x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Date of event requiring this shell company report. . . . . . . . . . . . . . . .
|
Title of each class
|
Name of each exchange on which registered
|
||
Common stock, $0.01 par value
|
New York Stock Exchange
|
||
Preferred stock purchase rights
|
New York Stock Exchange
|
Large accelerated filer
x
|
Accelerated filer
o
Non-accelerated filer
o
|
U.S. GAAP
x
|
International Financial Reporting Standards as issued Other
o
by the International Accounting Standards Board
o
|
FORWARD-LOOKING STATEMENTS
|
4
|
|
PART I
|
|
|
Item 1.
|
Identity of Directors, Senior Management and Advisers
|
5
|
Item 2.
|
Offer Statistics and Expected Timetable
|
5
|
Item 3.
|
Key Information
|
5
|
Item 4.
|
Information on the Company
|
29
|
Item 4A.
|
Unresolved Staff Comments
|
49
|
Item 5.
|
Operating and Financial Review and Prospects
|
49
|
Item 6.
|
Directors, Senior Management and Employees
|
70
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
74
|
Item 8.
|
Financial Information
|
77
|
Item 9.
|
The Offer and Listing
|
78
|
Item 10.
|
Additional Information
|
78
|
Item 11.
|
Quantitative and Qualitative Disclosures about Market Risk
|
87
|
Item 12.
|
Description of Securities Other than Equity Securities
|
88
|
PART II
|
||
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
89
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
89
|
Item 15.
|
Controls and Procedures
|
89
|
Item 16A.
|
Audit Committee Financial Expert
|
90
|
Item 16B.
|
Code of Ethics
|
90
|
Item 16C.
|
Principal Accountant Fees and Services
|
90
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
91
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
91
|
Item 16F.
|
Change in Registrant's Certifying Accountant
|
91
|
Item 16G.
|
Corporate Governance
|
91
|
Item 16H.
|
Mine Safety Disclosure
|
93
|
PART III | ||
Item 17. | Financial Statements | 94 |
Item 18. | Financial Statements | 94 |
Item 19. | Exhibits | 94 |
INDEX TO FINANCIAL STATEMENTS | F-1 |
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||||
|
(in thousands of U.S. dollars,
|
|||||||||||||||||||
|
except for share and per share data and average daily results)
|
|||||||||||||||||||
Income Statement Data:
|
|
|
|
|
|
|||||||||||||||
Time charter revenues
|
$ | 255,669 | $ | 275,448 | $ | 239,342 | $ | 337,391 | $ | 190,480 | ||||||||||
Other revenues
|
1,117 | - | - | - | - | |||||||||||||||
Voyage expenses
|
10,597 | 12,392 | 11,965 | 15,003 | 8,697 | |||||||||||||||
Vessel operating expenses
|
55,375 | 52,585 | 41,369 | 39,899 | 29,332 | |||||||||||||||
Depreciation and amortization of deferred charges
|
55,278 | 53,083 | 44,686 | 43,259 | 24,443 | |||||||||||||||
General and administrative expenses
|
25,123 | 25,347 | 17,464 | 13,831 | 11,718 | |||||||||||||||
Gain on vessel sale
|
- | - | - | - | (21,504 | ) | ||||||||||||||
Foreign currency gains
|
(503 | ) | (1,598 | ) | (478 | ) | (438 | ) | (144 | ) | ||||||||||
|
||||||||||||||||||||
Operating income
|
110,916 | 133,639 | 124,336 | 225,837 | 137,938 | |||||||||||||||
Interest and finance costs
|
(4,924 | ) | (5,213 | ) | (3,284 | ) | (5,851 | ) | (6,394 | ) | ||||||||||
Interest income
|
1,033 | 920 | 951 | 768 | 2,676 | |||||||||||||||
|
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||||
|
(in thousands of U.S. dollars,
|
|||||||||||||||||||
|
except for share and per share data and average daily results)
|
|||||||||||||||||||
Loss from derivative instruments
|
(737 | ) | (1,477 | ) | (505 | ) | - | - | ||||||||||||
Insurance settlements for vessel un-repaired damages
|
- | - | - | 945 | - | |||||||||||||||
Income from investment in Diana Containerships Inc.
|
1,207 | - | - | - | - | |||||||||||||||
|
||||||||||||||||||||
Net income
|
$ | 107,495 | $ | 127,869 | $ | 121,498 | $ | 221,699 | $ | 134,220 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Loss assumed by non controlling interests
|
$ | 2 | $ | 910 | $ | - | $ | - | $ | - | ||||||||||
|
||||||||||||||||||||
Net income attributed to Diana Shipping Inc.
|
$ | 107,497 | $ | 128,779 | $ | 121,498 | $ | 221,699 | $ | 134,220 | ||||||||||
|
||||||||||||||||||||
Earnings per common share, basic
|
$ | 1.33 | $ | 1.60 | $ | 1.55 | $ | 2.97 | $ | 2.11 | ||||||||||
|
||||||||||||||||||||
Earnings per common share, diluted
|
$ | 1.33 | $ | 1.59 | $ | 1.55 | $ | 2.97 | $ | 2.11 | ||||||||||
|
||||||||||||||||||||
Weighted average number of common shares, basic
|
81,081,774 | 80,682,770 | 78,282,775 | 74,375,686 | 63,748,973 | |||||||||||||||
|
||||||||||||||||||||
Weighted average number of common shares, diluted
|
81,124,348 | 80,808,232 | 78,385,464 | 74,558,254 | 63,748,973 | |||||||||||||||
|
||||||||||||||||||||
Cash dividends declared and paid per share
|
$ | - | $ | - | $ | - | $ | 3.31 | $ | 2.05 |
Balance Sheet Data:
|
|
|
|
|
|
|||||||||||||||
Cash and cash equivalents
|
$ | 416,674 | $ | 345,414 | $ | 282,438 | $ | 62,033 | $ | 16,726 | ||||||||||
Total current assets
|
432,691 | 354,649 | 297,156 | 68,554 | 21,514 | |||||||||||||||
Vessels' net book value
|
1,046,719 | 1,160,850 | 979,343 | 960,431 | 867,632 | |||||||||||||||
Property and equipment, net
|
21,659 | 21,842 | 200 | 136 | 956 | |||||||||||||||
Total assets
|
1,604,471 | 1,585,389 | 1,320,425 | 1,057,206 | 944,342 | |||||||||||||||
Total current liabilities
|
48,095 | 32,510 | 32,386 | 20,012 | 20,964 | |||||||||||||||
Deferred revenue, non-current portion
|
- | 4,227 | 11,244 | 22,502 | 23,965 | |||||||||||||||
Long-term debt (including current portion)
|
373,338 | 383,623 | 281,481 | 238,094 | 98,819 | |||||||||||||||
Total stockholders’ equity
|
1,208,878 | 1,169,930 | 999,325 | 775,476 | 799,474 |
Cash Flow Data:
|
|
|
|
|
|
|||||||||||||||
Net cash provided by operating activities
|
$ | 154,230 | $ | 178,292 | $ | 151,903 | $ | 261,151 | $ | 148,959 | ||||||||||
Net cash used in investing activities
|
(90,428 | ) | (252,313 | ) | (73,081 | ) | (108,662 | ) | (409,085 | ) | ||||||||||
Net cash provided by / (used in) financing activities
|
7,458 | 136,997 | 141,583 | (107,182 | ) | 262,341 |
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||||
|
|
|||||||||||||||||||
Ownership days (2)
|
8,609 | 8,348 | 7,000 | 6,913 | 5,813 | |||||||||||||||
Available days (3)
|
8,474 | 8,208 | 6,930 | 6,892 | 5,813 | |||||||||||||||
Operating days (4)
|
8,418 | 8,180 | 6,857 | 6,862 | 5,771 | |||||||||||||||
Fleet utilization (5)
|
99.3 | % | 99.7 | % | 98.9 | % | 99.6 | % | 99.3 | % |
Average Daily Results:
|
|
|
|
|
|
|||||||||||||||
Time charter equivalent (TCE) rate (6)
|
$ | 28,920 | $ | 32,049 | $ | 32,811 | $ | 46,777 | $ | 31,272 | ||||||||||
Daily vessel operating expenses (7)
|
6,432 | 6,299 | 5,910 | 5,772 | 5,046 |
|
Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in the period.
|
|
(2)
|
Ownership days are the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
|
|
(3)
|
Available days are the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels for such events. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.
|
|
(4)
|
Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
|
|
(5)
|
We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning for such events.
|
|
(6)
|
Time charter equivalent rates, or TCE rates, are defined as our time charter revenues less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel) expenses, canal charges and commissions. TCE rate is a non-GAAP measure, and is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts while charter hire rates for vessels on time charters are generally expressed in such amounts. The following table reflects the calculation of our TCE rates for the periods presented.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||||
|
(in thousands of U.S. dollars, except for
|
|||||||||||||||||||
|
TCE rates, which are expressed in U.S. dollars, and available days)
|
|||||||||||||||||||
Time charter revenues
|
$ | 255,669 | $ | 275,448 | $ | 239,342 | $ | 337,391 | $ | 190,480 | ||||||||||
Less: voyage expenses
|
(10,597 | ) | (12,392 | ) | (11,965 | ) | (15,003 | ) | (8,697 | ) | ||||||||||
|
||||||||||||||||||||
Time charter equivalent revenues
|
$ | 245,072 | $ | 263,056 | $ | 227,377 | $ | 322,388 | $ | 181,783 | ||||||||||
|
||||||||||||||||||||
Available days
|
8,474 | 8,208 | 6,930 | 6,892 | 5,813 | |||||||||||||||
Time charter equivalent (TCE) rate
|
$ | 28,920 | $ | 32,049 | $ | 32,811 | $ | 46,777 | $ | 31,272 |
|
(7)
|
Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period.
|
|
●
|
supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;
|
|
●
|
changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;
|
|
●
|
the location of regional and global exploration, production and manufacturing facilities;
|
|
●
|
the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;
|
|
●
|
the globalization of production and manufacturing;
|
|
●
|
global and regional economic and political conditions, including armed conflicts and terrorist activities, embargoes and strikes;
|
|
●
|
natural disasters and other disruptions in international trade;
|
|
●
|
developments in international trade;
|
|
●
|
changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;
|
|
●
|
environmental and other regulatory developments;
|
|
●
|
currency exchange rates; and
|
|
●
|
weather.
|
|
●
|
the number of newbuilding deliveries;
|
|
●
|
the scrapping rate of older vessels;
|
|
●
|
vessel casualties; and
|
|
●
|
the number of vessels that are out of service, namely those that are laid-up, drydocked, awaiting repairs or otherwise not available for hire.
|
|
●
|
the prevailing level of charter hire rates;
|
|
●
|
general economic and market conditions affecting the shipping industry;
|
|
●
|
competition from other shipping companies and other modes of transportation;
|
|
●
|
the types, sizes and ages of vessels;
|
|
●
|
the supply and demand for vessels;
|
|
●
|
applicable governmental regulations;
|
|
●
|
technological advances; and
|
|
●
|
the cost of newbuildings.
|
|
●
|
locate and acquire suitable vessels;
|
|
●
|
identify and consummate acquisitions or joint ventures;
|
|
●
|
enhance our customer base;
|
|
●
|
manage our expansion; and
|
|
●
|
obtain required financing on acceptable terms.
|
|
●
|
pay dividends or make capital expenditures if we do not repay amounts drawn under our loan facilities, if there is a default under the loan facilities or if the payment of the dividend or capital expenditure would result in a default or breach of a loan covenant;
|
|
●
|
incur additional indebtedness, including through the issuance of guarantees;
|
|
●
|
change the flag, class or management of our vessels;
|
|
●
|
create liens on our assets;
|
|
●
|
sell our vessels;
|
|
●
|
enter into a time charter or consecutive voyage charters that have a term that exceeds, or which by virtue of any optional extensions may exceed a certain period;
|
|
●
|
merge or consolidate with, or transfer all or substantially all our assets to, another person; and
|
|
●
|
enter into a new line of business.
|
|
●
|
marine disaster;
|
|
●
|
terrorism;
|
|
●
|
environmental accidents;
|
|
●
|
cargo and property losses or damage;
|
|
●
|
business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and
|
|
●
|
piracy.
|
|
●
|
actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;
|
|
●
|
mergers and strategic alliances in the dry bulk shipping industry;
|
|
●
|
market conditions in the dry bulk shipping industry;
|
|
●
|
changes in government regulation;
|
|
●
|
shortfalls in our operating results from levels forecast by securities analysts;
|
|
●
|
announcements concerning us or our competitors; and
|
|
●
|
the general state of the securities market.
