount of repayment instalments.
The Borrower shall repay each Tranche as follows:
|
|
(i)
|
12 equal consecutive six-monthly instalments of $720,000 each; and
|
|
(ii)
|
a balloon instalment (the "
Balloon Instalment
") of $6,360,000; and
|
(b)
|
in the case of Tranche B, by:
|
|
(i)
|
subject to the satisfaction of each of the Charter Conditions, by 8 equal consecutive six-monthly instalments of $625,000 each; and
|
|
(ii)
|
if at any time either of the Charter Conditions is not satisfied, by one bullet instalment (the "
Tranche B Bullet Instalment
") in an amount equal to the amount of Tranche B at the time the Charter conditions (or either of them) cease to be satisfied,
|
7.2
|
Repayment Dates.
|
(a)
|
In the case of Tranche A, the first Repayment Instalment shall be repaid on the date falling 6 months after the Drawdown Date applicable thereto, each subsequent Repayment Instalment shall be repaid at six-monthly intervals thereafter and the last Repayment Instalment, together with the Balloon Instalment, shall be repaid on the date falling on the earlier of (a) the date falling 72 months after the Drawdown Date applicable thereto and (b) 31 January 2017; and
|
(b)
|
in the case of Tranche B:
|
|
(i)
|
if Tranche B is repaid in accordance with Clause 7.7(b)(i), the first Repayment Instalment shall be repaid on the date falling 6 months after the Drawdown Date applicable thereto, each subsequent Repayment Instalment shall be repaid at six-monthly intervals thereafter and the last Repayment Instalment shall be repaid on the date falling on the earlier of:
|
|
(A)
|
the date falling 48 months after the Drawdown Date applicable to Tranche B; and
|
|
(B)
|
31 January 2015; and
|
|
(ii)
|
if either of the Charter Conditions ceases to be satisfied at any time, the Tranche B Bullet Instalment shall be repaid on the date on which the last Repayment Instalment referred to in sub-paragraph (i) would have become due and payable if Tranche B continued to be repaid in accordance with that sub-paragraph.
|
7.3
|
Final Repayment Date.
On the final Repayment Date, the Borrower shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.
|
7.4
|
Voluntary prepayment.
Subject to the following conditions, the Borrower may prepay
the whole or any part of the Loan on the last day of an Interest Period.
|
7.5
|
Conditions for voluntary prepayment.
The conditions referred to in Clause 7.4 are that:
|
(a)
|
a partial prepayment shall be $200,000 or an integral multiple thereof;
|
(b)
|
the Lender has received from the Borrower at least 10 days' prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and
|
(c)
|
the Borrower has provided evidence satisfactory to the Lender that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with.
|
7.6
|
Effect of notice of prepayment.
A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.
|
7.7
|
Mandatory prepayment.
Without prejudice to the provisions of Clause 14, the Borrower shall be obliged to prepay:
|
(a)
|
the whole of the Loan if the Financed Ship is sold or becomes a Total Loss:
|
|
(i)
|
in the case of a sale, on or before the date on which the sale is completed; or
|
|
(ii)
|
in the case of Total Loss, on the earlier of the date falling 150 days after the Total Loss Date relative thereto and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss; and
|
(b)
|
pursuant to Clause 7.12, Tranche B if the Collateral Ship is sold or becomes a Total Loss:
|
|
(i)
|
in the case a sale, on or before the date on which the sale is completed; or
|
|
(ii)
|
in the case of Total Loss, on the earlier of the date falling 150 days after the Total Loss Date relative thereto and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.
|
7.8
|
Shareholding and senior executive management of Borrower.
If at any time members of the Pittas family (either directly and/or through companies beneficially owned by the Pittas family and/or trusts or foundations of which the Pittas family are beneficiaries) (i) do not own the necessary shareholding to exercise executive power of the Corporate Guarantor or (ii) are not represented in the senior executive management of the Corporate Guarantor, the Borrower shall promptly advise the Lender of the occurrence of the circumstances referred to in this Clause 7.8. If the Lender does not approve (in its sole and absolute discretion) the change in circumstances which has occurred, the Loan shall be prepaid in full subject to the Lender giving the Borrower and the Corporate Guarantor 60 days' prior written notice.
|
7.9
|
Amounts payable on prepayment.
A prepayment shall be made together with accrued interest (and any other amount payable under Clause 20 below or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 20.1(b) but without premium or penalty.
|
7.10
|
Application of partial prepayment.
Each partial prepayment shall, unless otherwise agreed by the Lender, be applied as follows:
|
(a)
|
firstly, in reducing pro rata any then outstanding Repayment Instalment in respect of Tranche B; and
|
(b)
|
secondly, in reducing the Balloon Instalment up to $1,500,000; and
|
(c)
|
thirdly, in inverse order of maturity against each of the Repayment Instalments specified
|
|
in Clause 7.1(a) which are outstanding at the relevant time.
|
7.11
|
No reborrowing.
No amount prepaid may be reborrowed.
|
7.12
|
Charter Conditions.
Subject to the other provisions of this Agreement, Tranche B may remain outstanding so long as:
|
(a)
|
the Financed Ship is subject to a valid and binding Time Charter and the Borrower's rights under that Time Charter (and any guarantee thereof) have been validly assigned to the Lender by a Time Charter Assignment
Provided that
if at any time the Initial Time Charter is terminated, has expired or is not in full force and effect, the Borrower shall be in compliance with this Clause 7.12 if within 30 days of such event, it enters into a Replacement Charter and executes in favour of the Lender a Time Charter Assignment relative thereto (as well as any guarantee in respect of the Replacement Charter); and
|
(b)
|
the Collateral Finance Documents remain in full force and effect.
|
8
|
CONDITIONS PRECEDENT
|
8.1
|
Documents, fees and no default.
The Lender's obligation to advance a Tranche is subject to the following conditions precedent:
|
(a)
|
that, on or before the service of the Drawdown Notice in respect of Tranche A, the Lender receives the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers;
|
(b)
|
that, on the Drawdown Date in respect of Tranche A but prior to the advance of that Tranche, the Lender receives the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers;
|
(c)
|
that, on the Drawdown Date in respect of Tranche B but prior to the advance of that Tranche, the Lender receives the documents described in Part C of Schedule 2 in form and substance satisfactory to its lawyers:
|
(d)
|
that, on or before the Drawdown Date in respect of Tranche A, the Lender has received the management fee referred to in Clause 19.1 and has received payment of the expenses referred to in Clause 19.2;
|
(e)
|
that both at the date of each Drawdown Notice and at each Drawdown Date:
|
|
(i)
|
no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the relevant Tranche;
|
|
(ii)
|
the representations and warranties in Clause 9.1 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and
|
|
(iii)
|
none of the circumstances contemplated by Clause 4.4 has occurred and is continuing;
|
(f)
|
that, if the ratio set out in Clause 14.1 were applied immediately following the advance of a Tranche, the Lender would not be entitled to oblige the Borrower to provide additional security or prepay part of the Loan under that Clause; and
|
(g)
|
that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may reasonably request by notice to the Borrower prior to the applicable Drawdown Date.
|
8.2
|
Waivers of conditions precedent.
If the Lender, at its discretion, permits a Tranche to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the applicable Drawdown Date (or such longer period as the Lender may specify).
|
9
|
REPRESENTATIONS AND WARRANTIES
|
9.1
|
General.
The Borrower represents and warrants to the Lender as follows.
|
9.2
|
Status.
The Borrower is duly incorporated and validly existing and in good standing under the laws of the Republic of Liberia.
|
9.3
|
Share capital and ownership.
The Borrower has an authorised share capital of 500 registered and/or bearer shares of $0.01 each, all of which shares have been issued in registered form, and the legal title and beneficial ownership of all the shares of the Borrower is held, free of any Security Interest or other claim, by the Corporate Guarantor.
|
9.4
|
Corporate power.
The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
|
(a)
|
to execute the Finance Documents to which it is a party; and
|
(b)
|
to borrow under this Agreement and to make all the payments contemplated by, and to comply with, this Agreement and the other Finance Documents to which it is a party.
|
9.5
|
Consents in force.
All the consents referred to in Clause 9.4 remain in force and nothing has occurred which makes any of them liable to revocation.
|
9.6
|
Legal validity; effective Security Interests.
The Finance Documents to which the Borrower is a party do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):
|
(a)
|
constitute the Borrower's legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and
|
(b)
|
create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,
subject to any relevant insolvency laws affecting creditors' rights generally.
|
9.7
|
No third party Security Interests.
Without limiting the generality of Clause 9.6, at the time of the execution and delivery of each Finance Document:
|
(a)
|
the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and
|
(b)
|
no third party will have any Security Interest or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.
|
9.8
|
No conflicts.
The execution by the Borrower of the Finance Documents and the borrowing of the Loan, and its compliance with each Finance Document will not involve or lead to a contravention of:
|
(a)
|
any law or regulation; or
|
(b)
|
the constitutional documents of the Borrower; or
|
(c)
|
any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.
|
9.9
|
No withholding taxes.
All payments which the Borrower is liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.
|
9.10
|
No default.
No Event of Default or Potential Event of Default has occurred and is continuing.
|
9.11
|
Information.
All information which has been provided in writing by or on behalf of the Borrower or any Security Party to the Lender in connection with any Finance Document satisfied the requirements of Clause 10.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 10.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts.
|
9.12
|
No litigation.
No legal or administrative action involving the Borrower (including action relating to any alleged or actual breach of the ISM Code and the ISPS Code) has been commenced or taken or, to the Borrower's knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower's financial position or profitability.
|
9.13
|
Compliance with certain undertakings.
At the date of this Agreement, the Borrower is in compliance with Clauses 10.2, 10.4, 10.9 and 10.12.
|
9.14
|
Taxes paid.
The Borrower has paid all taxes applicable to, or imposed on or in relation
to itself, its business or the Financed Ship.
|
|
|
9.15
|
ISM Code and ISPS Code compliance.
All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Financed Ship will on or prior to the Drawdown Date applicable to Tranche A have been complied with.
|
9.16
|
No money laundering
. Without prejudice to the generality of Clause 2.2, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrower is a party, the Borrower confirms (i) that it is acting for its own account, (ii) that it will use the proceeds of the Loan for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement and (iii) that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat "money laundering" (as defined in Article 1 of Directive 2005/60/EC of the European Parliament and of the Council).
|
10
|
GENERAL UNDERTAKINGS
|
10.1
|
General.
The Borrower undertakes with the Lender to comply with the following provisions of this Clause 10 at all times during the Security Period, except as the Lender may otherwise permit.
|
10.2
|
Title; negative pledge.
The Borrower will:
|
(a)
|
hold the legal title to, and own the entire beneficial interest in the Financed Ship, its Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents; and
|
(b)
|
not create or permit to arise any Security Interest over any other asset, present or future.
|
10.3
|
No disposal of assets.
The Borrower will not transfer, lease or otherwise dispose of:
|
(a)
|
all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or
|
(b)
|
any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.
|
10.4
|
No other liabilities or obligations to be incurred.
The Borrower will not incur any liability or obligation except liabilities and obligations under the Finance Documents and liabilities or obligations reasonably incurred in the ordinary course of operating and chartering the Financed Ship.
|
10.5
|
Information provided to be accurate.
All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not, misleading and will not omit any material fact or consideration.
|
10.6
|
Provision of financial statements.
The Borrower will send to the Lender:
|
(a)
|
as soon as possible, but in no event later than 150 days after the end of each Financial Year of the Corporate Guarantor, the audited Accounting Information of the Group for that Financial Year;
|
(b)
|
as soon as possible, but in no event later than 60 days after the end of each financial quarter (ending on 31 March, 30 June, 30 September and 31 December) in each Financial Year of each of the Borrower and the Corporate Guarantor the unaudited Accounting Information of the Group for that financial quarter, in each case, certified as to its correctness by the chief financial officer of the Corporate Guarantor; and
|
(c)
|
promptly, when requested, such other financial information and accounts relating to the business, undertaking, assets, liabilities, revenues, financial condition or affairs of any Security Party and such other further general information relating to any Security Party as the Lender from time to time may reasonably require including (without limitation) in relation to the each Ship, its Earnings, the Group, the Approved Manager and the Corporate Guarantor.
|
10.7
|
Form of financial statements.
All Accounting Information delivered under Clause 10.6 will:
|
(a)
|
be prepared in accordance with all applicable laws and US GAAP consistently applied and, in the case of audited financial statements, certified as to its correctness by auditors acceptable to the Lender;
|
(b)
|
give a true and fair view of the state of affairs of the Borrower or the Group (as the case may be) at the date of that Accounting Information and of the profit of the Borrower or, as the case may be, the Group for the period to which that Accounting Information relates; and
|
(c)
|
fully disclose or provide for all significant liabilities of the Borrower or, as the case may be, of the Group.
|
10.8
|
Creditor notices.
The Borrower will send the Lender, at the same time as they are despatched, copies of all communications which are despatched to all the Borrower's creditors or any class of them.
|
10.9
|
Consents.
The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Lender of, all consents required:
|
(a)
|
to perform its obligations under any Finance Document;
|
(b)
|
for the validity or enforceability of any Finance Document to which it is a party;
|
(c)
|
for the Borrower to continue to own and operate the Financed Ship,
|
10.10
|
Maintenance of Security Interests.
The Borrower will:
|
(a)
|
at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and
|
(b)
|
without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.
|
10.11
|
Notification of litigation.
The Borrower will provide the Lender with details of any legal or administrative action involving the Borrower, any Security Party, either Approved Manager, either Ship, their Earnings or their Insurances as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.
|
10.12
|
Principal place of business.
The Borrower will maintain its place of business, and keep its corporate documents and records, at the address referred to in Clause 27.2(a); and will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.
|
10.13
|
Confirmation of no default.
The Borrower will, within 2 Business Days after service by the Lender of a written request, serve on the Lender a notice which is signed by 2 directors of the Borrower and which:
|
(a)
|
states that no Event of Default or Potential Event of Default has occurred; or
|
(b)
|
states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.
|
10.14
|
Notification of default.
The Borrower will notify the Lender as soon as the Borrower becomes aware of:
|
(a)
|
the occurrence of an Event of Default or a Potential Event of Default; or
|
(b)
|
any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,
|
10.15
|
Provision of further information.
The Borrower will, as soon as practicable after receiving the request, provide the Lender with any additional financial or other information relating:
|
(a)
|
to the Borrower, the Collateral Owner, a Ship, the Approved Manager, the Corporate Guarantor, the Insurances, the Earnings, the Time Charterer or any member of the Group; or
|
(b)
|
to any other matter relevant to, or to any provision of, a Finance Document, which may be reasonably requested by the Lender at any time.
|
10.16
|
"
Know your customer
". If:
|
(a)
|
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
|
(b)
|
any change in the status or the shareholding structure of the Borrower or any Security Party after the date of this Agreement; or
|
(c)
|
a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Lender or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
|
10.17
|
Minimum liquidity.
At all times during the Security Period, the Borrower will ensure that an amount of not less than $300,000 is standing to the credit of the Operating Account.
|
11
|
CORPORATE UNDERTAKINGS
|
11.1
|
General.
The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit.
|
11.2
|
Maintenance of status.
The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of Liberia.
|
11.3
|
Negative undertakings.
The Borrower will not:
|
(a)
|
carry on any business other than the ownership, chartering and operation of the Finaced Ship; or
|
(b)
|
pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital
Provided that
:
|
|
(i)
|
the Borrower may pay in any Financial Year dividends out of any Earnings which have been retained in any previous Financial Year; and/or
|
|
(ii)
|
the Borrower may pay in any Financial Year (no more frequently than on a quarterly basis during that Financial Year) dividends in an aggregate amount not
exceeding 60 per cent. of the Net Income in that Financial Year if at the relevant time no Event of Default has occurred or is continuing or would result from the payment of such dividend; and/or
|
|
(iii)
|
with the prior written consent of the Lender (to be given or withheld in its sole and absolute discretion) the Borrower may pay dividends in any Financial Year in excess of the amount referred to in sub-paragraph (i);
|
(c)
|
repay any shareholder loans or any other loans advanced to it by any person (or, in either case, any interest thereon), nor make nay loans or advances to any person; or
|
(d)
|
provide any form of credit or financial assistance to:
|
|
(i)
|
a person who is directly or indirectly interested in the Borrower's share or loan capital; or
|
|
(ii)
|
any company in or with which such a person is directly or indirectly interested or connected,
or 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 arms' length; or
|
(e)
|
open or maintain any account with any bank or financial institution except the Operating Account and the Retention Account and any other account opened or to be opened with the Lender for the purposes of the Finance Documents; or
|
(f)
|
issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital; or
|
(g)
|
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or
|
(h)
|
enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.
|
12
|
INSURANCE
|
12.1
|
General.
The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may otherwise permit.
|
12.2
|
Maintenance of obligatory insurances.
The Borrower shall keep the Financed Ship insured at the expense of the Borrower against:
|
(a)
|
fire and usual marine risks (including hull and machinery and excess risks);
|
(b)
|
war risks;
|
(c)
|
protection and indemnity risks (all classes); and
|
(d)
|
any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for the Borrower to insure and which are specified by the Lender by notice to the Borrower.
|
12.3
|
Terms of obligatory insurances.
The Borrower shall effect such insurances:
|
(a)
|
in Dollars;
|
(b)
|
in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) the Market Value of the Financed Ship and (ii) 120 per cent. of the Loan and upon such terms as shall from time to time be approved in writing by the Lender;
|
(c)
|
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and the international marine insurance market for vessels of the same type and age as the Financed Ship;
|
(d)
|
in relation to protection and indemnity risks, in respect of the full tonnage of the Financed
Ship;
|
(e)
|
on approved terms; and
|
(f)
|
through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.
|
12.4
|
Further protections for the Lender.
In addition to the terms set out in Clause 12.3, the Borrower shall procure that the obligatory insurances shall:
|
(a)
|
whenever the Lender requires name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
|
(b)
|
name the Lender as sole loss payee with such directions for payment as the Lender may specify;
|
(c)
|
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;
|
(d)
|
provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Lender in respect of any rights or interests (secured or not) held by or available to the Lender in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than the Lender, the Borrower or any other Security Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;
|
(e)
|
provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender;
|
(f)
|
provide that the Lender may make proof of loss if the Borrower fails to do so; and
|
(g)
|
provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Lender, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Lender for 30 days (or 7 days in the case of war risks) after receipt by the Lender of prior written notice from the insurers of such cancellation, change or lapse.
|
12.5
|
Renewal of obligatory insurances.
The Borrower shall:
|
(a)
|
at least 14 days before the expiry of any obligatory insurance effected by it:
|
|
(i)
|
notify the Lender of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that insurance and of the proposed terms of renewal; and
|
|
(ii)
|
obtain the Lender's approval to the matters referred to in paragraph (i) above;
|
(b)
|
at least 7 days before the expiry of any obligatory insurance effected by it, renew the insurance in accordance with the Lender's approval pursuant to paragraph (a) above; and
|
(c)
|
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.
|
12.6
|
Copies of policies; letters of undertaking.
The Borrower shall ensure that all approved brokers provide the Lender with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters of undertaking in a form required by the Lender and including undertakings by the approved brokers that:
|
(a)
|
they will have endorsed on each policy, immediately upon issue, a loss payable clause
and a notice of assignment complying with the provisions of Clause 12.4;
|
(b)
|
they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;
|
(c)
|
they will advise the Lender immediately of any material change to the terms of the obligatory insurances;
|
(d)
|
they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and
|
(e)
|
they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the Ship or otherwise, they waive any lien on the policies or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Lender.
|
12.7
|
Copies of certificates of entry.
The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Financed Ship is entered provides the Lender with:
|
(a)
|
a certified copy of the certificate of entry for the Financed Ship;
|
(b)
|
a letter or letters of undertaking in such form as may be required by the Lender; and
|
(c)
|
where required to be issued under the terms of insurance/indemnity provided by the Borrower's protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by the Borrower in relation to the Financed Ship in accordance with the requirements of such protection and indemnity association; and
|
(d)
|
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Financed Ship.
|
12.8
|
Deposit of original policies.
The Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.
|
12.9
|
Payment of premiums.
The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Lender.
|
12.10
|
Guarantees.
The Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
|
12.11
|
Restrictions on employment.
The Borrower shall not employ the Financed Ship, nor permit the Ship to be employed, outside the cover provided by any obligatory insurances.
|
12.12
|
Compliance with terms of insurances.
The Borrower shall not do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:
|
(a)
|
the Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 12.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;
|
(b)
|
the Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Financed Ship unless approved by the underwriters of the obligatory insurances;
|
(c)
|
the Borrower shall make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Financed Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and
|
(d)
|
the Borrower shall not employ the Financed Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
|
12.13
|
Alteration to terms of insurances.
The Borrower shall neither make or agree to any alteration to theterms of any obligatory insurance nor waive any right relating to any obligatory insurance.
|
12.14
|
Settlement of claims.
The Borrower shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.
|
12.15
|
Provision of copies of communications.
The Borrower shall provide the Lender, at the time of each such communication, copies of all major written communications between itself and:
|
(a)
|
the approved brokers; and
|
(b)
|
the approved protection and indemnity and/or war risks associations; and
|
(c)
|
the approved insurance companies and/or underwriters, which relate directly or indirectly to:
|
|
(i)
|
the Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
|
|
(ii)
|
any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.
|
12.16
|
Provision of information.
In addition, the Borrower shall promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:
|
(a)
|
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
|
(b)
|
effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17 below or dealing with or considering any matters relating to any such insurances,
and the Borrower shall, forthwith upon demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.
|
12.17
|
Mortgagee's interest and additional perils insurances.
The Lender shall be entitled from time to time to effect, maintain and renew a mortgagee's interest insurance policy and, at the discretion of the Lender, a mortgagee's interest additional perils policy in respect of the Financed Ship, each in such amount and otherwise on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate and the Borrower shall upon demand fully indemnify the Lender in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing such insurance or dealing with, or considering, any matter arising out of such insurance.
|
12.18
|
Review of insurance requirements.
The Lender shall be entitled to review the requirements of this Clause 12 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lender, significant and capable of affecting the Borrower or the Financed Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower may be subject) and may appoint insurance consultants in relation to this review at the cost of the Borrower.
|
12.19
|
Modification of insurance requirements.
The Lender shall notify the Borrower of any
proposed modification under Clause 12.18 to the requirements of this Clause 12 which the Lender considers appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 12 and shall bind the Borrower accordingly.
|
12.20
|
Compliance with mortgagee's instructions.
The Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require the Financed Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 12.19.
|
13
|
SHIP COVENANTS
|
13.1
|
General.
The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit.
|
13.2
|
Ship's name and registration.
The Borrower shall keep the Financed Ship registered in its name as a Liberian flag ship; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of the Financed Ship.
|
13.3
|
Repair and classification.
The Borrower shall keep the Financed Ship in a good and safe condition and state of repair:
|
(a)
|
consistent with first-class ship ownership and management practice;
|
(b)
|
so as to maintain the Financed Ship's present class (namely, 100 A5 with fleetboard 5.240m, IW-SOLAS-II-2, Reg.19 C2P57, Container Ship, MC AUT, with Germanischer Lloyd) free of all overdue recommendations and conditions affecting the Ship's class; and
|
(c)
|
so as to comply with all laws and regulations applicable to vessels registered at ports in Liberia or to vessels trading to any jurisdiction to which the Financed Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.
|
13.4
|
Modification.
The Borrower shall not make any modification or repairs to, or replacement of, the Financed Ship or equipment installed on the Financed Ship which would or might materially alter its structure, type or performance characteristics or materially reduce the Financed Ship's value.
|
13.5
|
Removal of parts.
The Borrower shall not remove any material part of the Financed Ship, or any item of equipment installed on it, unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lender and becomes on installation on the Financed Ship the property of the Borrower and subject to the security constituted by the Mortgage
Provided that
the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Financed Ship.
|
13.6
|
Surveys.
The Borrower shall submit the Financed Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender provide the Lender, with copies of all survey reports.
|
13.7
|
Inspection
. The Borrower shall permit the Lender (by surveyors or other persons appointed by it for that purpose at the Borrower's expense) to board the Financed Ship at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.
|
13.8
|
Prevention of and release from arrest.
The Borrower shall promptly discharge:
|
(a)
|
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Financed Ship, the Earnings or the Insurances;
|
(b)
|
all taxes, dues and other amounts charged in respect of the Financed Ship, the Earnings or the Insurances; and
|
(c)
|
all other outgoings whatsoever in respect of the Financed Ship, the Earnings or the Insurances,
|
13.9
|
Compliance with laws etc.
The Borrower shall:
|
(a)
|
comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Financed Ship, its ownership, operation and management or to the business of the Borrower;
|
(b)
|
not employ the Financed Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and
|
(c)
|
in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Financed Ship to enter or trade to any zone which is declared a war zone by any government or by the Financed Ship's war risks insurers unless the prior written consent of the Lender has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.
|
13.10
|
Provision of information.