|
|
●
|
authorizing our board of directors to issue "blank check" preferred stock without shareholder approval;
|
|
●
|
providing for a classified board of directors with staggered, three year terms;
|
|
●
|
prohibiting cumulative voting in the election of directors;
|
|
●
|
authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote for the directors;
|
|
●
|
prohibiting shareholder action by written consent;
|
|
●
|
limiting the persons who may call special meetings of shareholders; and
|
|
●
|
establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings.
|
–
|
acquired Gala Properties Inc., or Gala, that had a contract with the China Shipbuilding Trading Company, Limited and
Shanghai Jiangnan
-Changxing Shipbuilding Co. Ltd., for the construction of the
Houston
(delivered in October 2009) for a contract price of $60.2 million, as amended, in exchange for our
ownership interest in our former subsidiary Eniwetok Shipping Company Inc., which had a contract with the shipbuilders for the construction of
a separate 177,000 dwt Capesize drybulk carrier, identified as Hull No.H1108, for the contract price of $60.2 million, with a scheduled delivery date of June 30, 2010, or
the Eniwetok contract; and
|
–
|
acquired the charter party, which
Gala had already entered into, for the
Houston
with Jiangsu Shagang Group Co., or Shagang, or its nominee (with performance guaranteed by Shagang) providing for a gross charter hire rate of $55,000 per day for a period of a minimum of 59 months and a maximum of 62 months
for a consideration of $15.0 million.
|
25
|
HOUSTON
|
D
|
$55,000
|
4.75%
|
Shagang Shipping Co.
|
3-Nov-09
|
3-Oct-14 - 3-Jan-15
|
9
|
|
2009 177,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
NEW YORK
|
D
|
$48,000
|
3.75%
|
Nippon Yusen Kaisha, Tokyo (NYK)
|
3-Mar-10
|
3-Jan-15 - 3-May-15
|
|
|
2010 177,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newcastlemax Bulk Carrier
|
|||||||
|
|
|
|
|
|
|
|
|
27
|
LOS ANGELES
|
E
|
$18,000
|
5.00%
|
EDF Trading Limited, London
|
9-Feb-12
|
9-Dec-15 - 9-Apr-16
|
|
|
2012 206,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessels Under Construction
|
|||||||
|
|
|
|
|
|
|
|
|
28
|
PHILADELPHIA
|
E
|
$18,000
|
5.00%
|
EDF Trading Limited, London
|
30-Apr-12
|
30-Dec-15 - 30-Jun-16
|
10,11,12
|
|
2012 206,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
|
HULL H2528
|
F
|
-
|
-
|
-
|
-
|
- - -
|
10
|
|
2013 76,000
|
|
|
|
|
|
|
|
30
|
HULL H2529
|
F
|
-
|
-
|
-
|
-
|
- - -
|
10
|
|
2013 76,000
|
|
|
|
|
|
|
|
* Each dry bulk carrier is a "sister ship", or closely similar, to other dry bulk carriers that have the same letter.
|
||||||||
** Total commission percentage paid to third parties.
|
||||||||
*** Charterers' optional period to redeliver the vessel to owners. Charterers have the right to add the off hire days, if any, and therefore the optional period may be extended.
|
||||||||
1 The previous charterers, Daelim Corporation, Seoul, have agreed to compensate the owners for the early redelivery of the Clio by paying US$17,000 gross per day, minus 5% commission paid to third parties, starting from the date of redelivery to owners, on February 22, 2012, to the minimum agreed redelivery date, April 8, 2012.
|
||||||||
2 Vessel off-hire for drydocking from March 27, 2012 to April 17, 2012.
|
||||||||
3 Vessel off-hire for drydocking from January 28, 2012 to February 22, 2012.
|
||||||||
4 Resource Marine Pte., Ltd, Singapore is a guaranteed nominee of Macquarie Bank Limited.
|
||||||||
5 Expected to be delivered to the Company by the sellers on April 20, 2012.
|
||||||||
6 Estimated delivery date to charterer.
|
||||||||
7 In September 2010, the charterer's name was changed to Tata Steel UK, Limited.
|
||||||||
8 Morgan Stanley Capital Group Inc. has the option to employ the vessel for a further minimum of eleven (11) months to a maximum of thirteen (13) months at a gross rate of US$15,000 per day starting twenty-four (24) months after delivery of the vessel to the charterer.
|
||||||||
9 Shagang Shipping Co. is a guaranteed nominee of the Jiangsu Shagang Group Co.
|
||||||||
10 Year of delivery and dwt are based on shipbuilding contract.
|
||||||||
11 This newbuilding is also referred to as Hull H1235.
|
||||||||
12 Based on expected date of delivery to owners.
|
●
|
Very Large Ore Carriers, or VLOC
. Very large ore carriers have a carrying capacity of more than 200,000 dwt and are a comparatively new sector of the dry bulk carrier fleet. VLOCs are built to exploit economies of scale on long-haul iron ore routes.
|
●
|
Capesize
. Capesize vessels have a carrying capacity of 110,000-199,999 dwt. Only the largest ports around the world possess the infrastructure to accommodate vessels of this size. Capesize vessels are primarily used to transport iron ore or coal and, to a much lesser extent, grains, primarily on long-haul routes.
|
●
|
Post-Panamax
. Post-Panamax vessels have a carrying capacity of 80,000-109,999 dwt. These vessels tend to have a shallower draft and larger beam than a standard Panamax vessel with a higher cargo capacity. These vessels have been designed specifically for loading high cubic cargoes from draught restricted ports, although they cannot transit the Panama Canal.
|
●
|
Panamax
. Panamax vessels have a carrying capacity of 60,000-79,999 dwt. These vessels carry coal, iron ore, grains, and, to a lesser extent, minor bulks, including steel products, cement and fertilizers. Panamax vessels are able to pass through the Panama Canal, making them more versatile than larger vessels with regard to accessing different trade routes. Most Panamax and Post-Panamax vessels are "gearless," and therefore must be served by shore-based cargo handling equipment. However, there are a small number of geared vessels with onboard cranes, a feature that enhances trading flexibility and enables operation in ports which have poor infrastructure in terms of loading and unloading facilities.
|
●
|
Handymax/Supramax
. Handymax vessels have a carrying capacity of 40,000-59,999 dwt. These vessels operate in a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks. Within the Handymax category there is also a sub-sector known as Supramax. Supramax bulk carriers are ships between 50,000 to 59,999 dwt, normally offering cargo loading and unloading flexibility with on-board cranes, or gear, while at the same time possessing the cargo carrying capability approaching conventional Panamax bulk carriers.
|
●
|
Handysize
.
Handysize vessels have a carrying capacity of up to 39,999 dwt. These vessels are primarily involved in carrying minor bulk cargoes. Increasingly, ships of this type operate within regional trading routes, and may serve as trans-shipment feeders for larger vessels. Handysize vessels are well suited for small ports with length and draft restrictions. Their cargo gear enables them to service ports lacking the infrastructure for cargo loading and unloading.
|
●
|
We own a modern, high quality fleet of dry bulk carriers.
We believe that owning a modern, high quality fleet reduces operating costs, improves safety and provides us with a competitive advantage in securing favorable time charters. We maintain the quality of our vessels by carrying out regular inspections, both while in port and at sea, and adopting a comprehensive maintenance program for each vessel.
|
●
|
Our fleet includes five groups of sister ships
. We believe that maintaining a fleet that includes sister ships enhances the revenue generating potential of our fleet by providing us with operational and scheduling flexibility. The uniform nature of sister ships also improves our operating efficiency by allowing our fleet manager to apply the technical knowledge of one vessel to all vessels of the same series and creates economies of scale that enable us to realize cost savings when maintaining, supplying and crewing our vessels.
|
●
|
We have an experienced management team
. Our management team consists of experienced executives who each have, on average, more than 26 years of operating experience in the shipping industry and has demonstrated ability in managing the commercial, technical and financial areas of our business. Our management team is led by Mr. Simeon Palios, a qualified naval architect and engineer who has 42 years of experience in the shipping industry.
|
●
|
Internal management of vessel operations
. We conduct all of the commercial and technical management of our vessels in-house through DSS. We believe having in-house commercial and technical management provides us with a competitive advantage over many of our competitors by allowing us to more closely monitor our operations and to offer higher quality performance, reliability and efficiency in arranging charters and the maintenance of our vessels.
|
●
|
We benefit from strong relationships with members of the shipping and financial industries
. We have developed strong relationships with major international charterers, shipbuilders and financial institutions that we believe are the result of the quality of our operations, the strength of our management team and our reputation for dependability.
|
●
|
We have a strong balance sheet and a relatively low level of indebtedness
. We believe that our strong balance sheet and relatively low level of indebtedness provide us with the flexibility to increase the amount of funds that we may draw under our loan facilities in connection with future acquisitions and enable us to use cash flow that would otherwise be dedicated to debt service for other purposes.
|
|
(i)
|
injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
|
|
(ii)
|
injury to, or economic losses resulting from, the destruction of real and personal property;
|
|
(iii)
|
net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;
|
|
(iv)
|
loss of subsistence use of natural resources that are injured, destroyed or lost;
|
|
(v)
|
lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and
|
|
(vi)
|
net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.
|
|
●
|
on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status;
|
|
●
|
on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore;
|
|
●
|
the development of vessel security plans;
|
|
●
|
ship identification number to be permanently marked on a vessel's hull;
|
|
●
|
a continuous synopsis record kept onboard showing a vessel's history including the name of the ship, 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.
|
|
●
|
Annual Surveys:
For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable for special equipment classed, within three months before or after each anniversary date ofthe date of commencement of the class period indicated in the certificate.
|
|
●
|
Intermediate Surveys:
Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys are to be carried out at or between the occasions of the second or third annual survey.
|
|
●
|
Class Renewal Surveys:
Class renewal surveys, also known as special surveys, are carried out for the ship's hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a
one-year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a shipowner has the option of arranging with the classification society for the vessel's hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle. Upon a shipowner's request, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class. This process is referred to as continuous class renewal.
|
|
●
|
Ownership days.
We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
|
|
●
|
Available days.
We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels for such events. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable of generating revenues.
|
|
●
|
Operating days.
We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
|
|
●
|
Fleet utilization.
We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning for such events.
|
|
●
|
TCE rates.
We define TCE rates as our time charter revenues less voyage expenses during a period divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a non-GAAP measure and is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts while charter hire rates for vessels on time charters generally are expressed in such amounts.
|
|
Year Ended December 31,
|
|||||||||||
2011
|
2010
|
2009
|
||||||||||
Ownership days
|
8,609 | 8,348 | 7,000 | |||||||||
Available days
|
8,474 | 8,208 | 6,930 | |||||||||
Operating days
|
8,418 | 8,180 | 6,857 | |||||||||
Fleet utilization
|
99.3 | % | 99.7 | % | 98.9 | % | ||||||
Time charter equivalent (TCE) rate (1)
|
$ | 28,920 | $ | 32,049 | $ | 32,811 |
|
●
|
the duration of our charters;
|
|
●
|
our decisions relating to vessel acquisitions and disposals;
|
|
●
|
the amount of time that we spend positioning our vessels;
|
|
●
|
the amount of time that our vessels spend in drydock undergoing repairs;
|
|
●
|
maintenance and upgrade work;
|
|
●
|
the age, condition and specifications of our vessels;
|
|
●
|
levels of supply and demand in the dry bulk shipping industry; and
|
|
●
|
other factors affecting spot market charter rates for dry bulk carriers.
|
|
●
|
obtain the charterer's consent to us as the new owner;
|
|
●
|
obtain the charterer's consent to a new technical manager;
|
|
●
|
in some cases, obtain the charterer's consent to a new flag for the vessel;
|
|
●
|
arrange for a new crew for the vessel, and where the vessel is on charter, in some cases, the crew must be approved by the charterer;
|
|
●
|
replace all hired equipment on board, such as gas cylinders and communication equipment;
|
|
●
|
negotiate and enter into new insurance contracts for the vessel through our own insurance brokers;
|
|
●
|
register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;
|
|
●
|
implement a new planned maintenance program for the vessel; and
|
|
●
|
ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.
|
|
●
|
employment and operation of our vessels; and
|
|
●
|
management of the financial, general and administrative elements involved in the conduct of our business and ownership of our vessels.
|
|
●
|
vessel maintenance and repair;
|
|
●
|
crew selection and training;
|
|
●
|
vessel spares and stores supply;
|
|
●
|
contingency response planning;
|
|
●
|
onboard safety procedures auditing;
|
|
●
|
accounting;
|
|
●
|
vessel insurance arrangement;
|
|
●
|
vessel chartering;
|
|
●
|
vessel security training and security response plans, or ISPS;
|
|
●
|
obtaining of ISM certification and audit for each vessel within the six months of taking over a vessel;
|
|
●
|
vessel hiring management;
|
|
●
|
vessel surveying; and
|
|
●
|
vessel performance monitoring.