The Borrower shall promptly provide the Lender with any information which it requests regarding:
|
(a)
|
the Financed Ship, its employment, position and engagements;
|
(b)
|
the Earnings and payments and amounts due to the master and crew of the Financed Ship;
|
(c)
|
any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Financed Ship and any payments made in respect of the Financed Ship;
|
(d)
|
any towages and salvages;
|
(e)
|
its compliance, the Approved Manager's compliance or the compliance of the Financed Ship with the ISM Code and the ISPS Code,
|
13.11
|
Notification of certain events.
The Borrower shall immediately notify the Lender by fax, confirmed forthwith by letter of:
|
(a)
|
any casualty which is or is likely to be or to become a Major Casualty;
|
(b)
|
any occurrence as a result of which the Financed Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;
|
(c)
|
any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;
|
(d)
|
any arrest or detention of the Financed Ship, any exercise or purported exercise of any lien on the Financed Ship or its Earnings or any requisition of the Financed Ship for hire;
|
(e)
|
any intended dry docking of the Financed Ship;
|
(f)
|
any Environmental Claim made against the Borrower or in connection with the Financed Ship, or any Environmental Incident;
|
(g)
|
any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, either of the Approved Managers or otherwise in connection with the Financed Ship; or
|
(h)
|
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,
|
|
and the Borrower shall keep the Lender advised in writing on a regular basis and in such detail as the Lender shall require of the Borrower's and the Approved Managers' or any other person's response to any of those events or matters.
|
13.12
|
Restrictions on chartering, appointment of managers etc.
The Borrower shall not:
|
(a)
|
let the Financed Ship on demise charter for any period;
|
(b)
|
other than pursuant to an Initial Time Charter, enter into any time or consecutive voyage charter in respect of the Financed Ship for a term which exceeds, or which by virtue of
any optional extensions may exceed, 12 months;
|
(c)
|
enter into any charter in relation to the Financed Ship under which more than 2 months' hire (or the equivalent) is payable in advance;
|
(d)
|
charter the Financed Ship otherwise than on bona fide arm's length terms at the time when the Financed Ship is fixed;
|
(e)
|
appoint a manager of the Financed Ship other than the Approved Manager's or agree to any alteration to the terms of each of the Approved Managers' respective appointments;
|
(f)
|
de-activate or lay up the Financed Ship; or
|
(g)
|
put the Financed Ship into the possession of any person for the purpose of work being done upon the Financed Ship in an amount exceeding or likely to exceed $350,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on the Financed Ship or its Earnings for the cost of such work or any other reason.
|
13.13
|
Notice of Mortgage.
The Borrower shall keep the Mortgage registered against the Financed Ship as a valid first priority mortgage, carry on board the Financed Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of that Financed Ship a framed printed notice stating that the Financed Ship is mortgaged by the Borrower to the Lender.
|
14
|
SECURITY COVER
|
14.1
|
Minimum required security cover
. Clause 14.2 applies if the Lender notifies the Borrower that:
|
(a)
|
the aggregate of (i) the Market Value of the Financed Ship and (ii) at any time when Tranche B is outstanding, the Market Value of the Collateral Ship (after deducting from the same the amount of the Market Value for that Ship which is required for the Collateral Owner to satisfy the minimum security cover requirement in clause 14.1 of the Prospero Loan Agreement); plus
|
(b)
|
the net realisable value of any additional security previously provided under this Clause 14,
|
14.2
|
Provision of additional security cover; prepayment of Loan.
The Borrower will, within 1 month after the date on which the Lender's notice is served, either:
|
|
(i)
|
provide, or ensure that a third party provides, additional security which, in the opinion of the Lender, has a net realisable value at least equal to the shortfall and which, if it consists of or includes a Security Interest, covers such asset or assets and is documented in such terms as the Lender may approve or require; or
|
|
(ii)
|
prepay in accordance with Clause 7 such part (at least) of the Loan as will eliminate the shortfall.
|
14.3
|
Meaning of additional security.
In Clause 14.2 "
security
" means a Security Interest over an asset or assets (whether securing the Borrower's liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrower's liabilities under the Finance Documents.
|
14.4
|
Requirement for additional documents.
The Borrower shall not be deemed to have complied with sub-paragraph (i) of Clause 14.2 above until the Lender has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 2, Part A below and such legal opinions in terms acceptable to the Lender from such lawyers as it may select.
|
14.5
|
Valuation of Ship.
The Market Value of a Ship at any date is that shown by the valuation prepared:
|
(a)
|
as at a date not more than 14 days previously;
|
(b)
|
by one independent sale and purchase shipbroker which the Lender has approved or appointed for the purpose;
|
(c)
|
with or without physical inspection of that Ship (as the Lender may require);
|
(d)
|
on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer free of any existing charter or any other contract of employment in respect of that Ship; and
|
(e)
|
after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.
|
14.6
|
Valuation of additional security.
The net realisable value of any additional security which is provided under Clause 14.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 14.5.
|
14.7
|
Valuations binding.
Any valuation under Clause 14.2, 14.5 or 14.6 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Lender makes of a security which does not consist of or include a Security Interest.
|
14.8
|
Provision of information.
The Borrower shall promptly provide the Lender and any shipbroker or expert acting under Clause 14.5 or 14.6 with any information which the Lender or the shipbroker or expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Lender (or the expert appointed by it) consider prudent.
|
14.9
|
Payment of valuation expenses.
Without prejudice to the generality of the Borrower's obligations under Clauses 19.3 and 20.3, the Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any shipbroker or expert instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause.
|
14.10
|
Application of prepayment.
Clause 7 shall apply in relation to any prepayment pursuant to Clause 14.2(b).
|
15
|
PAYMENTS AND CALCULATIONS
|
15.1
|
Currency and method of payments.
All payments to be made by the Borrower to the Lender under a Finance Document shall be made to the Lender:
|
(a)
|
by not later than 11.00 a.m. (London time) on the due date;
|
(b)
|
in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and
|
(c)
|
to the account of the Lender at JPMorgan Chase Bank New York (Account No 786419036, Swift Code CHASUS33) or to such other account with such other bank as the Lender may from time to time notify to the Borrower.
|
15.2
|
Payment on non-Business Day.
If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:
|
(a)
|
the due date shall be extended to the next succeeding Business Day; or
|
(b)
|
if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,
|
15.3
|
Basis for calculation of periodic payments.
All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.
|
15.4
|
Lender accounts.
The Lender shall maintain an account showing the amounts advanced by the Lender and all other sums owing to the Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.
|
15.5
|
Accounts prima facie evidence.
If the account maintained under Clauses 15.4 shows an amount to be owing by the Borrower or a Security Party to the Lender, that account shall be prima facie evidence that that amount is owing to the Lender.
|
16
|
APPLICATION OF RECEIPTS
|
16.1
|
Normal order of application.
Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or by virtue of any Finance Document shall be applied:
|
(a)
|
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following proportions:
|
|
(i)
|
first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrower under Clauses 19, 20 and 21 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);
|
|
(ii)
|
secondly, in or towards satisfaction of any and all amounts of interest or default interest payable to the Lender under the Finance Document; and
|
|
(iii)
|
thirdly, in or towards satisfaction of the Loan;
|
(b)
|
SECONDLY: (if at the relevant time an Event of Default or Potential Event of Default has occurred) in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Lender, by notice to the Borrower and the Security Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of this Clause 16.1; and
|
(c)
|
THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.
|
16.2
|
Variation of order of application.
The Lender may, by notice to the Borrower and the Security Parties, provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.
|
16.3
|
Notice of variation of order of application.
The Lender may give notices under Clause 16.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.
|
16.4
|
Appropriation rights overridden.
This Clause 16 and any notice which the Lender gives under Clause 16.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.
|
17
|
APPLICATION OF EARNINGS
|
17.1
|
Payment of Earnings.
The Borrower undertakes with the Lender to ensure that, throughout the Security Period subject only to the provisions of this Agreement and the General Assignment, all the Earnings of the Financed Ship are paid to the Operating Account and that payments made in relation to the Financed Ship are paid from the Operating Account.
|
17.2
|
Monthly retentions.
The Borrower undertakes with the Lender to ensure that, in each calendar month of the Security Period after the first Drawdown Notice is served, on such dates as the Lender may from time to time specify, there is transferred to the Retention Account out of the Earnings received in the Operating Account during the preceding calendar month:
|
(a)
|
one-sixth of the amount of the Repayment Instalment falling due under Clause 7 on the next Repayment Date; and
|
(b)
|
the relevant fraction of the aggregate amount of interest on each Tranche which is payable on the next due date for payment of interest under this Agreement.
|
17.3
|
Shortfall in Earnings.
If the aggregate Earnings received in the Operating Account are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 17.2, the Borrower shall make up the amount of the insufficiency on demand from the Lender; but, without thereby prejudicing the Lender's right to make such demand at any time, the Lender may permit the Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 17.2 from the Earnings received in the next or subsequent months.
|
17.4
|
Application of retentions.
Until an Event of Default or a Potential Event of Default occurs, the Lender shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with Clause 17.1 so much of the balance on the Retention Account as equals:
|
(a)
|
the Repayment Instalment due on that Repayment Date; or
|
(b)
|
the amount of interest payable on that interest payment date,
|
17.5
|
Interest accrued on the Operating Account and the Retention Account.
Any credit balance on both the Operating Account and the Retention Account shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Lender likely to remain on the Operating Account and the Retention Account.
|
17.6
|
Release of accrued interest.
Interest accruing under Clause 17.5 shall be released to the Borrower on each Repayment Date unless an Event of Default or a Potential Event of Default has occurred or the then credit balance on the Retention Account is less than what would have been the balance had the full amount required by Clause 17.1 (and Clause 17.3, if applicable) been transferred in that and each previous month.
|
17.7
|
Location of accounts.
The Borrower shall promptly:
|
(a)
|
comply with any requirement of the Lender as to the location or re-location of the Operating Account and the Retention Account (or either of them); and
|
(b)
|
execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Operating Account and the Retention Account.
|
17.8
|
Debits for expenses etc.
The Lender shall be entitled (but not obliged) from time to time to debit the Operating Account without prior notice in order to discharge any amount due and payable to it under Clause 19 or 20 or payment of which it has become entitled to demand under Clause 19 or 20.
|
17.9
|
Borrower's obligations unaffected.
The provisions of this Clause 16.4 (as distinct from a distribution effected under Clause 17.4) do not affect:
|
(a)
|
the liability of the Borrower to make payments of principal and interest on the due dates;
or
|
(b)
|
any other liability or obligation of the Borrower or any Security Party under any Finance Document.
|
18
|
EVENTS OF DEFAULT
|
18.1
|
Events of Default.
An Event of Default occurs if:
|
(a)
|
the Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or
|
(b)
|
any breach occurs of Clause 7.8, 8.2, 10.2, 10.3, 10.15, 11.2, 11.3 or 14.2; or
|
(c)
|
any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (b) above) if, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 10 days after written notice from the Lender requesting action to remedy the same; or
|
(d)
|
(subject to any applicable grace period specified in any Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach caused by paragraph (a), (b) or (c) above); or
|
(e)
|
any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or
|
(f)
|
any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:
|
|
(i)
|
any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or
|
|
(ii)
|
any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or
|
|
(iii)
|
a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or
|
|
(iv)
|
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or
|
|
(v)
|
any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or
|
(g)
|
any of the following occurs in relation to a Relevant Person:
|
|
(i)
|
a Relevant Person becomes, in the opinion of the Lender, unable to pay its debts as they fall due; or
|
|
(ii)
|
any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or
|
|
(iii)
|
any administrative or other receiver is appointed over any asset of a Relevant Person; or
|
|
(iv)
|
a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or
|
|
(v)
|
a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or
|
|
(vi)
|
a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or
|
|
(vii)
|
any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or
|
|
(viii)
|
in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Lender, is similar to any of the foregoing; or
|
(h)
|
the Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, is material in the context of this Agreement; or
|
(i)
|
it becomes unlawful in any Pertinent Jurisdiction or impossible:
|
|
(i)
|
for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or
|
|
(ii)
|
for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or
|
(j)
|
any consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Lender considers material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or
|
(k)
|
it appears to the Lender that, without its prior consent, a change has occurred or probably has occurred after the date of this Agreement in the ultimate beneficial ownership of any of the shares in the Borrower or the Approved Manager or in the ultimate control of the voting rights attaching to any of those shares; or
|
(l)
|
any provision which the Lender considers material of a Finance Document proves to have
been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or
|
(m)
|
the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
|
(n)
|
the Ship ceases to be managed by the Approved Manager on the terms of the Management Agreement, unless prior to such cessation, the Borrower has appointed a substitute manager or managers acceptable to the Lender in all respects; or
|
(o)
|
any other event occurs or any other circumstances arise or develop including, without limitation:
|
|
(i)
|
a change in the financial position, state of affairs or prospects of the Borrower, the Approved Manager or the Corporate Guarantor; or
|
|
(ii)
|
any accident or other event involving the Ship or another vessel owned, chartered or operated by a Relevant Person,
|
18.2
|
Actions following an Event of Default.
On, or at any time after, the occurrence of an Event of Default the Lender may:
|
(a)
|
serve on the Borrower a notice stating that all obligations of the Lender to the Borrower under this Agreement are terminated; and/or
|
(b)
|
serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or
|
(c)
|
take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Lender is entitled to take under any Finance Document or any applicable law.
|
18.3
|
Existing rights unaffected.
The Lender shall not be obliged to exercise any of its rights under Clause 18.2; and those rights shall be without prejudice and in addition to any other right or remedy to which the Lender is entitled (whether under the general law or any document).
|
18.4
|
Termination of Loan.
On the service of a notice under paragraph (a) of Clause 18.2 all other obligations of the Lender to the Borrower under this Agreement, shall terminate.
|
18.5
|
Acceleration of Loan.
On the service of a notice under paragraph (b) of Clause 18.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.
|
18.6
|
Multiple notices; action without notice.
The Lender may serve notices under paragraphs (a) and (b) of Clause 18.2 simultaneously or on different dates and it may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.
|
18.7
|
Exclusion of Lender liability.
Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrower or a Security Party:
|
(a)
|
for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or
|
(b)
|
as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,
except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been by the gross negligence or the wilful misconduct of the Lender's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees.
|
18.8
|
Relevant Persons.
In this Clause 18 "
a Relevant Person
" means the Borrower, each Security Party and any other member of the Group.
|
18.9
|
Interpretation.
In Clause 18.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 18.1(g) "
petition
" includes an application.
|
19
|
FEES AND EXPENSES
|
19.1
|
Management and commitment fees.
The Borrower shall pay to the Lender:
|
(a)
|
not later than the date falling 10 Business Days after the Drawdown Date in respect of Tranche A, a non-refundable management fee of $220,000 (representing 1.1 per cent. of the maximum amount of the Loan); and
|
(b)
|
quarterly in arrears during the period from and including the date of this Agreement to the earlier of (i) the Drawdown Date in respect of Tranche B and (ii) the last day of the Availability Period and on the last day of that period, a non-refundable commitment fee of 0.85 per cent. per annum of the undrawn amount of the Loan.
|
19.2
|
Costs of negotiation, preparation etc.
The Borrower shall pay to the Lender on its demand the amount of all expenses incurred by the Lender in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.
|
19.3
|
Costs of variations, amendments, enforcement etc.
The Borrower shall pay to the Lender, on the Lender's demand, the amount of all expenses incurred by the Lender in connection with:
|
(a)
|
any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;
|
(b)
|
any consent or waiver by the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;
|
(c)
|
the valuation of any security provided or offered under Clause 14 or any other matter relating to such security; or
|
(d)
|
any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.
|
19.4
|
Documentary taxes.
The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender's demand, fully indemnify the Lender against any liabilities and expenses resulting from any failure or delay by the Borrower to pay such a tax.
|
19.5
|
Certification of amounts.
A notice which is signed by two officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
|
20
|
INDEMNITIES
|
20.1
|
Indemnities regarding borrowing and repayment of Loan.
The Borrower shall fully indemnify the Lender on its demand in respect of all expenses, liabilities and losses which are incurred by the Lender, or which the Lender reasonably and with due diligence
estimates that it will incur, as a result of or in connection with:
|
(a)
|
a Tranche not being borrowed on the date specified in the Drawdown Notice applicable thereto for any reason other than a default by the Lender;
|
(b)
|
the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;
|
(c)
|
any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 6);
|
(d)
|
the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,
|
20.2
|
Breakage costs.
Without limiting its generality, Clause 20.1 covers any liability, expense or loss, incurred by the Lender:
|
(a)
|
in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and
|
(b)
|
in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or a number of transactions of which this Agreement is one.
|
20.3
|
Miscellaneous indemnities.
The Borrower shall fully indemnify the Lender on its demand in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind ("
liability items
") which may be made or brought against, or incurred by, the Lender, in any country, in relation to:
|
(a)
|
any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document; and
|
(b)
|
any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document,
|
20.4
|
Environmental indemnity.
Without prejudice to its generality, Clause 20.3 covers any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code or any Environmental Law.
|
20.5
|
Currency indemnity.
If any sum due from the Borrower or any Security Party to the Lender under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the "
Contractual Currency
") into another currency (the "
Payment Currency
") for the purpose of:
|
(a)
|
making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or
|
(b)
|
obtaining an order or judgment from any court or other tribunal; or
|
(c)
|
enforcing any such order or judgment,
|
20.6
|
Certification of amounts.
A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
|
21
|
NO SET-OFF OR TAX DEDUCTION
|
21.1
|
No deductions.
All amounts due from the Borrower under a Finance Document shall be paid:
|
(a)
|
without any form of set-off, cross-claim or condition; and
|
(b)
|
free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.
|
21.2
|
Grossing-up for taxes.
If the Borrower is required by law to make a tax deduction from any payment:
|
(a)
|
the Borrower shall notify the Lender as soon as it becomes aware of the requirement;
|
(b)
|
the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and
|
(c)
|
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.
|
21.3
|
Evidence of payment of taxes.
Within one month after making any tax deduction, the Borrower shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.
|
21.4
|
Exclusion of tax on overall net income.
In this Clause 21 "
tax deduction
" means any deduction or withholding for or on account of any present or future tax except tax on the Lender's overall net income.
|
22
|
ILLEGALITY, ETC
|
22.1
|
Illegality.
This Clause 22 applies if the Lender notifies the Borrower that it has become, or will with effect from a specified date, become:
|
(a)
|
unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
|
(b)
|
contrary to, or inconsistent with, any regulation,
|
22.2
|
Notification and effect of illegality.
On the Lender notifying the Borrower under Clause 22.1, the Lender's obligation to make the Loan available shall terminate; and thereupon or, if later, on the date specified in the Lender's notice under Clause 22.1 as the date on which the notified event would become effective the Borrower shall prepay the Loan in full in accordance with Clause 7.
|
22.3
|
Mitigation
. If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 22.3, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:
|
(a)
|
have an adverse effect on its business, operations or financial condition; or
|
(b)
|
involve it in any activity which is unlawful or prohibited or any activity that is contrary
to, or inconsistent with, any regulation; or
|
(c)
|
involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.
|
23
|
INCREASED COSTS
|
23.1
|
Increased costs.
This Clause 23 applies if the Lender notifies the Borrower that it considers that as a result of:
|
(a)
|
the introduction or alteration after the date of this Agreement of a law, or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or
|
(b)
|
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,
|
23.2
|
Meaning of "increased costs".
In this Clause 23, "
increased costs
" means:
|
(a)
|
an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining the Loan or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums; or
|
(b)
|
a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital;
|
(c)
|
an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan; or
|
(d)
|
a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement,
|
23.3
|
Payment of increased costs.
The Borrower shall pay to the Lender, on its demand, the amounts which the Lender from time to time notifies the Borrower that it has specified to be necessary to compensate it for the increased cost.
|
23.4
|
Notice of prepayment.
If the Borrower is not willing to continue to compensate the Lender for the increased cost under Clause 23.2, the Borrower may give the Lender not less than 14 days' notice of its intention to prepay the Loan at the end of an Interest Period.
|
23.5
|
Prepayment
A notice under Clause 23.4 shall be irrevocable; and on the date specified in the Borrower's notice of intended prepayment, the Loan shall terminate and the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the applicable Margin.
|
23.6
|
Application of prepayment.
Clause 7 shall apply in relation to the prepayment.
|
24
|
SET-OFF
|
24.1
|
Application of credit balances.
The Lender may without prior notice:
|
(a)
|
apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of the Lender in or towards satisfaction of any sum then due from the Borrower to the Lender under any of the Finance Documents; and
|
(b)
|
for that purpose:
|
|
(i)
|
break, or alter the maturity of, all or any part of a deposit of the Borrower;
|
|
(ii)
|
convert or translate all or any part of a deposit or other credit balance into Dollars; and
|
|
(iii)
|
enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.
|
24.2
|
Existing rights unaffected.
The Lender shall not be obliged to exercise any of its rights under Clause 24.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document).
|
24.3
|
No Security Interest.
This Clause 24 give the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.
|
25
|
TRANSFERS AND CHANGES IN LENDING OFFICE
|
25.1
|
Transfer by Borrower.
The Borrower may not, without the consent of the Lender:
|
(a)
|
transfer any of its rights or obligations under any Finance Document; or
|
(b)
|
enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.
|
25.2
|
Assignment by Lender.
The Lender may assign all or any of the rights and interests which it has under or by virtue of the Finance Documents without the consent of the Borrower.
|
25.3
|
Rights of assignee.
In respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document, or any misrepresentation made in or in connection with a Finance Document, a direct or indirect assignee of any of the Lender's rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee as a result of the breach or misrepresentation irrespective of whether the Lender would have incurred a loss of that kind or amount.
|
25.4
|
Sub-participation; subrogation assignment.
The Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.
|
25.5
|
Disclosure of information.
The Lender may disclose to a potential assignee or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.
|
25.6
|
Change of lending office.
The Lender may change its lending office by giving notice to the Borrower and the change shall become effective on the later of:
|
(a)
|
the date on which the Borrower receives the notice; and
|
(b)
|
the date, if any, specified in the notice as the date on which the change will come into effect.
|
26
|
VARIATIONS AND WAIVERS
|
26.1
|
Variations, waivers etc. by Lender.
A document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or the Lender's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax by the Borrower and the Lender and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.
|
26.2
|
Exclusion of other or implied variations.
Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
|
(a)
|
a provision of this Agreement or another Finance Document; or
|
(b)
|
an Event of Default; or
|
(c)
|
a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or
|
(d)
|
any right or remedy conferred by any Finance Document or by the general law,
|
27
|
NOTICES
|
27.1
|
General.
Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
|
27.2
|
Addresses for communications.
A notice shall be sent:
|
(a)
|
to the Borrower:
|
c/o Eurobulk Ltd.
4 Messogiou & Evropis Street
Maroussi
Athens 151 24
Greece
Fax No: +30 211 18 04 097
|
(b)
|
to the Lender::
|
9 Quai du President Paul Doumer
92400 Courbevoie
La Defense, Paris
France
Fax No: +331 4189 2987
Attn: Shipping Department
|
27.3
|
Effective date of notices.
Subject to Clauses 27.4 and 27.5:
|
(a)
|
a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and
|
(b)
|
a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.
|
27.4
|
Service outside business hours.
However, if under Clause 27.3 a notice would be deemed to be served:
|
(a)
|
on a day which is not a business day in the place of receipt; or
|
(b)
|
on such a business day, but after 5 p.m. local time,
|
27.5
|
Illegible notices.
Clauses 27.3 and 27.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.
|
27.6
|
English language.
Any notice under or in connection with a Finance Document shall be in English.
|
27.7
|
Valid notices.
A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:
|
(a)
|
the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
|
(b)
|
in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.
|
27.8
|
Meaning of "notice".
In this Clause "
notice
" includes any demand, consent, authorisation, approval, instruction, waiver or other communication.
|
28
|
SUPPLEMENTAL
|
28.1
|
Rights cumulative, non-exclusive.
The rights and remedies which the Finance Documents give to the Lender are:
|
(a)
|
cumulative;
|
(b)
|
may be exercised as often as appears expedient; and
|
(c)
|
shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.
|
28.2
|
Severability of provisions.
If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.
|
28.3
|
Counterparts.
A Finance Document may be executed in any number of counterparts.
|
28.4
|
Third party rights.
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
|
29
|
LAW AND JURISDICTION
|
29.1
|
English law.
This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
|
29.2
|
Exclusive English jurisdiction.
Subject to Clause 29.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.
|
29.3
|
Choice of forum for the exclusive benefit of the Lender.
Clause 29.2 is for the exclusive benefit of the Lender, which reserves the rights:
|
(a)
|
to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to Dispute; and
|
(b)
|
to commence such proceedings in the courts of any such country or countries
concurrently with or in addition to proceedings in England or without commencing proceedings in England.
|
29.4
|
Process agent.