|
|
●
|
management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts;
|
|
●
|
management of our accounting system and records and financial reporting;
|
|
●
|
administration of the legal and regulatory requirements affecting our business and assets; and
|
|
●
|
management of the relationships with our service providers and customers.
|
|
●
|
rates and periods of charter hire;
|
|
●
|
levels of vessel operating expenses;
|
|
●
|
depreciation expenses;
|
|
●
|
financing costs; and
|
|
●
|
fluctuations in foreign exchange rates.
|
|
●
|
reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;
|
|
●
|
news and industry reports of similar vessel sales;
|
|
●
|
news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;
|
|
●
|
approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;
|
|
●
|
offers that we may have received from potential purchasers of our vessels; and
|
|
●
|
vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and
observers.
|
Vessel
|
Dwt
|
Year Built
|
Carrying Value
(in millions of US dollars)
|
|
|
|
|
|
|
Dry bulk vessels
|
||||
1
|
Nirefs
|
75,311
|
2001
|
12.3
|
2
|
Alcyon
|
75,247
|
2001
|
12.3
|
3
|
Triton
|
75,336
|
2001
|
12.5
|
*
|
Indicates dry bulk vessels for which we believe, as of December 31, 2011, the charter-free market value was lower than the vessel's carrying value. We believe that the aggregate carrying value of these vessels exceeded their aggregate charter-free market value by approximately $442 million.
|
|
Payments due by period
|
|||||||||||||||||||
Contractual Obligations
|
Total Amount
|
Less than 1 year
|
2-3 years
|
4-5 years
|
More than 5 years
|
|||||||||||||||
|
(in thousands of US dollars)
|
|||||||||||||||||||
Loan Agreements (1)
|
$ | 427,875 | $ | 30,340 | $ | 81,040 | $ | 254,840 | $ | 61,655 | ||||||||||
Construction contracts (2)
|
84,100 | 34,800 | 49,300 | - | - | |||||||||||||||
Memorandum of Agreement (3)
|
20,650 | 20,650 | - | - | - | |||||||||||||||
Broker services agreement (4)
|
12,260 | 2,384 | 4,768 | 4,768 | 340 | |||||||||||||||
|
||||||||||||||||||||
Total
|
$ | 544,885 | $ | 88,174 | $ | 135,108 | $ | 259,608 | $ | 61,995 |
|
(1)
|
As of December 31, 2011 we had an aggregate principal of $374.3 million of indebtedness outstanding under our loan facilities. In February 2012, we drew down $16.1 million of proceeds under our facility with Nordea to finance part of the purchase cost of the
Leto
and $37.5 million of proceeds under our facility with the CEXIM and DnB NOR, to finance part of the construction cost of Los Angeles. As of the date of this annual report, we had an aggregate principal of $425.9 million outstanding under our loan facilities which was incurred in connection with the acquisition of our dry bulk vessels. The table above does not include projected interest payments which are based on LIBOR plus a margin.
|
|
(2)
|
As of December 31, 2011, we had paid four predelivery installments for the construction of hull
H1234
, or
Los Angeles
, amounting to $31.9 million and the three
predelivery installments for the construction of hull
H1235
, to be renamed
Philadelphia
,
amounting to $26.1 million.
Los Angeles
was
delivered to us in February 2012, for which we paid a delivery installment of $26.1 million. In March 2012, we paid one additional predelivery installment of $5.8 million for the construction of hull
H1235
, to be renamed
Philadelphia
, and expect to pay $26.1 million on the delivery of the vessel in April 2012. In March 2012, we also entered into two contracts for the construction of two additional Panamax dry bulk carriers for the price of $29.0 each, expected to be delivered in the fourth quarter of 2013.
|
|
(3)
|
In March 2012, we entered into a Memorandum of Agreement to purchase from an unaffiliated third party a 2005 built Panamax dry bulk carrier of 76,225 dwt for a price of $20.65 million. The vessel, to be renamed
Melia
, is expected to be delivered to us by the sellers on or about April 24, 2012.
|
|
(4)
|
On June 1, 2010, DSS entered into an agreement with Diana Enterprises, a related party company, for the provision of brokerage services for an annual fee of $1.7 million. This agreement was terminated on February 22, 2012 and was replaced with an agreement for the provision of brokerage services and for an annual fee of $2.4 million effective from January 1, 2012. The agreement has a term of five years and the fee is paid quarterly in advance.
|
Name
|
|
Age
|
|
Position
|
Simeon Palios
|
|
70
|
|
Class I Director, Chief Executive Officer and Chairman
|
Anastasios Margaronis
|
|
56
|
|
Class I Director and President
|
Ioannis Zafirakis
|
|
40
|
|
Class I Director, Executive Vice President and Secretary
|
Andreas Michalopoulos
|
40
|
Chief Financial Officer and Treasurer
|
||
Maria Dede
|
39
|
Chief Accounting Officer
|
||
William (Bill) Lawes
|
|
68
|
|
Class II Director
|
Konstantinos Psaltis
|
|
73
|
|
Class II Director
|
Boris Nachamkin
|
|
78
|
|
Class III Director
|
Apostolos Kontoyannis
|
|
63
|
|
Class III Director
|
|
A.
|
Major Shareholders
|
Title of Class
|
Identity of Person or Group
|
Number of
Shares Owned
|
Percent of Class
|
||||||
Common Stock, par value $0.01
|
Simeon Palios (1)
|
15,112,717 | 18.2 | % | |||||
Seizert Capital Partners, LLC (2)
|
5,219,824 | 6.3 | % | ||||||
|
All officers and directors as a group (3)
|
16,711,068 | 20.1 | % |
|
(1)
|
Currently, Mr. Simeon Palios beneficially owns 826,177 restricted common shares granted through the Company's Equity Incentive Plan and 14,286,540 shares indirectly through Corozal Compania Naviera S.A., or Corozal, and Ironwood Trading Corp., or Ironwood, over which Mr. Simeon Palios exercises sole voting and dispositive power. As of December 31, 2009, 2010, 2011 and currently, Mr. Simeon Palios owned indirectly through Corozal and Ironwood 17.5%, 17.4%, 17.3% and 17.2%, respectively, of our outstanding common stock.
|
|
(2)
|
Seizert Capital Partners, LLC
is an investment adviser that has filed a Schedule 13G on February 13, 2012 reporting their ownership of 6.3% of our outstanding common stock as of December 31, 2011.
|
|
(3)
|
Mr. Simeon Palios is our only director or officer that beneficially owns 1% or more of our outstanding common stock. Mr. Anastasios Margaronis, our President and a member of our board of directors, and Mr. Ioannis Zafirakis, our Executive Vice President and a member of our board of directors, are indirect shareholders through ownership of stock held in Corozal Compania Naviera S.A., which is the registered owner of some of our common stock. Mr. Margaronis and Mr. Zafirakis do not have dispositive or voting power with regard to shares held by Corozal Compania S.A. and, accordingly, are not considered to be beneficial owners of our common shares held through Corozal Compania Naviera S.A. Messrs. Lawes, Psaltis, Nachamkin and Kontoyannis, each a non-executive director of ours, and Messrs. Margaronis, Zafirakis and Michalopoulos, each executive officers of ours, each own less than 1% of our outstanding common stock.
|
|
A.
|
Consolidated statements and other financial information
|
|
(1)
|
It is organized in a qualified foreign country which, as defined, is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of the Shipping Income for which exemption is being claimed under Section 883 of the Code, or the Country of Organization Requirement; and
|
|
(2)
|
It can satisfy any one of the following two stock ownership requirements:
|
|
●
|
more than 50% of its stock, in terms of value, is beneficially owned by qualified shareholders which, as defined, includes individuals who are residents of a qualified foreign country, or the 50% Ownership Test; or
|
|
●
|
its stock is "primarily and regularly" traded on an established securities market located in the United States or a qualified foreign country, or the Publicly Traded Test.
|
|
●
|
at least 75% of the Company's gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or
|
|
●
|
at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, such passive income.
|
|
●
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common stock;
|
|
●
|
the amount allocated to the current taxable year and any taxable years before the Company became a PFIC would be taxed as ordinary income; and
|
|
●
|
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
|
●
|
the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to that gain, the gain is taxable in the United States only if attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or
|
|
●
|
the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.
|
|
●
|
fails to provide an accurate taxpayer identification number;
|
|
●
|
is notified by the IRS that he has failed to report all interest or dividends required to be shown on his U.S. federal income tax returns; or
|
|
●
|
in certain circumstances, fails to comply with applicable certification requirements.
|
Issuer purchases of equity securities for the year ended December 31, 2011
|
||||||||
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Programs
|
Maximum Amount in U.S. $ that may Yet Be Expected on Share Repurchases Under Programs
|
||||
December 2011
|
154,091
|
$7.71
|
154,091
|
$0
|
||||
Total
|
$0
|
Exhibit
Number
|
Description
|
1.1
|
Amended and Restated Articles of Incorporation of Diana Shipping Inc. (originally known as Diana Shipping Investment Corp.) (1)
|
1.2
|
Amended and Restated By-laws of the Company (2)
|
2.1
|
Form of Share Certificate (10)
|
4.1
|
Second Amended and Restated Stockholders Rights Agreement dated October 7, 2008 (4)
|
4.2
|
Amended and Restated 2005 Stock Incentive Plan (6)
|
4.3
|
2011 Stock Incentive Plan
|
4.4
|
Form of Technical Manager Purchase Option Agreement (5)
|
4.5
|
Form of Management Agreement (3)
|
4.6
|
Loan Agreement with Royal Bank of Scotland dated February 18, 2005 (5)
|
4.7
|
Amending and Restating Loan Agreement with Royal Bank of Scotland dated May 24, 2006 (8)
|
4.8
|
Supplemental Agreement with the Royal Bank of Scotland dated January 30, 2007 (7)
|
4.9
|
Sales Agency Financing Agreement dated April 23, 2008 (9)
|
4.10
|
Loan Agreement with Deutsche Bank dated October 8, 2009 (10)
|
4.11
|
Loan Agreement with Bremer Landesbank dated October 22, 2009 (10)
|
4.12
|
Loan Agreement with the Export-Import Bank of China and DnB Nor Bank ASA dated October 2, 2010 (10)
|
4.13
|
Loan Agreement with Emporiki Bank of Greece S.A. dated September 13, 2011
|
4.14
|
Loan Agreement with Nordea Bank Finland Plc dated February 7, 2012
|
8.1
|
Subsidiaries of the Company
|
11.1
|
Code of Ethics (10)
|
12.1
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
|
12.2
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
|
13.1
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
13.2
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
(1)
|
Filed as Exhibit 1 to the Company's Form 6-K filed on May 29, 2008.
|
(2)
|
Filed as Exhibit 1 to the Company's Form 6-K filed on December 4, 2007.
|
(3)
|
Filed as an Exhibit to the Company's Amended Registration Statement (File No. 123052) on March 15, 2005.
|
(4)
|
Filed as Exhibit 4.5 to the Company's Form 8-A12B/A filed on October 7, 2008 and amended on October 10, 2008 (File No. 001-32458).
|
(5)
|
Filed as an Exhibit to the Company's Registration Statement (File No. 123052) on March 1, 2005.
|
(6)
|
Filed as Exhibit 1 to the Company's Form 6-K filed on October 27, 2008.
|
(7)
|
Filed as Exhibit VI to the Company's Form 6-K filed on March 19, 2007.
|
(8)
|
Filed as Exhibit 4.10 to the Company's 2007 Annual Report on Form 20-F (File No. 001-32458) on March 14, 2008.
|
(9)
|
Filed as Exhibit 2 to the Company's Form 6-K filed on April 24, 2008.
|
(10)
|
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F on March 30, 2010.
|
Page
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
|
F-3
|
|
Consolidated Balance Sheets as of December 31, 2011 and 2010
|
F-4
|
|
Consolidated Statements of Income for the years ended December 31, 2011, 2010 and 2009
|
F-5
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2011, 2010 and 2009
|
F-6
|
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2011, 2010 and 2009
|
F-7
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009
|
F-8
|
|
Notes to Consolidated Financial Statements
|
F-9
|
|
1.
|
Basis of Presentation and General Information
|
1.1.
|
Subsidiaries incorporated in the Republic of Panama
|
(a)
|
Skyvan Shipping Company S.A. ("Skyvan"),
owner of the Bahamas flag 75,311 dwt bulk carrier vessel "Nirefs" which was built and delivered in January 2001.
|
(b)
|
Buenos Aires Compania Armadora S.A. ("Buenos"),
owner of the Bahamas flag 75,247 dwt bulk carrier vessel "Alcyon" which was built and delivered in February 2001.
|
(c)
|
Husky Trading S.A. ("Husky
"),
owner of the Bahamas flag 75,336 dwt bulk carrier vessel "Triton" which was built and delivered in March 2001.