The Borrower irrevocably appoints Hill Dickinson Services Limited at their office for the time being, presently at Irongate House, Duke's Place, London EC3A 7LP, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.
|
29.5
|
Lender's rights unaffected.
Nothing in this Clause 29 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
|
29.6
|
Meaning of "proceedings".
In this Clause 29, "
proceedings
" means proceedings of any kind, including an application for a provisional or protective measure and a "
Dispute
" means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligations arising out of or in connection with this Agreement.
|
1
|
We refer to the loan agreement (the "
Loan Agreement
") dated [
l
] December 2010 and made between us, as Borrower, and you, as Lender, in connection with a facility of up to US$20,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
|
2
|
We request to borrow Tranche [A][B] as follows:
|
(a)
|
Amount: US$[
l
];
|
(b)
|
Drawdown Date: [ ];
|
(c)
|
Duration of the first Interest Period shall be [ ] months;
|
(d)
|
Payment instructions : account in our name and numbered [ ] with [ ] of [ ].
|
3
|
We represent and warrant that:
|
(a)
|
the representations and warranties in Clause 9 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing;
|
(b)
|
no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Loan.
|
4
|
This notice cannot be revoked without the prior consent of the Lender.
|
1
|
A duly executed original of each of this Agreement, the Corporate Guarantee, the Accounts Pledge and the Negative Pledge.
|
2
|
Copies of the certificate of incorporation and constitutional documents of each of the Borrower and the Corporate Guarantor.
|
3
|
Copies of resolutions of the shareholders and directors of each of the Borrower and the Corporate Guarantor authorising the execution of each of the Finance Documents to which the Borrower or the Corporate Guarantor is a party and, in the case of the Borrower, authorising named officers or attorneys-in-fact to give each Drawdown Notice and other notices under this Agreement.
|
4
|
The original of any power of attorney under which any Finance Document is executed on behalf of each of the Borrower or the Corporate Guarantor.
|
5
|
Copies of all consents which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document.
|
6
|
The originals of any mandates or other documents required in connection with the opening or operation of the Operating Account and the Retention Account.
|
7
|
A valuation of the Financed Ship, addressed to the Lender, stated to be for the purposes of this Agreement and dated not earlier than 30 days before the Drawdown Date in respect of Tranche A, from an independent sale and purchase shipbroker selected by the Lender.
|
8
|
Such documents as the Lender may require for its know your customer and its other customary money laundering checks.
|
9
|
Documentary evidence that the agent for service of process named in Clause 29 has accepted its appointment.
|
10
|
Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of Liberia and such other relevant jurisdictions as the Lender may require.
|
11
|
If the Lender so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Lender.
|
1
|
A duly executed original of the Mortgage, the General Assignment and the Time Charter Assignment in respect of the Initial Time Charter and, if applicable, the Charter Guarantee.
|
2
|
Documentary evidence that:
|
(a)
|
the Financed Ship is definitively and permanently registered in the name of the Borrower under Liberian flag;
|
(b)
|
the Financed Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents;
|
(c)
|
the Financed Ship maintains the classification specified in Clause 13.3(b) with Germanischer Lloyd free of all recommendations and conditions of such classification society affecting the Financed Ship's class;
|
(d)
|
the Mortgage has been duly registered against the Financed Ship as a valid first preferred Liberian ship mortgage in accordance with the laws of the Republic of Liberia; and
|
(e)
|
the Financed Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of Insurances have been complied with.
|
3
|
Documents establishing that the Financed Ship will, as from the Drawdown Date in respect of Tranche A, be managed by the Approved Manager on terms acceptable to the Lender, together with:
|
(a)
|
the Manager's Undertaking duly executed by the Approved Manager;
|
(b)
|
a copy of the Management Agreement;
|
(c)
|
copies of the Approved Manager's Document of Compliance and the Safety Management Certificate for the Financed Ship; and
|
(d)
|
copies of the ISPS Code Documentation in respect of the Financed Ship.
|
4
|
A favourable opinion from an independent insurance consultant acceptable to the Lender on such matters relating to the insurances for the Financed Ship as the Lender may require.
|
5
|
Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of Liberia and such other relevant jurisdictions as the Lender may require
|
1
|
A duly executed original of each of the Collateral Finance Documents (and of each document required to be delivered under each Finance Document).
|
2
|
Copies of the resolutions of the shareholders and directors of the Collateral Owner authorising the execution of each of the Collateral Finance Documents and authorising named officers and attorneys-in-fact to give any notices under the Collateral Finance Documents.
|
3
|
The original of any power of attorney under which any Collateral Finance Document is executed on behalf of the Collateral Owner.
|
4
|
Documentary evidence that:
|
(a)
|
the Collateral Ship is definitely and permanently registered in the name of the Collateral Owner under Marshall Islands flag;
|
(b)
|
the Collateral Ship is in the absolute and unencumbered ownership of the Collateral Owner save as contemplated by the Collateral Finance Documents and the Finance Documents (as that term is defined in the Prospero Loan Agreement);
|
(c)
|
the Collateral Mortgage has been duly registered against the Collateral Ship as a valid second preferred Marshall Islands ship mortgage in accordance with the laws of the Republic of the Marshall Islands;
|
(d)
|
the Collateral Ship is insured in accordance with the requirements of this Agreement and of the Prospero Loan Agreement and all requirements therein in respect of insurances have been complied with.
|
6
|
A copy of the Initial Time Charter duly executed by the parties thereto.
|
7
|
Evidence satisfactory to the Lender that the Financed Ship has been unconditionally delivered to, and accepted by, the Time Charterer for operation under the Initial Time Charter.
|
8
|
Confirmation from the Lender that the terms of the Initial Time Charter are in all respects acceptable to it and its legal advisers.
|
9
|
All financial information in relation to the Time Charterer and if applicable, the Charter Guarantor, as may be required by the Lender such financial information to be in form and substance satisfactory to the Lender.
|
10
|
Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Marshall Islands and such other relevant jurisdictions as the Lender may require.
|
SIGNED by Stefania Karmiri
|
)
|
/ s/ Stefania Karmiri |
)
|
||
for and on behalf of
|
)
|
|
NOUMEA SHIPPING LTD
|
)
|
|
in the presence of: George Macheras
|
)
|
/s/ George Macheras |
SIGNED by Dimitris Karamacheras
|
)
|
/s/ Dimitris Karamacheras |
)
|
||
attorney-in-fact
|
)
|
|
for and on behalf of
|
)
|
|
CRÉDIT AGRICOLE CORPORATE
|
)
|
|
AND INVESTMENT BANK
|
)
|
|
in the presence of: George Macheras
|
)
|
/s/ George Macheras |
(1)
|
AGGELIKI SHIPPING LTD,
a company incorporated under the laws of Republic of Liberia whose registered address is at 80 Broad Street, Monrovia, Liberia (the
"Borrower");
and
|
|
|
(2)
|
DVB BANK SE,
acting through its office at Ballindamm 6, D20095 Hamburg, Federal Republic of Germany (the
"Lender").
|
(A)
|
The Borrower has purchased the Vessel from the Seller on the terms of the MOA and is the registered owner of the Vessel under the flag of the Republic of Liberia.
|
|
|
(B)
|
The Lender has agreed to advance to the Borrower up to the lesser of (a) $8,500,000 and (b) 75% of the Fair Market Value of the Vessel (to be determined pursuant to the valuation(s) to be obtained under Clause 3.1 not earlier than two (2) weeks prior to the Drawdown Date) to assist the Borrower to re-finance part of the purchase price of the Vessel as evidenced by the MOA.
|
1
|
Definitions and Interpretation
|
|
1.1
|
In this Agreement:
|
|
(a)
|
moneys borrowed;
|
|
|
|
|
(b)
|
any acceptance credit;
|
|
|
|
|
(c)
|
any bond, note, debenture, loan stock or similar instrument;
|
|
|
|
|
(d)
|
any finance or capital lease;
|
|
|
|
|
(e)
|
receivables sold or discounted (other than on a non-recourse basis);
|
|
|
|
|
(f)
|
deferred payments for assets or services;
|
|
|
|
|
(g)
|
any derivative transaction, including container freight derivatives 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.
|
|
|
|
|
(a)
|
the rate per annum equal to the offered quotation for deposits in Dollars in an amount comparable to the Loan (or any relevant part of the Loan) for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00 a.m. on the Determination Date of the relevant Interest Period (and, for the purposes of this Agreement,
"BBA Page LIBOR 01"
means the Reuters' page or such other page as may replace that page on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying British Bankers' Association Interest Settlement Rates for Dollars); or
|
|
|
|
|
(b)
|
if no rate is quoted on BBA Page LIBOR 01 on the Determination Date of the relevant Interest Period or if the Lender has provided a rate in compliance with Clause 7.10.1(a) for the relevant Interest Period, the Actual Rate for that Interest Period shall be the per annum rate used.
|
(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 hijacking, theft, condemnation as prize, confiscation or forfeiture of the Vessel (not falling within (b) above), unless the Vessel is released and returned to the possession of the Borrower within sixty (60) days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question.
|
|
|
|
|
1.2
|
In this Agreement:
|
|
1.3
|
Offer letter
|
|
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 purposes 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.
|
|
|
|
|
3.1
|
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; and
|
|
|
|
|
|
|
3.2.3
|
there are no events or series of events, which in the reasonable opinion of the Lender are likely to have a material adverse effect on the business, assets, financial condition or credit worthiness of a Security Party.
|
|
|
|
|
|
|
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 the date specified by the Lender. |
|
3.5
|
Form and content
All documents and evidence delivered to the Lender under this Clause 3 shall:
|
|
3.5.1
|
be in form and substance acceptable to the Lender, such acceptance not to be unreasonably withheld; and
|
|
|
|
|
3.5.2
|
if required by the Lender, be certified, notarised, legalised or attested in a manner, acceptable to the Lender, such acceptance not to be unreasonably withheld.
|
|
|
|
|
5.1
|
Repayment of Loan
The Borrower agrees to repay the Loan to the Lender in the Repayment Instalments and on the Repayment Dates set out in Schedule 2 and in any event the final Repayment Instalment for the Loan shall fall due not later than the Final Maturity Date. The Repayment Dates set out in Schedule 2 shall be adjusted in accordance with the actual Drawdown Date.
|
|
|
|
|
5.2
|
Reduction of Repayment Instalments
If the aggregate amount advanced to the Borrower is less than $8,500,000, the amount of each Repayment Instalment shall be reduced pro rata to the amount actually advanced.
|
|
|
|
|
5.3
|
Reborrowing
The Borrower may not reborrow any part of the Loan which is repaid or prepaid.
|
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 on any Interest Payment Date (but, if in part, being an amount that reduces the Loan by a minimum amount of $1,000,000 or an 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;
|
|
|
|
|
6.2.2
|
it pays to the Lender, in addition to the amount prepaid, a fee of an amount equal to (a) two per cent (2%) of the amount prepaid if such prepayment occurs until the second anniversary of the Drawdown Date to occur and (b) one per cent (1 %) of the amount prepaid if such prepayment occurs from the second anniversary of the Drawdown Date until the end of the Facility Period;
|
|
6.2.3
|
any prepayment under this Clause 6.2 shall satisfy the obligations under Clause 5.1
(Repayment of Loan)
in inverse order of maturity.
|
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 or within ninety (90) days after any such Total Loss, prepay the whole of the Indebtedness. In the case of a sale, the Borrower shall, simultaneously with that sale, pay to the Lender, in addition to the amount prepaid, a fee of an amount equal to (a) two per cent (2%) of the amount prepaid if such prepayment occurs on or prior to the second anniversary of the Drawdown Date to occur and (b) one per cent (1%) of the amount prepaid if such prepayment occurs from the second anniversary of the Drawdown Date until the end of the Facility Period. For the avoidance of doubt, no prepayment fee is payable to the Lender in case prepayment is made in case of the Vessel becoming a Total Loss or in case of sale of the Vessel after the second anniversary of the Drawdown Date, or in case of all or any part of the Loan being re-financed with the Lender.
|
|
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.
|
|
7.1
|
Interest Periods
The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of three, six, nine or twelve 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.
|
|
|
|
|
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 and (b) LIBOR or the Actual Rate (whichever is applicable).
|
|
|
|
|
7.6
|
Fixed interest rate option
The Borrower may, subject to giving the Lender not fewer than five (5) Business Days' prior written notice expiring on a Business Day of their intention to do so, and subject to availability and the Lender's prior written approval, request that the interest rate of all or a substantial part of the Loan be fixed for a period exceeding twelve (12) months. During such fixed interest rate period interest shall accrue on the part of the Loan on which interest rate has been fixed at the rate determined by the Lender to be the aggregate of (a) the Margin and (b) the actual interest rate which shall be available to the Lender for that interest period.
|
|
|
|
|
7.7
|
Failure to select Interest Period
If
the Borrower at any time fail 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 such duration (not exceeding three (3) months) as the Lender may select.
|
|
|
|
|
7.8
|
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 (3) months, on the dates falling at three (3) monthly intervals after the first day of that Interest Period.
|
|
|
|
|
7.9
|
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 7.9 shall be immediately payable by the Borrower on demand by the Lender. If unpaid, any such interest will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
|
7.10
|
Actual rate
|
|
7.10.1
|
(a) If at any time the Lender determines at its absolute discretion (which determination shall be final and conclusive and binding on the Borrower) that the actual rate quoted to the Lender in the ordinary course of its business (including, without limitation, broker quotes to the Lender of funding rates available in the European financial markets) to fund the Loan (or any part of it) for the relevant Interest Period is higher than the rate appearing on BBA Page LIBOR 01 determined under paragraph (a) of the definition of LIBOR in Clause 1 for that Interest Period or (b) if no rate is quoted on BBA Page LIBOR 01 at 11:00 a.m. on the Determination Date for the relevant Interest Period, the Lender shall as soon as practicable, and in any event no later than the first day of that Interest Period, inform the Borrower of the rate quoted to that Lender in the ordinary course of its business (including, without limitation, broker quotes to the Lender of funding rates available in the European financial markets) to fund the Loan (or any part of it) for that Interest Period.
|
|
|
|
|
7.10.2
|
Where the Lender provides the Borrower with a rate under Clause 7.10.1, that rate (the "
Actual Rate
") shall apply for the relevant Interest Period.
|
|
|
|
|
7.10.3
|
For the purposes of this Clause 7.10, the Lender may determine its funding rate for the relevant Interest Period by obtaining one or more broker quotes in the ordinary course of its business and where more than one such quote is obtained then the weighted average of quotes obtained by the Lender shall prevail. For the avoidance of doubt, the funding rate determined by the Lender shall be deemed to be the benchmark in substitution of BBA Page LIBOR 01 for the relevant Interest Period, however, there shall be no obligation on the Lender to actually refinance on a back-to-back basis its funding for the relevant Interest Period as a condition to such substitution.
|
|
7.10.4
|
The Actual Rate that shall apply for the relevant Interest Period in accordance with this Clause 7.10 shall not be higher than the actual rate that has been quoted to the Lender under Clause 7.10.1.
|
|
|
|
|
7.11
|
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.
|
|
8.1
|
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); and
|
|
|
|
|
8.1.3
|
any other document which may at any time be reasonably 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 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.
|
|
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 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;
|
and the result of any of the above shall be to materially increase the cost to the Lender (or to the holding company of the Lender) of the Lender making or maintaining the Loan, or to cause the Lender to suffer (in its reasonable opinion) a material reduction in the rate of return on its overall capital below the level which it reasonably anticipated at the date of this Agreement and which it would have been able to achieve but for its entering into this Agreement and/or performing its obligations under this Agreement, or to cause a reduction in any amount due and payable to the Lender under any of the Finance Documents, then, subject to Clause 8.6 (Exceptions to increased costs), the Lender shall notify the Borrower and the Borrower shall from time to time pay to the Lender on demand the amount which shall compensate the Lender (or the holding company of the Lender) for such additional cost or reduced return or reduced amount. A certificate signed by an authorised signatory of the Lender setting out the amount of that payment and the basis of its calculation shall be submitted to the Borrower and shall be conclusive evidence of such amount save for manifest error or on any question of law. | ||
For the purposes of this Clause 8.5; | ||
"Basel II Accord" means the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement; | ||
"Basel II Approach" means, in relation to the Lender, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Accord) adopted by the Lender (or its holding company) for the purpose of implementing or complying with the Basel II Accord; |
8.7
|
Events of Default
The Borrower shall indemnify the Lender from time to time promptly 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.
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8.8
|
Enforcement costs
The Borrower shall pay to the Lender promptly 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.
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8.9
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Other costs
The Borrower shall pay to the Lender promptly 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.
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8.10
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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 promptly 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.
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9
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Arrangement Fee
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10
|
Security and Application of Moneys
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10.1
|
Security Documents
As security for the payment of the Indebtedness, the Borrower shall execute and deliver to the Lender or cause to be executed and delivered to the Lender the following documents in such forms and containing such terms and conditions as the Lender shall require:
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10.1.1
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a first preferred mortgage over the Vessel;
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10.1.2
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a first priority deed or deeds of assignment of the Insurances, Earnings, Charters and Requisition Compensation of the Vessel from the Borrower and any bareboat charterer, including (in the case of a bareboat charterer) an agreement whereby its interests under a bareboat charter are subordinated to the interests of the Lender under the Mortgage;
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10.1.3
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a guarantee and indemnity from the Guarantor;
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10.1.4
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a first priority deed of charge over the Earnings Account and all amounts from time to time standing to the credit of the Earnings Account; and
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10.1.5
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a first priority pledge of all the issued shares of the Borrower.
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10.2
|
Earnings Account
The Borrower shall maintain the Earnings Account with the Account Holder 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.
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10.3
|
Earnings
The
Borrower shall procure that all Earnings and any Requisition Compensation are credited to the Earnings Account.
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10.4
|
Application of Earnings Account
The Borrower shall procure that there is transferred from the Earnings Account to the Lender:
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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.
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10.6
|
Release of surplus
Any amount remaining to the credit of the Earnings Account following the making of any transfer 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.
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10.7
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Restriction on withdrawal
During the Facility Period no sum may be withdrawn from the Earnings Account (except in accordance with this Clause 10) without the prior written consent of the Lender, such consent not to be unreasonably withheld.
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10.8
|
Access to information The
Borrower agrees that the Lender (and its nominees) may from time to time during the Facility Period review the records held by the Account Holder (whether in written or electronic form) in relation to the Earnings Account, and irrevocably waives any right of confidentiality which may exist in relation to those records.
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10.9
|
Statements
Without prejudice to the rights of the Lender under Clause 10.8
(Access. to information),
the Borrower will procure that the Account Holder provides to the Lender, no less frequently than each calendar month during the Facility Period, written statements of account showing all entries made to the credit and debit of the Earnings Account during the immediately preceding calendar month.
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10.10
|
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 10.11
(General application of moneys)
and the Borrower irrevocably authorise the Lender to instruct the Account Holder to make those transfers.
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10.11
|
General application of moneys
The Borrower, subject to Clause 10.12
(Application of moneys on sale or Total Loss),
irrevocably authorises the Lender to apply all sums which the Lender may receive:
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10.11.1
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pursuant to a sale or other disposition of the Vessel or any right, title or interest in the Vessel; or
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10.11.2
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by way of payment of any sum in respect of the Insurances, Earnings, Charters or Requisition Compensation; or
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10.11.3
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by way of transfer of any sum from the Earnings Account; or
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10.11.4
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otherwise arising under or in connection with any Security Document,
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(a)
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firstly in or towards payment of all sums other than principal or interest which may be due to the Lender under the Finance Documents;
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(b)
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secondly in or towards any arrears or interest (including interest at the rate determined in accordance with Clause 7.9) due in respect of the Loan;
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(c)
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thirdly in or towards interest due at the time of payment;
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(d)
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fourthly in or towards repayment of the Loan;
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(e)
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fifthly the surplus, (if any), shall be paid to the Borrower or to whoever else be entitled thereto.
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10.12
|
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 of the Vessel or a Total Loss in or towards satisfaction of the prepayment due and payable by virtue of that sale or Total Loss under Clause 6.3
(Mandatory prepayment on 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.
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10.13
|
Additional security
If at any time 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 reasonable discretion (in all other cases)) for the time being provided to the Lender under this Clause 10.13 is less than one hundred and thirty three per cent (133%) of the amount of the Loan then outstanding, the Borrower or the Guarantor shall, within thirty (30) days of the Lender's request, at the Borrower's or the Guarantor's option (as the context requires):
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10.13.1
|
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 as additional security for the payment of the Indebtedness; or
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10.13.2
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give to the Lender other additional security in amount and form acceptable to the Lender in its reasonable discretion; or
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10.13.3
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prepay the Loan in the amount of the shortfall.
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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.
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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.
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11.1.2
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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.
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11.1.3
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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:
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(a)
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any law or regulation applicable to that Security Party;
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(b)
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the constitutional documents of that Security Party; or
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(c)
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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.
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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.
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11.1.5
|
Validity and admissibility in evidence
All consents, licences, approvals, authorisations, filings and registrations required or desirable:
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(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
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(b)
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to make the Finance Documents to which any Security Party is a party admissible in evidence in its jurisdiction of incorporation, have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part
II
of Schedule
1
(Conditions subsequent).
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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.
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11.1.14
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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.
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11.1.15
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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.
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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.
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12.1.1
|
Financial statements
The Borrower shall supply to the Lender as soon as the same become available, but in any event within 150 days after the end of each of its financial years, its balance sheets and profit and loss accounts for that financial year and shall procure that the Guarantor supplies to the Lender as soon as the same become available, but in any event within 150 days after the end of the Guarantor's financial years, the Guarantor's audited consolidated financial statements (including consolidated balance sheets and profit and loss accounts and explanatory notes from the auditors) for that financial year, in each case to be supplemented by updated details of all off-balance sheet and time charter hire commitments, together with a Compliance Certificate, signed by two directors of the Borrower or the Guarantor (as the context requires), 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 or balance sheets and profit and loss accounts were drawn up.
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|||
12.1.2
|
Requirements as to financial statements
Each set of balance sheets and profit and loss accounts delivered by the Borrower and financial statements delivered by the Guarantor under Clause 12.1.1
(Financial statements):
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||
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(a)
|
shall be certified by a director of the Borrower or the Guarantor as fairly representing its financial condition as at the date as at which those financial statements and balance sheets and profit and loss accounts were drawn up; and
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||
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||
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(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 or balance sheets and profit and loss accounts, the Borrower or the Guarantor (as applicable) notifies the Lender that there has been a change in GAAP, the accounting practices or reference periods and the Borrower and the Guarantor's auditors deliver to the Lender:
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(i)
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a description of any change necessary for those financial statements or balance sheets and profit and loss accounts, to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and
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(ii)
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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 or balance sheets and profit and loss accounts and that indicated in the Original Financial Statements.
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12.1.3
|
Interim financial statements
The Borrower shall supply to the Lender and shall procure that the Guarantor supplies to the Lender as soon as the same become available, but in any event within 45 days after the end of each quarter during each of its financial years, the Borrower's and the Guarantor's quarterly management accounts for that quarter, together in each case with a Compliance Certificate, signed by two directors of the Borrower or Guarantor (as the context requires), setting out (in reasonable detail) computations as to compliance with Clause 12.2
(Financial covenants)
as at the date as at which those accounts were drawn up.
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12.1.4
|
Information: miscellaneous
The Borrower shall supply to the Lender:
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(a)
|
all material 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;
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(b)
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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
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(c)
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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.
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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.
|
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|
|
|
(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).
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1.2.1.6
|
"Know your customer" checks
If:
|
|
(a)
|
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
|
|
|
|
|
(b)
|
any change in the status of the Borrower 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,
|
obliges the Lender (or, in the case of (c) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender (for itself or, in the case of (c) above, on behalf of any prospective new Lender) in order for the Lender (or, in the case of (c) above, any prospective new Lender) to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents. |
|
12.2
|
Financial covenants |
|
12.2.1
|
Borrower's financial covenants
The Borrower shall at all times during the Facility Period maintain minimum Cash at least equal to three hundred thousand Dollars ($300,000).
|
|
12.2.2
|
Guarantor's financial covenants
The Borrower shall procure that the Guarantor shall at all times during the Facility Period maintain:-
|
|
(a)
|
Leverage of less than seventy five per cent (75%); and
|
|
|
|
|
(b)
|
Liquidity of an amount of not less than three hundred thousand Dollars ($300,000) per Fleet Vessel; and
|
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|
|
|
(c)
|
Net Worth of not less than fifteen million Dollars ($15,000,000).
|
|
12.3
|
General undertakings
|
|
12.3.1
|
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,
|
|
|
any consent, licence, approval or authorisation required under any law or regulation to enable each Security Party to perform its obligations under the Finance Documents to which it is a party and to ensure the legality, validity, enforceability or admissibility in evidence in the jurisdiction of incorporation of each relevant Security Party of any Finance Document.
|
|
12.3.2
|
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.
|
|
12.3.3
|
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).
|
|
12.3.4
|
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 and all corporate shareholders of any Security Party remain in good standing.
|
|
12.3.5
|
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 revenues or undertaking (other than Encumbrances created by operation of law which are immediately notified to the Lender and are discharged within ten (10) days from the date they are incurred) nor dispose of any of those assets or revenues or of all or part of that undertaking, unless reasonably incurred in the normal course of its business.