|
(d)
|
Panama Compania Armadora S.A. ("Panama"),
owner of the Bahamas flag 75,211 dwt bulk carrier vessel "Oceanis", which was built and delivered in May 2001.
|
(e)
|
Eaton Marine S.A. ("Eaton"),
owner of the Greek flag 75,106 dwt bulk carrier vessel "Danae" (built in 2001), which was acquired in July 2003.
|
(f)
|
Chorrera Compania Armadora S.A. ("Chorrera"),
owner of the Greek flag 75,172 dwt bulk carrier vessel "Dione" (built in 2001), which was acquired in May 2003.
|
(g)
|
Cypres Enterprises Corp. ("Cypres"),
owner of the Bahamas flag 73,630 dwt bulk carrier vessel "Protefs" which was built and delivered in August 2004.
|
(h)
|
Darien Compania Armadora S.A. ("Darien"),
owner of the Bahamas flag 73,691 dwt bulk carrier vessel "Calipso" which was built and delivered in February 2005.
|
(i)
|
Cerada International S.A ("Cerada"),
ex-owner of the Bahamas flag 169,883 dwt bulk carrier vessel "Pantelis SP" (built in 1999), which was acquired in February 2005. The vessel was sold in February 2007, and was delivered to her new owners in July 2007.
|
(j)
|
Texford Maritime S.A. ("Texford"),
owner of the Bahamas flag 73,691 dwt bulk carrier vessel "Clio" which was built and delivered in May 2005.
|
(k)
|
Urbina Bay Trading, S.A. ("Urbina"),
owner of the Bahamas flag 74,444 dwt bulk carrier vessel "Erato" (built in 2004), which was acquired in November 2005.
|
(l)
|
Changame Compania Armadora S.A. ("Changame"),
owner of the Bahamas flag 73,583 dwt bulk carrier vessel "Thetis" (built in 2004), which was acquired in November 2005.
|
(m)
|
Vesta Commercial, S.A. ("Vesta"),
owner of the Bahamas flag 74,381 dwt bulk carrier vessel "Coronis" which was built and delivered in January 2006.
|
14.
|
Diana Shipping Services S.A. (the "Manager" or "DSS").
DSS provides the Company and its vessels with management services since November 12, 2004, pursuant to management agreements. Such costs are eliminated in consolidation. Since April 2010, DSS provides to Diana Containerships and its vessels, administrative services for a monthly fee of $10, and since June 2010 technical and commercial services for a monthly fee of $15 per vessel for employed vessels, $20 per vessel per month for laid-up vessels, and 1% commission on the gross charter hire and freight earned by each vessel. Subsequent to Diana Containerships' spin-off (Note 3), the fees charged by DSS to Diana Containerships and its ship-owning subsidiaries are recorded as Other revenues in the accompanying consolidated statements of income. Management fees, administrative services fees and commissions charged by DSS to Diana Containerships and its subsidiaries until January 18, 2011 were eliminated from the consolidated financial statements as intercompany transactions.
|
1.2.
|
Subsidiaries incorporated in the Republic of the Marshall Islands
|
|
(a)
Ailuk Shipping Company Inc. ("Ailuk"),
owner of the Marshall Islands' flag 73,546 dwt dry bulk carrier vessel "Naias" which was built in 2006 and delivered in August 2006.
|
|
(b)
Bikini Shipping Company Inc. ("Bikini"),
owner of the Marshall Islands' flag 177,773 dwt dry bulk carrier vessel "New York" which was built and delivered in March 2010.
|
|
(c)
Jaluit Shipping Company Inc. ("Jaluit"),
owner of the Marshall Islands' flag, 174,186 dwt, dry bulk carrier vessel "Sideris GS" which was built and delivered in November 2006.
|
|
(d)
Kili Shipping Company Inc. ("Kili"),
owner of the Marshall Islands' flag, 174,261 dwt, dry bulk carrier vessel "Semirio" which was built and delivered in June 2007.
|
|
(e)
Knox Shipping Company Inc. ("Knox"), owner of the Marshall Islands flag, 180,235 dwt, dry bulk carrier vessel "Aliki" (built 2005), which was acquired in April 2007.
|
|
(f)
Lib Shipping Company Inc. ("Lib"),
owner of the Marshall Islands flag, 177,828 dwt, dry bulk carrier vessel "Boston" which was built and delivered in November 2007.
|
|
(g)
Majuro Shipping Company Inc. ("Majuro"),
owner of the Marshall Islands flag, 93,193 dwt, dry bulk carrier vessel "Alcmene" (built 2010), which was delivered in November 2010.
|
|
(h)
Taka Shipping Company Inc. ("Taka"),
owner of the Marshall Islands flag, 76,436 dwt, dry bulk carrier vessel, "Melite" (built 2004) which was acquired in January 2010.
|
|
(i)
Gala Properties Inc. ("Gala"),
owner of the Marshall Islands flag 177,729 dwt, dry bulk carrier vessel "Houston" which was built and delivered in October 2009.
|
|
(j)
Lae Shipping Company Inc. ("Lae"),
entered into a shipbuilding contract with China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co., Ltd for the construction of one Newcastlemax dry bulk carrier of approximately 206,000 dwt. The vessel has a contract price of $59,000, and was delivered in February 2012 (Notes 5 and 18).
|
|
(k)
Namu Shipping Company Inc. ("Namu"),
entered into a shipbuilding contract with China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co., Ltd for the construction of one Newcastlemax dry bulk carrier of approximately 206,000 dwt. The vessel has a contract price of $59,000, and is expected to be delivered during the second quarter of 2012 (Note 5).
|
|
(l)
Bikar Shipping Company Inc. ("Bikar"),
owner of the Greek flag, 73,593 dwt, dry bulk carrier vessel, "Arethusa" (built 2007) which was acquired in July 2011(Note 6).
|
|
(m)
Jemo Shipping Company Inc. ("Jemo"),
entered into a memorandum of agreement with a third party company for the acquisition of a 2010 built Panamax dry bulk carrier of 81,297 dwt, renamed "Leto", for a price of $32,250. The vessel was delivered to the Company by the sellers in January 2012 (Notes 5 and 18).
|
1.3.
|
Subsidiaries incorporated in the United States of America
|
(a)
|
Bulk Carriers (USA) LLC ("Bulk Carriers")
was established in September 2006 in the State of Delaware, USA, to act as the Company's authorized representative in the United States.
|
1.4.
|
Subsidiaries incorporated in the Republic of Cyprus
|
(a)
|
Marfort Navigation Company Limited ("Marfort"),
owner of the Cyprus flag 171,810 dwt bulk carrier vessel "Salt Lake City" (built 2005) which was acquired in December 2007.
|
(b)
|
Silver Chandra Shipping Company Limited ("Silver"),
owner of the Cyprus flag 164,218 dwt bulk carrier vessel "Norfolk" (built 2002) which was acquired in February 2008.
|
Charterer
|
2011
|
2010
|
2009
|
|||||||||||
A | 18 | % | 16 | % | 23 | % | ||||||||
B | 12 | % | 18 | % | 21 | % | ||||||||
C | 11 | % | 10 | % | 11 | % | ||||||||
D | - | - | 14 | % |
2.
|
Significant Accounting Policies and Recent Accounting Pronouncements
|
Principles of Consolidation
: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, and include the accounts of Diana Shipping Inc. and its wholly-owned subsidiaries referred to in Note 1 above. All significant intercompany balances and transactions have been eliminated upon consolidation.
|
Use of Estimates
:
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
|
(c)
|
Other Comprehensive Income / (loss)
:
The Company follows the provisions of Financial Accounting Standards Board ("FASB") Accounting Standard Codification (ASC) 220, "Comprehensive Income", which requires separate presentation of certain transactions, which are recorded directly as components of stockholders' equity.
|
Foreign Currency Translation
:
The functional currency of the Company is the U.S. Dollar because the Company's vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Company's books of accounts are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities which are denominated in other currencies are translated into U.S. Dollars at the year-end exchange rates. Resulting gains or losses are reflected separately in the accompanying consolidated statements of income.
|
Cash and Cash Equivalents
:
The Company considers highly liquid investments such as time deposits, certificates of deposit and their equivalents with an original maturity of three months or less to be cash equivalents.
|
Accounts Receivable, Trade
:
The amount shown as accounts receivable, trade, at each balance sheet date, includes receivables from charterers for hire, freight and demurrage billings, net of any provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No provision for doubtful accounts was established as of December 31, 2011 and 2010.
|
(g)
|
Inventories
: Inventories consist of lubricants and victualling which are stated at the lower of cost or market. Cost is determined by the first in, first out method. Inventories may also consist of bunkers when on the cut- off date a
vessel has been redelivered by its previous charterers and has not yet been delivered to the new charterers, or remains idle. Bunkers are also stated at the lower of cost or market and cost is determined by the first in, first out method.
|
(h)
|
Vessel Cost
:
Vessels are stated at cost which consists of the contract price and any material expenses incurred upon acquisition (initial repairs, improvements and delivery expenses, interest and on-site supervision costs incurred during the construction periods). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred. Interest cost incurred during the assets' construction periods that theoretically could have been avoided if expenditure for the assets had not been made is also capitalized. The capitalization rate, applied on accumulated expenditures for the vessel, is based on interest rates applicable to outstanding borrowings of the period.
|
(i)
|
Prepaid/Deferred Charter Revenue
: The Company records identified assets or liabilities associated with the acquisition of a vessel at fair value, determined by reference to market data. The Company values any asset or liability arising from the market value of the time charters assumed when a vessel is acquired. The amount to be recorded as an asset or liability at the date of vessel delivery is based on the difference between the current fair market value of the charter and the net present value of future contractual cash flows. When the present value of the contractual cash flows of the time charter assumed is greater than its current fair value, the difference is recorded as prepaid charter revenue. When the opposite situation occurs, any difference, capped to the vessel's fair value on a charter free basis, is recorded as deferred revenue. Such assets and liabilities, respectively, are amortized as a reduction of, or an increase in, revenue over the period of the time charter assumed.
|
Impairment of Long-Lived Assets
:
The Company follows ASC 360-10-40 "Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The guidance requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted projected net operating cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company should evaluate the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. The Company determines the fair value of its assets based on management estimates and assumptions and by making use of available market data and taking into consideration third party valuations.
|
Assets held for sale
: It is the Company's policy to dispose of vessels and other fixed assets when suitable opportunities occur and not necessarily to keep them until the end of their useful life. The Company classifies assets and disposal groups as being held for sale in accordance with ASC 360-10-45-9 "Long-Lived Assets Classified as Held for Sale", when the following criteria are met: (i) management possessing the necessary authority has committed to a plan to sell the asset (disposal group); (ii) the asset (disposal group) is immediately available for sale on an "as is" basis; (iii) an active program to find the buyer and other actions required to execute the plan to sell the asset (disposal group) have been initiated; (iv) the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year; and (v) the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. In case a long-lived asset is to be disposed of other than by sale (for example, by abandonment, in an exchange measured based on the recorded amount of the nonmonetary asset relinquished, or in a distribution to owners in a spinoff) the Company continues to classify it as held and used until its disposal date. Long-lived assets or disposal groups classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These assets are not depreciated once they meet the criteria to be held for sale.
|
Reporting of discontinued operations
: The current and prior year periods' results of operations and cash flows of assets (disposal groups) classified as held for sale are reported as discontinued operations when it is determined that their operations and cash flows will be eliminated from the ongoing operations of the Company as a result of their disposal, and that the Company will not have continuing involvement in the operation of these assets after their disposal.
|
Vessel Depreciation
: Depreciation is computed using the straight-line method over the estimated useful life of the vessels, after considering the estimated salvage (scrap) value. Each vessel's salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Management estimates the useful life of the Company's vessels to be 25 years from the date of initial delivery from the shipyard. Diana Containerships, consolidated in the financial statements for the year ended December 31, 2010 estimated the useful life of containerships to be 30 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted.
|
(n)
|
Accounting for Dry-Docking Costs
: The Company follows the deferral method of accounting for dry-docking costs
whereby actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next dry-docking is scheduled to become due. Unamortized dry-docking costs of vessels that are sold are written off and included in the calculation of the resulting gain or loss in the year of the vessel's sale.
|
Financing Costs
: Fees paid to lenders for obtaining new loans or refinancing existing ones are deferred and recorded as a contra to debt. Other fees paid for obtaining loan facilities not used at the balance sheet date are capitalized as deferred financing costs. Fees are amortized to interest and finance costs over the life of the related debt using the effective interest method and, for the loan facilities not used at the balance sheet date, according to their availability terms. Unamortized fees relating to loans repaid or refinanced as debt extinguishment are expensed as interest and finance costs in the period the repayment or extinguishment is made. Loan commitment fees are charged to expense in the period incurred.