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|
12.3.6
|
Merger
The Borrower shall not without the prior written consent of the Lender enter into any amalgamation, demerger, merger or corporate reconstruction.
|
|
12.3.7
|
Change of business
The Borrower shall not without the prior written consent of the Lender make any substantial change to the general nature of its business from that carried on at the date of this Agreement.
|
|
12.3.8
|
No other business
The Borrower shall not without the prior written consent of the Lender engage in any business other than the ownership, operation, chartering and management of the Vessel.
|
|
12.3.9
|
No place of business in UK or US
The Borrower shall have an established place of business in the United Kingdom or the United States of America at any time during the Facility Period.
|
|
12.3.10
|
No borrowings
The Borrower shall not without the prior written consent of the Lender borrow any money (except for the Loan and unsecured Financial Indebtedness subordinated to the Loan) nor incur any obligations under leases.
|
|
12.3.11
|
No substantial liabilities
Except in the ordinary course of business, the Borrower shall not without the prior written consent of the Lender incur any liability to any third party which is in the Lender's reasonable opinion of a substantial nature.
|
|
12.3.12
|
No loans or other financial commitments
The Borrower shall not without the prior written consent of the Lender (such consent not to be unreasonably withheld) 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 or enter into any transaction (including derivative transactions) that may result in the incurrence of any additional indebtedness (except for inter-company loans, interest rate swaps and container freight derivatives).
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|
12.3.13
|
No dividends or non-arm's length transactions
The Borrower shall not without the prior written consent of the Lender (a) unless the Security Parties are in full compliance of all the provisions of the Finance Documents, pay any dividends or make any other distributions of revenue or capital nature to shareholders, issue any new shares or make any payments of principal or interest on amounts owed to related entities or persons or (b) enter into transactions with an affiliate other than on arm's length terms.
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|
12.3.14
|
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.
|
|
12.3.15
|
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) there shall be no termination of, alteration to, or waiver of any term of, any of the Relevant Documents which are not Finance Documents.
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|
12.3.16
|
Loans Administration Form
The Borrower shall provide a completed loans administration form (as provided by the Lender and substantially in the form set out in Schedule 5) which, inter alia, shall provide the Lender with the list of authorised persons
("Authorised Persons")
who, on behalf of the Security Parties, may make any information request or communicate generally with the Lender in relation to the ongoing administration of the Loan by the Lender throughout the Facility Period. The Authorised Persons shall also be the point of first contact with the Security Parties for the Lender in relation to the administration of the Loan. The list of Authorised Persons may only be amended and/or varied by an Authorised Person or Director of the relevant Security Party.
|
|
12.3.17
|
Notification of Event of Default
The Borrower will immediately notify the Lender in writing of the occurrence of any Event of Default or a potential Event of Default.
|
|
12.3.18
|
No repayments
The Borrower shall not without the prior written consent of the Lender (such consent not to be unreasonably withheld) repay any loans made to it, which shall include both principal and interest on debt to related entities or persons.
|
|
12.3.19
|
No change in ownership or control
The Borrower shall not permit and shall procure that no Security Party permits without the prior written consent of the Lender any change in its beneficial ownership and control from that advised to the Lender at the date of this Agreement, unless such change relates to the shareholders of the Guarantor trading shares in the normal course of business.
|
|
12.3.20
|
No change of Guarantor's CEO and Chairman
The Borrower shall procure that Mr. Aristides J. Pittas who is the CEO and Chairman of the Guarantor retains at least one of his capacities as CEO or Chairman.
|
|
12.3.21
|
No transaction with associated companies
The Borrower shall not without the prior written consent of the Lender, enter into any transactions (except on arm's length terms) with any associated companies or companies associated with the Guarantor, unless reasonably entered in the normal course of business.
|
|
12.3.22
|
Subordination of shareholder loans
The Borrower shall procure that any shareholder loans and/or inter company borrowings and all claims of the Guarantor or the Managers against the Borrower are fully subordinated to the Loan.
|
|
12.3.23
|
No cross-default
The Borrower shall procure that no Security Party or any subsidiary of the Guarantor defaults under any Financial Indebtedness, including without limitation:
|
|
(a)
|
any non-payment of any Financial Indebtedness when due or within any originally applicable grace period; or
|
|
|
|
|
(b)
|
any Financial Indebtedness 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)
|
any Financial Indebtedness is capable of being declared by a creditor to be due and payable before its specified maturity as a result of such an event.
|
|
12.3.24
|
Ownership
The Borrower undertakes to remain 100% owned (directly or indirectly) by the Guarantor.
|
|
12.4
|
V
essel undertakings
|
|
12.4.1
|
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.
|
|
12.4.2
|
No chartering
The Borrower shall not without the prior written consent of the Lender let the Vessel on a Charter or a bareboat charter or renew or extend any Charter or other contract of employment having a duration of more than 12 months (nor agree to do so).
|
|
12.4.3
|
No change in management
The Borrower shall procure that, without the prior written consent of the Lender, such consent not to be unreasonably withheld, there shall be no termination of, alteration to, or waiver of any term of, the Management Agreement in respect of the Vessel and the Borrower shall not without the prior written consent of the Lender, such consent not to be unreasonably withheld, permit the Managers to sub-contract or delegate the commercial or technical management of the Vessel to any third party.
|
|
12.4.4
|
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 in its reasonable discretion.
|
|
12.4.5
|
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, will provide the Lender with evidence of that Certificate, and will comply strictly with the requirements of that Act.
|
|
12.4.6
|
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 and provide a copy to the Lender;
|
|
|
|
|
(c)
|
procure that the ISM Company maintains a valid and current DOC throughout the Facility Period and provide a copy to the Lender; 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.
|
|
12.4.7
|
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 provide a copy to the Lender; and
|
|
|
|
|
(c)
|
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC of the Vessel.
|
|
|
|
|
12.4.8
|
Annex VI compliance
The Borrower will:
|
|
(a)
|
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;
|
|
|
|
|
(b)
|
maintain a valid and current IAPPC for the Vessel throughout the Facility Period and provide a copy to the Lender; and
|
|
|
|
|
(c)
|
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the IAPPC of the Vessel.
|
|
12.4.9
|
Valuations
The Borrower shall procure that valuations of the Vessel will be carried out semi-annually for the purposes of determining the Fair Market Value, at the cost of the Borrower and at any other time, as determined in the absolute discretion of the Lender, at the cost of the Lender. However, in case of a Default valuations (which may be carried out at any time) shall be at the cost of the Borrower.
|
|
12.4.10
|
No change in class
The Borrower shall class the Vessel with a classification society acceptable to the Lender and shall maintain such classification free of all recommendations and qualification for the duration of the Facility Period unless otherwise agreed by the Lender in writing and shall not change such classification society without the prior written consent of the Lender, such consent not to be unreasonably withheld. The Borrower shall advise the Lender in writing of the class and the classification society with which the Vessel shall be classified at least 15 days prior to the Drawdown Date. The Borrower shall send to the classification society of the Vessel a letter in form and substance acceptable to the Lender granting the Lender permission to access class records and other information from the classification society in relation to the Vessel during the Facility Period. That letter should also specify that if the Vessel has a condition of class imposed or a class recommendation issued, the classification society shall immediately inform the Lender by email at
techcom@dvbbank.com
and at
thibaud.ollivier@dvbbank.com
.
The Borrower shall arrange for the Lender to have electronic access to class records either (a) by way of the Lender being granted direct access from the classification society or (b) by way of indirect access via the Borrower's account manager and designating the Lender as a user or administrator of the system under its account.
|
|
12.4.11
|
Inspection of Vessel
The Borrower will permit the physical inspection of the Vessel by the Lender or its nominee at any time during the Facility Period, upon the request of the Lender. The Lender will use reasonable endeavours to ensure that the operation of the Vessel is not adversely affected as a result of any physical inspection. The Borrower will be liable for the cost of up to one physical inspection of the Vessel per calendar year, unless there is an Event of Default which is continuing, unremedied and unwaived, in which case the Borrower shall be liable for the costs of all such physical inspections. The Borrower shall comply with all reasonable requests from the Lender to repair the Vessel following a physical inspection.
|
|
12.4.12
|
Insurances
The Borrower shall advise the Lender at least 15 days prior to the Drawdown Date of the Vessel about the insurance brokers and clubs and about the main terms under which the Insurances shall be effected, all of which must be approved by the Lender and be acceptable to the Lender.
|
|
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.
|
|
13.1.2
|
Other obligations
A Security Party does not comply with any provision of any of the Security Documents to which that Security Party 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 a Security Party or any subsidiary of the Guarantor:
|
|
(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 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 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.
|
|
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;
|
|
|
|
|
(b)
|
a composition, compromise, assignment or arrangement with any creditor of a Security Party;
|
|
|
|
|
(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 any of its assets; or
|
|
|
|
|
(d)
|
enforcement of any Encumbrance over any assets of a Security Party, 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 asset or assets of a Security Party, which shall include without limitation the sale of the Vessel by public auction, private auction, private treaty sale or any other similar proceedings having been initiated.
|
|
13.1.8
|
Change in ownership or control of a Security Party
There is any change in the beneficial ownership or control of a Security Party (other than the Guarantor) from that advised to the Lender by the Borrower at the date of this Agreement, unless such change relates to the shareholders of the Guarantor trading shares in the normal course of business.
|
|
13.1.9
|
Change of Guarantor's CEO and Chairman
There is change of Mr. Aristides J. Pittas from both of his capacities as CEO and Chairman of the Guarantor.
|
|
13.1.10
|
Repudiation
A Security Party repudiates any of the Security Documents to which that Security Party is a party or evidences an intention to do so.
|
|
13.1.11
|
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.
|
|
13.1.12
|
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.
|
|
13.1.13
|
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.
|
|
13.1.14
|
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.
|
|
13.1.15
|
Reduction
of capital
A Security Party reduces its authorised or issued or subscribed capital.
|
|
13.1.16
|
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 unless, the Borrower or the Guarantor shall not, within ten (10) days of the Lender's request, provide to the Lender additional security acceptable to the Lender in its reasonable discretion, which shall only be released either upon full prepayment of the Indebtedness under Clause 6.3 or upon return of the Vessel to the Borrower in satisfactory condition to the Lender's reasonable discretion.
|
|
13.1.17
|
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 a Mortgage is contested.
|
|
13.1.18
|
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 or there is instability which may affect the country of the flag of the Vessel and the Lender in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced.
|
|
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 any subsidiary of the Guarantor.
|
|
13.1.21
|
Insurances
There is breach of the main terms under which the Insurances shall be effected from that advised to the Lender by the Borrower at the date of this Agreement.
|
|
13.2
|
Acceleration
If an Event of Default is continuing the Lender may by notice to the Borrower cancel any part of the Maximum Loan Amount not then advanced and:
|
|
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 other branch of the Lender or 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 (at Lender's no material costs); and irrevocably authorise 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.
|
|
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 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, that 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, 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 names of the Borrower showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrower's obligations to repay the Loan and to pay interest and all other sums due under this 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.
|
|
17.1
|
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, c/o Eurobulk Ltd. at 4 Messogiou & Evropis, Maroussi, Athens, Greece (fax no: 211 180 4097) marked for the attention of Mr. Aristides Pittas; and
|
|
|
|
|
17.2.2
|
in the case of the Lender, at its address at the head of this Agreement (fax no: +49 40 3080 0412) marked for the attention of: Loans Administration Department;
|
|
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:
|
|
17.3.1
|
if by way of fax, when received in legible form; or
|
|
|
|
|
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.
|
|
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 reasonable 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
|
Consent to disclosure
The Borrower shall, and shall procure that the Guarantor shall, irrevocably and unconditionally authorise the Lender to give, divulge and reveal from time to time information and details relating to its account, the Vessel, the Facility Documents, the Relevant Documents, the Loan and any agreement entered into by the Borrower and/or the Guarantor or information provided by the Borrower or the Guarantor in connection with the Facility Documents to (i) any private, public or internationally recognised authorities, (ii) the Lender's head offices, branches and affiliates and professional advisors, (iii) any other parties to the Facility Documents, (iv) a rating agency or their professional advisors, (v) any person with whom they propose to enter (or contemplate entering) into contractual relations in relation to the Loan and (vi) any other person(s) regarding the funding, re-financing, transfer, assignment, sale, sub-participation or operational arrangement or other transaction in relation thereto, including without limitation, any enforcement,
preservation, assignment, transfer, sale or sub-participation of any of the Lender's rights and obligations.