|
Property and equipment
:
The Company acquired in 2010 the land and building where its offices are located. Land is presented in its fair value on the date of acquisition and it is not subject to depreciation, but it is reviewed for impairment. As at December 31, 2011 and 2010, no impairment loss was identified or recorded and the Company has not identified any other facts or circumstances that would require the write down of the value of its land or building in the near future. The building which consists of office space, a warehouse and parking spaces has an estimated useful life of 55 years with no residual value and depreciation is calculated on a straight-line basis. Equipment consists of office furniture and equipment, computer software and hardware and vehicles. The useful life of the office furniture, equipment and vehicles is 5 years; and the computer software and hardware is 3 years. Depreciation is calculated on a straight-line basis.
|
Concentration of Credit Risk
:
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with various qualified financial institutions and performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers' financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate credit risk.
|
Accounting for Revenues and Expenses
:
Revenues are generated from time charter agreements and are usually paid fifteen days in advance. Time charter agreements with the same charterer are accounted for as separate agreements according to the terms and conditions of each agreement. Time charter revenues are recorded over the term of the charter as service is provided. Revenues from time charter agreements providing for varying annual rates over their term are accounted for on a straight line basis. Deferred revenue includes cash received prior to the balance sheet date for which all criteria to recognize as revenue have not been met, including any deferred revenue resulting from charter agreements providing for varying annual rates, which are accounted for on a straight line basis. Deferred revenue also includes the unamortized balance of the liability associated with the acquisition of second-hand vessels with time charters attached which were acquired at values below fair market value at the date the acquisition agreement is consummated. Voyage expenses, primarily consisting of port, canal and bunker expenses that are unique to a particular charter, are paid for by the charterer under time charter arrangements or by the Company under voyage charter arrangements, except for commissions, which are always paid for by the Company, regardless of charter type. All voyage and vessel operating expenses are expensed as incurred, except for commissions. Commissions are deferred over the related voyage charter period to the extent revenue has been deferred since commissions are due as the Company's revenues are earned.
|
Repairs and Maintenance
:
All repair and maintenance expenses including underwater inspection expenses are expensed in the year incurred. Such costs are included in vessel operating expenses in the accompanying consolidated statements of income.
|
Earnings per Common Share
:
Basic earnings per common share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the year. Diluted earnings per common share, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised.
|
Segmental Reporting
:
The Company has determined that it operates under one reportable segment, relating to its operations of the dry-bulk vessels. The Company reports financial information and evaluates the operations of the segment by charter revenues and not by the length of ship employment for its customers, i.e. spot or time charters. The Company does not use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
|
Variable Interest Entities
:
ASC 810-10, addresses the consolidation of business enterprises (variable interest entities) to which the usual condition (ownership of a majority voting interest) of consolidation does not apply. The guidance focuses on financial interests that indicate control. It concludes that in the absence of clear control through voting interests, a company's exposure (variable interest) to the economic risks and potential rewards from the variable interest entity's assets and activities are the best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the value of the variable interest entity's assets and liabilities. Additionally, ASU 2009-17, Consolidations (Topic 810) "Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity's purpose and design and the reporting entity's ability to direct the activities of the other entity that most significantly impact the other entity's economic performance. ASU 2009-17 also requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement.
|
Fair Value Measurements
: ASC 820 "Fair Value Measurements and Disclosures", provides guidance for using fair value to measure assets and liabilities. The guidance also responds to investors' requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. The guidance describes fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants in the market in which the reporting entity transacts. The guidance clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, the guidance establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entity's own data. Under the guidance, fair value measurements would be separately disclosed by level within the fair value hierarchy. Financial statements should include disclosures for transfers in and out of Level 1 and Level 2 fair value measurements and description for the reason for transfer, for inputs and valuation techniques for fair value measurements that fall in either Level 2 or Level 3 and for the level of disaggregation.
|
Share Based Payment
:
ASC 718 "Compensation – Stock Compensation", requires the Company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met. The Company initially measures the cost of employee services received in exchange for an award or liability instrument based on its current fair value; the fair value of that award or liability instrument is re-measured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period are recognized as compensation cost over that period with the exception of awards granted in the form of restricted shares which are measured at their grant date fair value and are not subsequently re measured. The grant-date fair value of employee share options and similar instruments are estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.
|
Derivatives
:
The Company is exposed to interest rate fluctuations associated with its variable rate borrowings and its objective is to manage the impact of such fluctuations on earnings and cash flows of its borrowings. In this respect, in May 2009, the Company entered into a five-year zero cost collar agreement with a floor at 1% and a cap at 7.8% of a notional amount of $100,000 to manage its exposure to interest rate changes related to its borrowings. The collar agreement is considered as an economic hedge agreement as it does not meet the criteria of hedge accounting; therefore, the change in its fair value is recognized in earnings (Note 17).
|
(z)
|
Equity method investments:
Investments in common stock in entities over which the Company exercises significant influence, but does not exercise control are accounted for by the equity method of accounting. Under this method the Company records such an investment at cost, and adjusts the carrying amount for its share of the earnings or losses of the entity subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends received reduce the carrying amount of the investment. When the Company's share of losses in an entity accounted for by the equity method equals or exceeds its interest in the entity, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of the entity.
|
4.
|
Transactions with Related Parties
|
(a)
|
Altair Travel Agency S.A. ("Altair"):
The Company uses the services of an affiliated travel agent, Altair, which is controlled by the Company's CEO and Chairman. Travel expenses for 2011, and 2010, and 2009 amounted to $1,799, $1,628, and $1,385, respectively, and are included in Vessels, Advances for vessels construction and acquisitions and other vessel costs, Due from related parties, Vessel operating expenses and General and administrative expenses in the accompanying consolidated financial statements. Until September 30, 2010, the Company was also paying Altair rent for office space, parking space and a warehouse leased by DSS until December 31, 2011, for the monthly rent of Euro 6,330 including stamp duty. Rent expense for 2011, 2010 and 2009 amounted to $0, $76, and $19, respectively, and is included in General and administrative expenses in the accompanying consolidated statements of income. At December 31, 2011, and 2010, an amount of $153 and $206, respectively, was payable to Altair and is included in Due to related parties in the accompanying
consolidated balance sheets. The lease agreement between Altair and DSS was terminated on September 30, 2010, as Altair sold the office space, parking space and the warehouse to Universal Shipping and Real Estates Inc.
|
(b)
|
Universal Shipping and Real Estates Inc. ("Universal"):
Universal was acquired by the Company in October 2010. Until then Universal was a company controlled by the Company's CEO and Chairman from which the DSS was leasing office space, a warehouse and parking spaces for a monthly rent of Euro 24,530 including stamp duty. Rent expense for 2010 and 2009 amounted to $304 and $216, respectively, and is included in General and administrative expenses in the accompanying consolidated statements of income. On October 21, 2010, Universal transferred all of its real property to DSS and the company was dissolved in November 2010 (Note 7). At December 31, 2010, there were no amounts due to or from Universal.
|
(c)
|
Diana Shipping Agencies S.A. ("DSA"):
DSA was acquired by the Company in October 2010. Until then, DSA was a company controlled by the Company's CEO and Chairman, from which DSS was leasing office space, parking spaces and a warehouse for a monthly rent of Euro 23,788 including stamp duty. Rent expense for 2010 and 2009 amounted to $283 and $146, respectively, and is included in General and administrative expenses in the accompanying consolidated statements of income. On October 21, 2010, DSA transferred all of its property to DSS and the company was dissolved in November 2010 (Note 7). At December 31, 2010, there were no amounts due to or from DSA.
|
(d)
|
Diana Enterprises Inc. ("Diana Enterprises"):
Diana Enterprises is a company controlled by the Company's CEO and Chairman, and has entered into two agreements with DSS to provide brokerage services through DSS to DSI for an annual fee of $1,652 and to Diana Containerships for an annual fee of $1,040 until January 18, 2011 when Diana Containerships was deconsolidated from the Company's financial statements. The agreement has a term of five years and the fees are paid quarterly in advance (see also Note 18). For 2011 and 2010, brokerage fees amounted to $1,704 and $1,570 and are included in General and administrative expenses in the accompanying consolidated statements of income. At December 31, 2011 and 2010 there were no amounts due to or from Diana Enterprises.
|
(e)
|
Diana Containerships Inc. ("Diana Containerships"):
DSS receives management fees and commissions on hire from Diana Containerships and its vessels, pursuant to the related management agreements between Diana Containerships and its vessels and DSS and administrative fees pursuant to the related administrative services agreement between Diana Containerships and DSS (Note 1). After the partial spin-off of Diana Containerships (Note 3), such fees are not eliminated. Therefore, for the period from January 19 to December 31, 2011, revenues derived from the agreements with Diana Containerships amounted to $1,117 and they are separately presented as Other revenues in the accompanying consolidated statements of income. As at December 31, 2011, there was an amount of $263 due from Diana Containerships and its vessels and is included in Due from related party in the accompanying consolidated balance sheets. As at December 31, 2010, all amounts relating to Diana Containerships were eliminated from the Company's financial statements as intercompany transactions.
|
(f)
|
Acquisition of affiliated entities:
On October 8, 2010, the Company entered into two transfer agreements with Poinsettia Management Ltd. ("Poinsettia"), an entity affiliated with the Company's CEO and Chairman and with other executives, for the acquisition of 100% of the issued and outstanding shares of Universal and DSA for a total consideration of $21,500. The Company's Board of Directors appointed an independent committee consisting of the independent members of the Board of Directors to address any issues in connection with such acquisition and to evaluate the merits and fairness of the consideration of the transaction. The Independent Committee
considered the Company's specific facts and circumstances and the developments in the domestic real estate market, obtained financial, legal and other advice as deemed appropriate and utilized multiple valuation approaches from different sources in its analysis, including but not limited to: i) independent market valuations for the entities' real property based on comparable real estate prices, ii) independent assessment of the physical condition of the real property, its fixtures and other infrastructure included within the real property and iii) discounted cash flow analyses (with reference also to the present value of the future lease outflows based upon the Company's then existing lease agreements for office space). Based upon the various inputs discussed above, the independent committee determined that the transaction was in the best interests of the Company and its stockholders and recommended the transaction to the Board. On October 21, 2010, the building and land were transferred to DSS.
|
(g)
|
Acquisition of Gala:
On April 13, 2009, the Company entered into agreements with the shipbuilders, Shanghai Jiangnan-Changxing Shipbuilding Co. Ltd., and with Gala, which was then a related party controlled by the two daughters of the Company's Chairman and Chief Executive Officer under which the Company acquired Gala, that had a contract with the China Shipbuilding Trading Company, Limited and Shanghai Jiangnan-Changxing Shipbuilding Co. Ltd., for the construction of the Houston for a contract price, as amended, of $60,200 and with scheduled delivery in October 2009, in exchange of its ownership interest in the Company's subsidiary Eniwetok Shipping Company Inc., which had a contract with the shipbuilders for the construction of Hull H1108. The Company also acquired the charter party, which Gala had already entered into for Houston (Note 8) for a consideration of $15,000. Assets exchanged were recorded at fair value, measured on the consummation date of the transaction. No gain or loss was recognized as a result of the transaction.
|
5.
|
Advances for Vessels under Construction and Acquisitions and Other Vessel Costs
|
|
2011
|
2010
|
||||||
Pre-delivery installments
|
$ | 58,000 | $ | 34,800 | ||||
Advances for vessel acquisitions
|
3,225 | - | ||||||
Capitalized interest and finance costs
|
1,516 | 449 | ||||||
Other related costs
|
699 | 31 | ||||||
Total
|
$ | 63,440 | $ | 35,280 |
|
2011
|
2010
|
||||||
Beginning balance
|
$ | 35,280 | $ | 29,630 | ||||
- Advances for vessels under construction and other vessel costs
|
24,919 | 72,111 | ||||||
- Advances for vessel acquisitions and other vessel costs
|
3,241 | 31,647 | ||||||
- Transferred to vessel cost (Note 6)
|
- | (98,108 | ) | |||||
Ending balance
|
$ | 63,440 | $ | 35,280 |
6.
|
Vessels
|
|
Vessel Cost
|
Accumulated Depreciation
|
Net Book Value
|
|||||||||
|
|
|
||||||||||
|
|
|
||||||||||
Balance, December 31, 2009
|
$ | 1,123,105 | $ | (143,762 | ) | $ | 979,343 | |||||
- Transfer from advances for vessels under construction and acquisition and other vessel costs
|
98,108 | - | 98,108 | |||||||||
- Acquisition and other vessel costs
|
134,431 | - | 134,431 | |||||||||
- Depreciation for the year
|
- | (51,032 | ) | (51,032 | ) | |||||||
Balance, December 31, 2010
|
$ | 1,355,644 | $ | (194,794 | ) | $ | 1,160,850 | |||||
- Deconsolidation of Diana Containerships Inc. (Note 3)
|
(93,531 | ) | 1,599 | (91,932 | ) | |||||||
- Acquisition and other vessel costs
|
30,124 | - | 30,124 | |||||||||
- Depreciation for the year
|
- | (52,323 | ) | (52,323 | ) | |||||||
Balance, December 31, 2011
|
$ | 1,292,237 | $ | (245,518 | ) | $ | 1,046,719 |
7.
|
Property and equipment, net
|
|
Property and Equipment
|
Accumulated Depreciation
|
Net Book Value
|
|||||||||
|
|
|
||||||||||
Balance, December 31, 2009
|
$ | 518 | $ | (318 | ) | $ | 200 | |||||
- Land
|
11,109 | - | 11,109 | |||||||||
- Building acquisition
|
10,391 | 10,391 | ||||||||||
- Additions in equipment
|
314 | 314 | ||||||||||
- Depreciation for the period
|
- | (172 | ) | (172 | ) | |||||||
Balance, December 31, 2010
|
$ | 22,332 | $ | (490 | ) | $ | 21,842 | |||||
- Additions in equipment and building improvements
|
220 | - | 220 | |||||||||
- Depreciation for the period
|
- | (403 | ) | (403 | ) | |||||||
Balance, December 31, 2011
|
$ | 22,552 | $ | (893 | ) | $ | 21,659 |
8.
|
Prepaid charter revenue, current and non-current
|
Period
|
Amount
|
|||||
January 1, 2012
|
to
|
December 31, 2012
|
$ | 3,058 | ||
January 1, 2013
|
to
|
December 31, 2013
|
3,050 | |||
January 1, 2014
|
to
|
October 3, 2014
|
2,301 |
|
2011
|
2010
|
||||||
Royal Bank of Scotland revolving credit facility
|
$ | 290,700 | $ | 290,700 | ||||
Bremer Landesbank loan facility
|
32,800 | 36,400 | ||||||
Deutsche Bank AG loan facility
|
35,800 | 38,200 | ||||||
DnB NOR Bank ASA loan facility
|
- | 19,670 | ||||||
Emporiki Bank of Greece S.A.
|
15,000 | - | ||||||
Total debt outstanding
|
$ | 374,300 | $ | 384,970 | ||||
Less related deferred financing costs
|
(962 | ) | (1,347 | ) | ||||
Total debt, net of deferred financing costs
|
$ | 373,338 | $ | 383,623 | ||||
Current portion of long term debt
|
$ | (27,700 | ) | $ | (7,320 | ) | ||
Long-term debt, non current portion
|
$ | 345,638 | $ | 376,303 |
Period
|
Principal Repayment
|
|||||
January 1, 2012
|
to
|
December 31, 2012
|
$ | 27,700 | ||
January 1, 2013
|
to
|
December 31, 2013
|
37,000 | |||
January 1, 2014
|
to
|
December 31, 2014
|
37,000 | |||
January 1, 2015
|
to
|
December 31, 2015
|
63,200 | |||
January 1, 2016
|
to
|
December 31, 2016
|
184,600 | |||
January 1, 2017
|
and thereafter
|
24,800 | ||||
|
|
Total
|
$ | 374,300 |
10.
|
Deferred revenue, current and non-current
|
|
2011
|
2010
|
||||||
Hires collected in advance
|
$ | 3,905 | $ | 6,643 | ||||
Charter revenue resulting from varying charter rates
|
- | 1,901 | ||||||
Unamortized balance of time charter attached
|
4,231 | 9,345 | ||||||
Total
|
$ | 8,136 | $ | 17,889 | ||||
Less current portion
|
$ | (8,136 | ) | $ | (13,662 | ) | ||
Non-current portion
|
$ | - | $ | 4,227 |
11.
|
Commitments and Contingencies
|
|
(a)
|
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company's vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.
|
|
(b)
|
The Company has entered into shipbuilding contracts for the construction of two Newcastlemax vessels (Note 5). As at December 31, 2011, the remaining installments under the contract for the construction of hull H1234, named "Los Angeles", amounted to $26,100 and for the construction of hull H1235, to be named "Philadelphia", amounted to $31,900.
|
|
(c)
|
As of December 31, 2011, all our vessels (including those scheduled to be delivered after December 31, 2011) had fixed non-cancelable time charter contracts, the last of which expires in June 2016 (latest redelivery date), under the following terms:
|
Vessel Name
|
Daily time charter gross rate (in U.S. Dollars)
|
Date delivered to charterer
|
Charterer redelivery option periods
|
|||||
Nirefs
|
$ | 12,250 |
18-Dec-11
|
18-Jan-13
|
- |
18-Apr-13
|
||
Alcyon
|
$ | 34,500 |
21-Feb-08
|
21-Nov-12
|
- |
21-Feb-13
|
||
Triton
|
$ | 19,500 |
11-Dec-10
|
11-Nov-13
|
- |
11-Feb-14
|
||
Oceanis
|
$ | 19,750 |
17-Sep-10
|
17-Aug-12
|
- |
1-Nov-12
|
||
Dione
|
$ | 20,500 |
26-Sep-10
|
26-Jul-12
|
- |
26-Nov-12
|
||
Danae
|
$ | 15,600 |
18-Apr-11
|
18-Mar-13
|
- |
18-May-13
|
||
Protefs
|
$ | 11,750 |
6-Aug-11
|
6-Jul-12
|
- |
6-Oct-12
|
||
Calipso
|
$ | 12,250 |
11-Oct-11
|
11-Aug-13
|
- |
11-Dec-13
|
||
Clio
|
$ | 25,000 |
8-May-10
|
8-Apr-12
|
- |
8-Jun-12
|
||
Erato
|
$ | 12,200 |
26-Nov-11
|
26-Dec-12
|
- |
10-Apr-13
|
||
Thetis
|
$ | 13,750 |
23-Feb-11
|
28-Jan-12
|
- |
28-Jan-12
|
||
Coronis
|
$ | 24,000 |
6-Apr-10
|
6-Mar-12
|
- |
21-Jun-12
|
||
Naias
|
$ | 19,750 |
24-Sep-10
|
24-Aug-12
|
- |
24-Oct-12
|
||
Sideris
|
$ | 30,500 |
16-Oct-10
|
16-Feb-13
|
- |
16-Jun-13
|
||
Aliki
|
$ | 26,500 |
1-Mar-11
|
1-Feb-16
|
- |
1-Apr-16
|
||
Semirio
|
$ | 17,350 |
30-May-11
|
15-Mar-13
|
- |
14-Aug-13
|
||
Boston
|
$ | 14,000 |
29-Oct-11
|
29-Aug-13
|
- |
29-Dec-13
|
||
SLC
|
$ | 55,800 |
28-Sep-07
|
28-Aug-12
|
- |
28-Oct-12
|
||
Norfolk
|
$ | 74,750 |
12-Feb-08
|
12-Jan-13
|
- |
12-Mar-13
|
||
New York
|
$ | 48,000 |
3-Mar-10
|
3-Jan-15
|
- |
3-May-15
|
||
Melite
|
$ | 16,500 |
1-Feb-11
|
1-Jan-13
|
- |
1-Mar-13
|
||
Houston
|
$ | 55,000 |
3-Nov-09
|
3-Oct-14
|
- |
3-Jan-15
|
||
Alcmene
|
$ | 20,250 |
20-Nov-10
|
5-Oct-12
|
- |
4-Jan-13
|
||
Arethusa
|
$ | 13,250 |
8-Jul-11
|
24-May-12
|
- |
23-Aug-12
|
||
Leto
|
$ | 12,900 |
17-Jan-12
|
17-Jan-14
|
- |
17-Nov-14
|
||
Los Angeles
|
$ | 18,000 |
9-Feb-12
|
9-Dec-15
|
- |
9-Apr-16
|
||
Philadelphia
|
$ | 18,000 |
30-Apr-12
|
30-Dec-15
|
- |
30-Jun-16
|
12.
|
Capital Stock and Changes in Capital Accounts
|
|
(a)
Preferred stock and common stock
:
Under the amended articles of incorporation in May 2008 discussed in Note 1, the Company's authorized capital stock consists of 200,000,000 shares (all in registered form) of common stock, par value $0.01 per share and of 25,000,000 shares (all in registered form) of preferred stock, par value $0.01 per share. The holders of the common shares are entitled to one vote on all matters submitted to a vote of stockholders and to receive all dividends, if any.
|
|
(b)
Incentive plan
: In February 2005, the Company adopted an equity incentive plan (the "Plan") which entitles the Company's employees, officers and directors to receive options to acquire the Company's common stock. A total of 2,800,000 shares of common stock are available for issuance under the plan. The plan is administered by the Company's Board of Directors. Under the terms of the plan, the Company's Board of Directors is able to grant a) incentive stock options, b) non-qualified stock options, c) stock appreciation rights, d) dividend equivalent rights, e) restricted stock, f) unrestricted stock, g) restricted stock units, and h) performance shares. No options, stock appreciation rights or restricted stock units can be exercisable prior to the first anniversary or subsequent to the tenth anniversary of the date on which such award was granted. The plan will expire 10 years from the adoption of the plan by the Board of Directors. On October 21, 2008, the Stock Incentive Plan was amended and restated. Under the amended and restated Plan, the Administrator may waive or modify the application of forfeiture of awards of restricted stock and performance shares in connection with cessation of service with the Company. The Company's Board of Directors delegated to the members of the Compensation Committee its authority as Administrator of the Plan to vest restricted stock awards granted under the Plan in the event of the grantee's death. On May 2, 2011, the Company's board of directors approved to adopt the Diana Shipping Inc. 2011 Equity Incentive Plan, with substantially the same terms and provisions as the Company's Amended and Restated 2005 Equity Incentive Plan. Under the 2011 Equity Incentive Plan, an aggregate of 5,000,000 common shares will be available for issuance under the Plan.
|
|
Number of Shares
|
Weighted Average Grant Date Price
|
||||||
Outstanding at December 31, 2008
|
675,500 | $ | 19.07 | |||||
Granted
|
364,200 | $ | 12.10 | |||||
Vested
|
(125,167 | ) | $ | 20.28 | ||||
Forfeited or expired
|
- | $ | - | |||||
Outstanding at December 31, 2009
|
914,533 | $ | 16.13 | |||||
Granted
|
519,926 | $ | 14.29 | |||||
Vested
|
(246,572 | ) | $ | 16.25 | ||||
Forfeited or expired
|
- | $ | - | |||||
Outstanding at December 31, 2010
|
1,187,887 | $ | 15.30 | |||||
Granted
|
616,055 | $ | 12.64 | |||||
Vested
|
(419,880 | ) | $ | 15.44 | ||||
Forfeited or expired
|
- | $ | - | |||||
Outstanding at December 31, 2011
|
1,384,062 | $ | 14.07 |
|
(c)
Dividend Reinvestment and Direct Stock Purchase Plan ("DRIP"):
In April 2008, the Company entered into a Plan for 2,500,000 shares of common stock to allow existing shareholders to purchase additional common stock by reinvesting all or a portion of the dividends paid on their common stock and by making optional cash investments and new investors to enter into the Plan by making an initial investment. During the period from January 1, 2011 until its termination in April 2011, 1,640 shares were issued pursuant to the DRIP in addition to the 21,187 shares issued as at December 31, 2010.
|
|
(d)
Share repurchase agreement:
In December 2011, the Company entered into an agreement with Goldman, Sachs & Co. (the "Broker") to repurchase its stock according to Rule 10b5-1(c)(l) and to the extend applicable to Rule 10b-18 under the Securities and Exchange Act of 1934. Under the terms of the agreement the Broker may purchase shares in the open market or through privately negotiated transactions. The agreement will terminate the earlier of February 29, 2012 and the date the purchased stock amounts to $10,000 (excluding commissions), unless there are other conditions to terminate the agreement earlier. As at December 31, 2011, the Company had repurchased 154,091 shares, amounting to $1,187, which were cancelled.
|
|
(e)
Diana Containerships Inc.:
On April 6, 2010, the Company invested $50,000 in a private offering of 5,892,330 shares of common stock of Diana Containerships pursuant to Rule 144A and Regulation S and Regulation D of the Securities Act of 1933, as amended, and acquired 3,333,333 common shares of Diana Containerships. The difference between the consideration paid by Diana during the offering and the book value of Diana's share in Diana Containerships's net proceeds from the offering, amounting $3,438, was recognized directly as an adjustment to additional paid-in capital.
|
13.