|
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 exclusive jurisdiction to settle any dispute (a) arising from or in connection with this Agreement or (h) 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 Hill Dickinson LLP, London England 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.
|
|
(a)
|
Constitutional Documents
Copies of the constitutional documents of each Security Party together with such other evidence as the Lender may reasonably require that each Security Party is duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.
|
|
|
|
|
|
|
(b)
|
Certificates of good standing
A certificate of good standing in respect of each Security Party (if such a certificate can be obtained).
|
|
|
|
|
|
|
(c)
|
Board resolutions
A copy of a resolution of the board of directors of each Security Party:
|
|
|
|
|
|
|
|
(i)
|
approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute those Relevant Documents; and
|
|
|
|
|
|
|
(ii)
|
authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or despatched under those documents) on its behalf.
|
|
|
|
|
|
(d)
|
Copy passports
A copy of the passport of each person authorised by the resolutions referred to in paragraph (c) above.
|
|
|
|
|
|
|
(e)
|
Shareholder resolutions
A copy of a resolution signed by all the holders of the issued shares in each Security Party, approving the terms of, and the transactions contemplated by, the Relevant Documents to which that Security Party is a party.
|
|
|
|
|
|
|
(f)
|
Officer's certificates
A certificate of a duly authorised officer of each Security Party certifying that each copy document relating to it specified in this Part I of Schedule 1 is correct, complete and in full force and effect and setting out the names of the directors, officers and shareholders of that Security Party and the proportion of shares held by each shareholder.
|
|
|
|
|
|
(g)
|
Evidence of registration
Where such registration is required or permitted under the laws of the relevant jurisdiction, evidence that the names of the directors, officers and shareholders of each Security Party are duly registered in the companies registry or other registry in the country of incorporation of that Security Party.
|
|
|
|
|
|
|
(h)
|
Powers of attorney
The
notarially attested and legalised power of attorney of each Security Party under which any documents are to be executed or transactions undertaken by that Security Party.
|
|
|
|
|
|
|
(i)
|
Capital structure
Evidence, in form and substance satisfactory to the Lender, of the capital structure (equity and subordinated debt) of the Borrower and the Guarantor.
|
|
|
|
|
|
2
|
Security and related documents
|
||
|
|
|
|
|
(a)
|
Vessel documents
Photocopies, certified as true, accurate and complete by a director or the secretary or the legal advisers of the Borrower, of:
|
|
|
|
|
|
|
|
(i)
|
the MOA;
|
|
|
|
|
|
|
(ii)
|
such documents as the Lender may reasonably require to evidence the nomination of the Borrower as purchaser of the Vessel pursuant to the MOA;
|
|
|
|
|
|
|
(iii)
|
any charterparty or other contract of employment of the Vessel which will be in force on the Drawdown Date (including without limitation. the Charter);
|
|
|
|
|
|
|
(iv)
|
the Management Agreement;
|
|
|
|
|
|
|
(v)
|
the Vessel's current Safety Construction, Safety Equipment, Safety Radio, Oil Pollution Prevention and Load Line Certificates;
|
|
|
|
|
|
|
(vi)
|
evidence of the Vessel's current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;
|
|
|
|
|
|
|
(vii)
|
the Vessel's current SMC;
|
|
|
|
|
|
|
(viii)
|
the ISM Company's current DOC;
|
|
|
|
|
|
|
(ix)
|
the Vessel's current ISSC;
|
|
|
(x)
|
the Vessel's current IAPPC;
|
|
|
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|
|
(xi)
|
the Vessel's current Tonnage Certificate; in each case together with all addenda, amendments or supplements.
|
|
|
|
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|
(b)
|
Evidence of Borrower's title
Certificate of ownership and encumbrance (or equivalent) issued by
the
Registrar of Ships (or equivalent official) of the flag stated in Recital (A) confirming that (a) the Vessel is permanently registered under that flag in the ownership of the Borrower, (b) the Mortgage has been registered with first priority against the Vessel
and
(c) there are no further Encumbrances registered against the Vessel.
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|
|
|
|
|
|
(c)
|
Evidence of insurance
Evidence that the Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Lender) the written approval of the Insurances by an insurance adviser appointed by the Lender.
|
|
|
|
|
|
|
(d)
|
Confirmation of class
A
Certificate of Confirmation of Class for hull and machinery confirming that the Vessel is classed with the highest class applicable to vessels of her type with Lloyd's Register or such other classification society as may be acceptable to the Lender free of overdue recommendations affecting class.
|
|
|
|
|
|
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(e)
|
Survey report
A
report
by a surveyor instructed by the Lender to inspect the Vessel confirming that the condition of the Vessel is in all respects acceptable to the Lender.
|
|
|
|
|
|
|
(f)
|
Valuation
Not less than
two (2) weeks prior to her expected Delivery Date, the fair market value of the Vessel shall be conclusively determined on a charter-free basis by firms of shipbrokers approved and appointed by the Lender (and in a form approved by the Lender) which shall include: (a) one valuation by a firm of shipbrokers appointed by the Lender (which shall be Maritime Strategies International Ltd. unless the Lender advises otherwise) and (b) if requested by the Borrower, one valuation to
be
obtained by
a firm of shipbrokers selected by the Borrower from the Lender's approved list, in which case the fair marker value of the Vessel shall be conclusively determined by the average of the two valuations. If there is a difference of or in excess of 10% between the two valuations, the Borrower may select a third firm of shipbrokers from the Lender's approved list and the fair market value of the Vessel shall be determined by the average of the three valuations.
|
|
(g)
|
Security Documents
The
Mortgage and the Assignment in respect of the Vessel, the Guarantee, the Account Charge and the Share Pledge, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.
|
|
|
|
|
(h)
|
Mandates
Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Account, as the Lender may require.
|
|
|
|
|
(i)
|
Managers' confirmation
The written confirmation of the Managers that, throughout the Facility Period unless otherwise agreed by the Lender, they will remain the commercial and technical managers of the Vessel pursuant to the terms of the Management Agreement and that they will not, without the prior written consent of the Lender (such consent not to be unreasonably withheld), sub-contract or delegate the commercial or technical management of the Vessel to any third party and confirming in terms acceptable to the Lender that, following the occurrence of an Event of Default, all claims of the Managers against the Borrower shall be subordinated to the claims of the Lender under the Finance Documents.
|
|
|
|
|
(j)
|
No disputes
The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.
|
|
|
|
|
(k)
|
The Account Holder's confirmation
The written confirmation of the Account Holder that the Earnings Account has been opened with the Account Holder and to its actual knowledge is free from Encumbrances and rights of set off other than as created by or pursuant to the Security Documents.
|
|
|
|
|
(l)
|
Technical information
Delivery of
technical information to the Lender by the Borrower in respect of the Vessel in a form acceptable to the Lender, including without limitation (i) full history of class, (ii) details of statutory certificates, (iii) summaries of inspections (flag, port state control etc.) and (iv) any records of planned maintenance.
|
|
|
|
|
(m)
|
Other Relevant Documents
Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule l .
|
|
|
|
|
(a)
|
Drawdown Notice
A duly completed Drawdown Notice.
|
|
|
|
|
(b)
|
Process agent
Evidence that any process agent referred to in Clause 21.5
(Service of process)
and any process agent appointed under any other Finance Document has accepted its appointment.
|
|
|
|
|
(c)
|
Other authorizations
A copy of any other consent, licence, approval, authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any of the Relevant Documents or for the validity and enforceability of any of the Relevant Documents.
|
|
|
|
|
(d)
|
Financial statements
Copies of the Original Financial Statements.
|
|
|
|
|
(e)
|
Fees
Evidence that the fees, costs and expenses then due from the Borrower under Clause 8
(Indemnities)
and Clause 9
(Arrangement Fee)
have been paid or will be paid by the Drawdown Date.
|
|
|
|
|
(f)
|
"Know your customer" documents
Such documentation and other evidence as is reasonably requested by the Lender in order for the Lender to comply with all necessary "know your customer" or similar identification procedures in relation to the transactions contemplated in the Finance Documents.
|
|
|
|
|
(g)
|
Loan Administration Form
A duly completed Loan Administration Form.
|
1
|
Letters of undertaking
Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Lender.
|
|
|
2
|
Acknowledgements of notices
Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Lender pursuant to Part I of this Schedule I.
|
|
|
3
|
Legal opinions
Such of the legal opinions specified in Part I of this Schedule 1 as have not already been provided to the Lender.
|
|
|
4
|
Master's receipt
The master's receipt for the Mortgage.
|
We confirm that: | [We maintain Cash equal to [ ] Dollars ($[ ]).] | |
[We maintain:-
|
||
(a)
|
Leverage of [ per cent ([ ]%); and
|
|
|
|
|
(b)
|
Liquidity of an amount of [ ] Dollars ($[ ]) per Fleet Vessel; and
|
|
|
|
|
(c)
|
Net Worth of [ ] Dollars ($[ ]).]
[Guarantor]
|
Signed:
|
||||
Director
|
Director
|
|||
Of
|
Of
|
|||
[Borrower]
|
[Borrower]
|
Signed:
|
||||
Director
|
Director
|
|||
Of
|
Of
|
|||
[Guarantor]
|
[Guarantor]
|
1.
|
[ ], of [ ], Tel: [ ],
|
|
Mobile [ ], e-mail: [ ].
|
|
|
2.
|
[ ], of [ ], Tel: [ ],
|
|
Mobile [ ], e-mail: [ ].
|
|
|
3.
|
[ ], of [ ], Tel: [ ],
|
|
Mobile [ ], e-mail: [ ].
|
1.
|
[ ], of [ ], Tel: [ ],
|
|
Mobile [ ], e-mail: [ ].
|
|
|
2.
|
[ ], of [ ], Tel: [ ],
|
|
Mobile [ ], e-mail: [ ].
|
|
|
3.
|
[ ], of [ ], Tel: [ ],
|
|
Mobile [ ], e-mail: [ ].
|
SIGNED
by
STEFANIA KARMIRI
|
)
|
|
as duly authorised
attorney-in-fact
|
)
/
s/ Stefania Karmiri
|
|
for and on behalf of
|
|
)
|
AGGELIKI SHIPPING LTD
|
|
)
|
in the presence of:
PINELOPI KARAMADOUKI
|
)
/s/Pinelopi Karamadouki
|
SIGNED
by
MARIA PAPALEXI
|
)
|
|
as duly authorised
attorney-in-fact
|
)
/s/ Maria Papalexi
|
|
for and on behalf of
|
|
)
|
DVB BANK SE
|
|
)
|
in the presence of:
PINELOPI KARAMADOUKI
|
)
/s/Pinelopi Karamadouki
|
Registrant’s Subsidiaries
|
Jurisdiction of Organization
|
|
Aggeliki Shipping Ltd.
|
Republic of Liberia
|
|
Allendale Investments S.A.
|
Republic of Panama
|
|
Alterwall Business Inc.
|
Republic of Panama
|
|
Diana Trading Ltd.
|
Republic of the Marshall Islands
|
|
Eleni Shipping Limited
|
Republic of Liberia
|
|
Emmentaly Business Inc.
|
Republic of Panama
|
|
Eternity Shipping Company
|
Republic of the Marshall Islands
|
|
Gregos Shipping Limited
|
Republic of the Marshall Islands
|
|
Manolis Shipping Limited
|
Republic of the Marshall Islands
|
|
Noumea Shipping Ltd.
|
Republic of the Marshall Islands
|
|
Oceanopera Shipping Limited
|
Republic of Cyprus
|
|
Pantelis Shipping Corp.
|
Republic of Liberia
|
|
Pilory Associates Corp.
|
Republic of Panama
|
|
Prospero Maritime Inc.
|
Republic of the Marshall Islands
|
|
Saf-Concord Shipping Ltd.
|
Republic of Liberia
|
|
Salina Shipholding Corp.
|
Republic of the Marshall Islands
|
|
Tiger Navigation Corp.
|
Republic of the Marshall Islands
|
|
Trust Navigation Corp.
|
Republic of Liberia
|
|
Xenia International Corp.
|
Republic of the Marshall Islands
|
|
Xingang Shipping Ltd.
|
Republic of Liberia
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|