|
Voyage and Vessel Operating Expenses
|
|
2011
|
2010
|
2009
|
|||||||||
Voyage Expenses
|
|
|
|
|||||||||
Bunkers
|
$ | (1,663 | ) | $ | (652 | ) | $ | 779 | ||||
Commissions charged by third parties
|
11,963 | 12,889 | 11,273 | |||||||||
Miscellaneous
|
297 | 155 | (87 | ) | ||||||||
Total
|
$ | 10,597 | $ | 12,392 | $ | 11,965 | ||||||
|
||||||||||||
Vessel Operating Expenses
|
||||||||||||
Crew wages and related costs
|
$ | 31,497 | $ | 28,406 | $ | 23,922 | ||||||
Insurance
|
4,369 | 4,181 | 3,410 | |||||||||
Spares and consumable stores
|
12,686 | 12,691 | 9,149 | |||||||||
Repairs and maintenance
|
5,903 | 6,257 | 4,043 | |||||||||
Tonnage taxes (Note 16)
|
318 | 306 | 273 | |||||||||
Other operating expenses
|
602 | 744 | 572 | |||||||||
Total
|
$ | 55,375 | $ | 52,585 | $ | 41,369 |
14.
|
Interest and Finance Costs
|
|
2011
|
2010
|
2009
|
|||||||||
Interest expense
|
$ | 4,494 | $ | 4,642 | $ | 2,944 | ||||||
Amortization of financing costs
|
278 | 263 | 65 | |||||||||
Commitment fees and other costs
|
152 | 308 | 275 | |||||||||
Total
|
$ | 4,924 | $ | 5,213 | $ | 3,284 |
15.
|
Earnings per Share
|
|
2011
|
2010
|
2009
|
|||||||||||||||||||||
|
Basic EPS
|
Diluted EPS
|
Basic EPS
|
Diluted EPS
|
Basic EPS
|
Diluted EPS
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
Net income attributed to Diana Shipping Inc.
|
$ | 107,497 | $ | 107,497 | $ | 128,779 | $ | 128,779 | $ | 121,498 | $ | 121,498 | ||||||||||||
|
||||||||||||||||||||||||
Weighted average number of common shares outstanding
|
81,081,774 | 81,081,774 | 80,682,770 | 80,682,770 | 78,282,775 | 78,282,775 | ||||||||||||||||||
Incremental shares
|
- | 42,574 | - | 125,462 | - | 102,689 | ||||||||||||||||||
Total shares outstanding
|
81,081,774 | 81,124,348 | 80,682,770 | 80,808,232 | 78,282,775 | 78,385,464 | ||||||||||||||||||
|
||||||||||||||||||||||||
Earnings per share
|
$ | 1.33 | $ | 1.33 | $ | 1.60 | $ | 1.59 | $ | 1.55 | $ | 1.55 |
16.
|
Income Taxes
|
17.
|
Financial Instruments
|
18.
|
Subsequent Events
|
|
(a)
Vessel delivery and loan agreement:
On January 16, 2012, the Company took delivery of m/v Vathy, renamed to "Leto" (Note 5) and paid the delivery installment of $29,025. Part of the acquisition cost of the vessel was paid with proceeds under the loan facility with Nordea Bank discussed in Note 9, the Company entered into on February 7, 2012. On the same date, the Company drew down the full amount of $16,125 and paid an aggregate amount of $204 of arrangement and commitment fees.
|
|
(b)
Vessel delivery and loan drawdown:
On February 8, 2012, the Company took delivery of Hull 1234, named "Los Angeles" and paid the delivery installment of $26,100 (Note 5). On February 15, 2012, the Company drew down $37,450 under the loan facility with Cexim and DnB NOR discussed in Note 9, to finance part of the construction cost of the vessel.
|
|
(c)
Annual Incentive Bonus
: On February 22, 2012 the Company's Board of Directors approved a cash bonus of about $2,548 to all employees and executive management of the Company and 667,614 shares of restricted common stock awards to executive management and non-executive directors, pursuant to the Company's 2005 equity incentive plan as amended in 2008. The fair value of the restricted shares based on the closing price on the date of the Board of Directors' approval was about $6,095 and will be recognized in income ratably over the restricted shares vesting period which will be 3 years.
|
|
(d)
Diana Enterprises Inc.:
On February 22, 2011 the Brokerage Services Agreement between DSS and Diana
Enterprises (Note 4) was terminated and replaced with a new agreement. Diana Enterprises will provide the Company, through DSS, brokerage services for a period of five years from the date of the agreement and for an annual lump sum commission of $2,384 paid quarterly in advance and effective retroactively from January 1, 2012.
|
|
(e)
Vessel under construction:
On March 12, 2012, the Company paid one additional predelivery installment for the construction of hull H1235, to be named "Philadelphia", amounting to $5,800.
|
|
(f)
New construction contracts:
On March 28, 2012, Erikub Shipping Company Inc. and Wotho Shipping Company Inc., each entered into one shipbuilding contract with China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (Group) Co., Ltd for the construction of one 76,000 dwt ice class Panamax dry bulk carrier for each subsidiary for the contract price of $29,000 each. The two vessels are expected to be delivered in the fourth quarter of 2013.
|
|
(g)
New vessel acquisition:
On March 30, 2012, we entered into a Memorandum of Agreement to purchase from an unaffiliated third party, a 2005 built Panamax dry bulk carrier of 76,225 dwt, for a price of $20,650. On April 12, 2012 we paid a 20% advance, or $4,130 of the purchase price. The vessel, to be renamed "Melia", is expected to be delivered to the Company by the sellers in April 2012.
|
|
2.9.
|
Other Stock-Based Awards
|
|
2.10.
|
Dividend Equivalents
|
1.
|
PURPOSE, DEFINITIONS AND INTERPRETATION
|
3
|
2.
|
THE LOAN
|
13
|
3.
|
INTEREST
|
15
|
4.
|
REPAYMENT - PREPAYMENT
|
18
|
5.
|
PAYMENTS, TAXES AND COMPUTATION
|
20
|
6.
|
REPRESENTATIONS AND WARRANTIES
|
21
|
7.
|
CONDITIONS PRECEDENT
|
26
|
8.
|
COVENANTS
|
30
|
9.
|
EVENTS OF DEFAULT
|
39
|
10.
|
INDEMNITIES - EXPENSES
|
44
|
11.
|
SECURITY AND SET-OFF
|
47
|
12.
|
UNLAWFULNESS, INCREASED COSTS
|
54
|
13.
|
MISCELLANEOUS
|
56
|
1. | INSURANCE REQUIREMENTS | |
2. | DRAWDOWN NOTICE | |
3. | COMPLIANCE CERTIFICATE | |
a)
|
all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature, (including, without limitation, Taxes, repair costs, registration fees and insurance premiums, crew wages, repatriation expenses and seamen's pension fund dues) suffered, incurred, charged to or paid or committed to be paid by the Bank in connection with the exercise of the powers referred to in or granted by any of the Security Documents or otherwise payable by the Borrower in accordance with the terms of any of the Security Documents;
|
b)
|
the expenses referred to in Clause 10.02 (a), (b) and (d) ; and
|
c)
|
interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from the date on which the same were suffered, incurred or paid by the Bank until the date of receipt or recovery thereof (whether before or after judgement) at a rate per annum calculated in accordance with Clause 3.04 (as conclusively certified by the Bank);
|
a)
|
Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement.
|
b)
|
Each of the terms defined in Clause 1.02 when used in plural and terms defined in plural or words used in plural (and unless in the specific clause or sentence is otherwise expressly specified) mean all of them collectively and/or each of them and/or anyone of them (even if this is not expressly so spelled out) as the context may require or permit.
|
c)
|
Subject to any specific provision of this Agreement or of any assignment and/or participation or syndication agreement of any nature whatsoever, reference to each of the parties hereto and to the other Security Documents shall be deemed to be reference to and/or to include, as appropriate, their respective successors and permitted assigns.
|
d)
|
Reference to a person shall be construed as including reference to an individual, firm, company, corporation, unincorporated body of persons or any State or any agency thereof.
|
e)
|
Where the context so admits, words in the singular include the plural and vice versa.
|
f)
|
The words "including" and "in particular" shall not be construed as limiting the generality of any foregoing words.
|
g)
|
This Agreement and all documents referred to in this Agreement include the same as varied or supplemented from time to time.
|
h)
|
Reference to this Agreement includes all the terms of this Agreement and any Schedules, Annexes or Appendices to this Agreement, which form an integral part of this Agreement.
|
i)
|
Unless otherwise stated in respect of the Master Swap Agreement, reference to Clauses, Sub-Clauses and Schedules are to Clauses, Sub-Clauses and Schedules in this Agreement.
|
j)
|
All obligations imposed on, or assumed by the Borrower and the Guarantors are joint and several even if not so expressed.
|
a)
|
the initial Interest Period in respect of the Loan (or - in case that the Commitment is agreed to be advanced in more than one advance - of each Advance) will commence on the date on which the Commitment (or - as the case may be - the relevant Advance) is advanced and each subsequent Interest Period will commence forthwith upon the expiry of the previous Interest Period;
|
b)
|
in case that the Commitment is advanced by more than one advance, the initial Interest Period in respect of each Advance after the first Advance shall end on the same day as the then current Interest Period for the Loan;
|
c)
|
if any Interest Period would otherwise overrun one or more Repayment Dates, then, in the case of the last Repayment Date, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be divided into parts so that there is one part equal to the amount(s) of the Repayment Instalment(s) due (in the currency in which the same is due) on each Repayment Date falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part equal to the amount of the balance of the Loan having an Interest Period determined in accordance with Clause 3.02 and the other provisions of this Clause 3.03;
|
d)
|
in case of failure of the Borrower to specify the duration of an Interest Period in accordance with the provisions of Clause 3.02 and this Clause 3.03, such Interest Period shall have a duration of three (3) months unless another period shall be agreed between the Bank and the Borrower provided always that such period (whether of three (3) months or of different duration) shall comply with this Clause 3.03; and
|
e)
|
if the Bank determines that the duration of an Interest Period specified by the Borrower in accordance with Clause 3.02 is not readily available, then that Interest Period shall have such duration as the Bank, in consultation with the Borrower, may determine.
|
(a)
|
The giving of such notice by the Borrower will irrevocably commit the Borrower to prepay such amount as stated in such notice;
|
(b)
|
Such prepayment may take place only on the last day of an Interest Period relating to the whole of the Loan provided, however, that if the Borrower shall request consent to make such prepayment on another day and the Bank shall accede to such request (it being in the sole discretion of the Bank to decide whether or not to do so) the Borrower will pay in addition to the amount to be prepaid, any such sum as may be payable to the Bank pursuant to Clause 10.01 and any costs from unwinding of any then existing hedging transactions;
|
(c)
|
Each partial prepayment shall be equal to Dollars Five Hundred Thousand ($500,000) or higher integral multiple thereof or the balance of the Loan;
|
(d)
|
Every notice of prepayment shall be effective only on actual receipt by the Bank, shall be irrevocable and shall oblige the Borrower to make such prepayment on the date specified;
|
(e)
|
No amount prepaid may be re-borrowed; and
|
(f)
|
The Borrower may not prepay the Loan or any part thereof save as expressly provided in this Agreement.
|
a)
|
(
Due Incorporation/Valid Existence
)
the Borrower, any other corporate Security Party and the Manager are incorporated and duly organised and validly existing and in good standing under the laws of their respective countries of incorporation and any other laws which are applicable to them, with power to own their property and assets, to carry on their business as the same is now being lawfully conducted and to purchase, own, finance and operate vessels, or manage vessels as the case may be as well as to undertake the obligations which have undertaken pursuant to the Security Documents;
|
b)
|
(
Due Authority
)
the entry into and performance of this Agreement and all the other Security Documents, the Approved Charter and the Memorandum of Agreement are within the corporate powers of the Borrower, any other corporate Security Party and the Manager and have been duly authorised by all corporate, shareholders' and other necessary action required for the authorization and do not and would not contravene or result in breach of any applicable law, regulation, rule, judgment, decree or permit or contractual restriction which does, or may, bind any one or more of them or their shareholders or their Subsidiaries, or the documents defining the respective constitutions of any of them and do not and will not result in the creation or imposition of any security interest, lien, charge, or Encumbrance on any of their assets or those of any of their Subsidiaries in favour of any party other than the Bank;
|
c)
|
(
No Default/ or litigation
)
neither the Borrower nor any other Security Party or any other member of the Group is in default under this Agreement or any other agreement to which it is a party or by which it may be bound and no litigation, arbitration, tax claim or administrative proceeding is current or pending or (to its or its officers' knowledge) threatened, which, if adversely determined, would have a materially detrimental effect on the business assets or the financial condition of any of them;
|
d)
|
(
Financial Information
)
all information, accounts, statements of financial position, exhibits and reports furnished by or on behalf of any Security Party to the Bank in connection with the negotiation and preparation of this Agreement and each of the other Security Documents are true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other facts the omission of which would make any fact or statement therein misleading and, in the case of accounts and statements of financial position, they have been prepared in accordance with Applicable Accounting Principles which have been consistently applied;
|
e)
|
(
Financial Condition
)
the financial condition of the Borrower, any other Security Party and the Manager has not suffered any material deterioration since that condition was last disclosed to the Bank;
|
f)
|
(
No Immunity
)
neither the Borrower nor any other Security Party or any of their respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement);
|
g)
|
(
Shipping Company
)
the Borrower is and/or on the drawdown of the Commitment, will be a
shipping company involved in the owning or managing of ships engaged in international voyages
and earning profits in free foreign currency;
|
h)
|
(
Commercial Benefit of the Corporate Guarantor
)
the giving of the Guarantee by the Corporate Guarantor is to its best commercial benefit in that the Borrower is a wholly owned direct Subsidiary of the Corporate Guarantor and in that the Corporate Guarantor belongs to the same Group of companies as the Borrower and has close financial cooperation and mutual assistance with the Borrower and by lending its support to the Borrower through such guarantee it furthers its own business interests within the scope of its constitutional documents;
|
i)
|
(
No established place of business in the United Kingdom or United States
)
none of the Security Parties has, nor will any of them have during the term of the Loan, an established place of business in the United Kingdom or the United States of America;
|
j)
|
(
Acting for its own account
)
the Borrower, by entering into this Agreement, the Master Swap Agreement and the Security Documents, is acting on its own behalf and for its own account;
|
k)
|
(
Information during negotiations
)
all information furnished to the Bank during the negotiations of this Agreement is true and accurate;
|
l)
|
(
No money laundering
)
without prejudice to the generality of Clause 1.02, in relation to the borrowing by the Borrower of the Loan, the performance and discharge of its obligations and liabilities under the Security Documents, and the transactions and other arrangements effected or contemplated by the Security Documents to which the Borrower is a party, the Borrower confirms that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat "money laundering" (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities);
|
m)
|
(
Shareholdings
)
|
(i)
|
the Borrower is a wholly-owned direct Subsidiary of the Corporate Guarantor;
|
(ii)
|
all of the issued shares in the Manager are legally and beneficially owned by the Corporate Guarantor;
|
(iii)
|
the aggregate number of shares of common stock that the Corporate Guarantor is authorised to issue is 200 million registered shares each of a par value of one cent (US$ 0.1) and the Corporate Guarantor is authorized to issue 25 million preferred shares each of a par value of one cent (US$ 0.1) which are publicly listed and traded permanently on the New York Stock Exchange (NYSE), out of which 82,573,508 common registered shares and nonepreferred registered shares have been issued and are fully paid up;
|
(iv)
|
to the best of its knowledge and belief (having made due and careful enquiry), no person, or persons acting in concert (other than any financial institution acting as a passive investor), are the legal or ultimate beneficial owners of a higher percentage of the total issued share capital of the Corporate Guarantor, than the percentage of the total issued share capital of the Corporate Guarantor, beneficially owned by Mr Simeon Palios; and
|
(iv)
|
Mr. Simeon Palios is the Chief Executive Officer, the Chairman and a member of the board of directors of the Corporate Guarantor
|
n)
|
(Solvency)
|
(i)
|
neither the Borrower nor any other Relevant Party is unable, or admits or has admitted its inability, to pay its debts or has suspended making payments on any of its debts;
|
(ii)
|
neither the Borrower nor any other Relevant Party by reason of actual or anticipated financial difficulties has commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness;
|
(iii)
|
the value of the assets of the Borrower and the other Relevant Parties is not less than their respective liabilities (taking into account contingent and prospective liabilities); and
|
(iv)
|
no moratorium has been, or may, in the reasonably foreseeable future be, declared in respect of any Indebtedness of the Borrower or any other Relevant Party.
|
a)
|
(
Licences/Authorization
)
all licences, authorizations, consents or approvals necessary for the execution, validity, enforceability or admissibility in evidence of the Security Documents and all other documents executed or to be executed in connection therewith, have been obtained and complied with by the Borrower and any other Security Party;
|
b)
|
(
Perfected Securities)
when duly executed, the Security Documents will create a perfected security interest in favour of the Bank, with the intended priority, in the assets and revenues intended to be covered, valid and enforceable against the Borrower, and any other Security Party;
|
c)
|
(
No Notarisation/Filing/Recording
)
save for the registration of any mortgage in the appropriate shipping registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement or any of the Security Documents that it or they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere or that any stamp, registration or similar tax or charge be paid on or in relation to this Agreement or the Security Documents;
|
d)
|
(
No
Taxes
)
no Taxes are imposed by deduction, withholding or otherwise on any payment to be made by any Security Party under this Agreement and/or any other of the Security Documents or are imposed on or by virtue of the execution or delivery of this Agreement and/or any other of the Security Documents or any document or instrument to be executed or delivered hereunder or thereunder. In case that any Tax exists now or will be imposed in the future, it will be borne by the Borrower;
|
e)
|
(
Validity and Binding effect
)
the Security Documents are (or upon their execution - and in the case of any mortgage upon its registration at the appropriate registry - will be) valid and binding and enforceable against the Borrower, all the other Security Parties and the Manager in accordance with their respective terms and conditions, and that there are no other agreements or arrangements which may adversely affect or conflict with the Security Documents or the security they create;
|
f)
|
(
Pari passu
)
the obligations imposed on the Borrower and any other Security Party by the Security Documents do and will constitute direct general and unconditional obligations of the Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrower with the exception of any obligations which are mandatorily preferred by law and not by contract;
|
g)
|
(
Valid choice of Law
)
the choice of law agreed to govern this Agreement and/or any other Security Document and the submission to the jurisdiction of the courts agreed in each of the Security Documents are or will be, on execution of the respective Security Documents, valid and binding on the Borrower and any other Security Party which is party thereto;
|
h)
|
(
Subordinated indebtedness
)
any Indebtedness of the Borrower or the Corporate Guarantor owing to any of its respective shareholders or other members of the Group is subordinated in all
|
|
respects to the Borrower's obligations under this Agreement and the Master Swap Agreement (in the case of the Borrower) and to the Corporate Guarantor's obligations under the Corporate Guarantee (in the case of the Corporate Guarantor);
|
a)
|
Except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Bank:
|
|
i.
|
The provisions of all Environmental Laws, have been complied with by the Borrower, the other Relevant Parties and (to the best knowledge and belief of the Borrower) by their respective Environmental Affiliates;
|
|
ii.
|
all Environmental Approvals have been obtained and are complied with by the Borrower, the other Relevant Parties and (to the best knowledge and belief of the Borrower) by their respective Environmental Affiliates; and
|
|
iii.
|
Neither the Borrower nor any other Relevant Party nor (to the best knowledge and belief of the Borrower) any of their respective Environmental Affiliates has received notice of any Environmental Claim that any Relevant Party or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval;
|
b)
|
except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Bank there is no Environmental Claim pending or, (to the best knowledge and belief of the Borrower), threatened against the Borrower or the Vessel or any other Relevant Party or any other Relevant Ship or (to the best of knowledge and belief of the Borrower) any of their respective Environmental Affiliates;
|
c)
|
except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing, by the Bank there has been no emission, spill, release or discharge of a material of environmental concern from the Vessel or any other Relevant Ship owned by, managed by or chartered to the Borrower (or the Corporate Guarantor) nor (to the best of knowledge and belief of the Borrower) from any other Relevant Ship owned by, managed by or chartered to, any other Relevant Party which could give rise to any Environmental Claim.
|
a)
|
(
Ownership/ Flag/ Seaworthiness/ Class/ Insurance
)
the Vessel is and on the Drawdown Date, will be:
|
|
i.
|
in the absolute and (save for any mortgage in favour of the Bank) unencumbered ownership of its Owner;
|
|
ii.
|
registered with a registry and under Greek flag in the name of its Owner;
|
|
iii.
|
operationally seaworthy and in every way fit for service;
|
|
iv.
|
classed with a Classification Society which has been approved by the Bank in writing and the Classification is and will be free of all requirements, recommendations or notations save for the notations which, at the sole discretion of the Bank, do not affect the Classification; and
|
|
v.
|
insured in accordance with the provisions of this Agreement;
|
b)
|
(
No Charter
)
save for the Approved Charter and unless otherwise permitted in writing by the Bank, the Vessel will on the drawdown of the Commitment (or as the case may be of each
|
|
Advance) be subject to no charter or contract of affreightment nor to any agreement to enter into any charter or contract which, if entered into after the drawdown of the Commitment (or as the case may be of any Advance) would have required the consent of the Bank under any of the Security Documents and on the drawdown of the Commitment (or as the case may be of any Advance) there will not be any agreement or arrangement whereby the Earnings of the Vessel, may be shared with any other person;
|
c)
|
(
No Encumbrances
)
neither the Vessel, nor its Earnings, Requisition Compensation or Insurances nor any part thereof will, on the drawdown of the Commitment (or as the case may be of any Advance), be subject to any Encumbrances other than Encumbrances in favour of the Bank,
|
d)
|
(
DOC and SMC
)
on the Drawdown Date of the Commitment, the Manager will have a DOC for itself and an SMC in respect of the Vessel; and
|
e)
|
(
ISPS Code
)
on the Drawdown Date of the Commitment, the Borrower shall have a valid and current ISSC in respect of the Vessel and such Ship shall be in compliance with the ISPS Code.
|
a)
|
A duly certified true copy of the Articles of Incorporation and By-Laws or the Memorandum and Articles of Association, or of any other constitutional documents, as the case may be, of each corporate Security Party and the Manager together with certified translations of the same in Greek, if so required by the Bank;
|
b)
|
A recent certificate of incumbency of each corporate Security Party and the Manager issued by the appropriate authority and/or at the discretion of the Bank signed by the secretary or a director of each of them respectively, stating the corporate body which binds every one of them, the officers and/or the directors of each of them and containing specimens of their signatures;
|
c)
|
A recent certificate as to the shareholding of the Borrower issued by an appropriate authority or, at the discretion of the Bank, signed by the secretary or a director of each of them as the case may be, stating respectively the full names and addresses of the person or persons beneficially entitled as shareholders/ stockholders of the entire issued and outstanding shares/ stock of each of them;
|
d)
|
Minutes of meetings of the directors (or of any other body which binds them, if any) of each corporate Security Party and the Manager and Minutes of meetings of the shareholders of each corporate Security Party (with the exception of the Corporate Guarantor) at which there was approved the entry into, execution, delivery and performance of this Agreement, the Master Swap Agreement and the other Security Documents and any other documents executed or to be executed pursuant hereto or thereto to which the relevant corporate Security Party and/or the Manager is a party;
|
e)
|
Evidence of the due authority of any person signing this Agreement, the Master Swap Agreement and the other Security Documents and any other documents executed or to be executed pursuant hereto or thereto on behalf of any corporate person;
|
f)
|
Evidence that all necessary licences, consents, permits and authorizations (including exchange control ones) have been obtained by any Security Party and the Manager for the execution, delivery, validity, enforceability, admissibility in evidence and the due performance of the respective obligations under or pursuant to this Agreement, the Master Swap Agreement and the other Security Documents;
|
g)
|
Any other documents or recent certificates or other evidence which would be required by the Bank in relation to any corporate Security Party and the Manager evidencing that each of the Security Parties and the Manager has been properly established, continues to exist validly and to be in good standing, which is the corporate body which binds the company, which is its present board of directors and shareholders (save for the Corporate Guarantor), that the execution and performance of the Security Documents has been duly authorized and generally that the representations in Clause 6 are correct in all respects.
|
a)
|
A copy of the Memorandum of Agreement certified as true and complete by the legal counsel of the Borrower;
|
b)
|
Evidence to the full satisfaction of the Bank, proving the Seller's title to the Vessel free of any Encumbrances, debts or claims of any nature whatsoever and in case that the Vessel is changing Registry, that the Vessel has been deleted from the previous Registry;
|
c)
|
Duly certified copies of corporate documentation of the Seller - comparable at the discretion of the Bank to that provided in Clause 7.01 - proving the due incorporation and existence of the Seller and the due authorization of the sale of the Vessel and the execution of all documents required in connection therewith; and
|
d)
|
Duly certified copy of the Bill of Sale, the protocol of delivery and acceptance of the Vessel and the relevant invoices.
|
a)
|
The representations and warranties set out in Clause 6 and in each of the Security Documents are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time;
|
b)
|
No Event of Default shall have occurred and be continuing or would result from the drawdown; and
|
c)
|
The Bank shall be satisfied that there has been no change in the ultimate ownership, management, operations or financial condition of any Security Party or any member of the Group which (change) might, in the sole opinion of the Bank, be detrimental to the interests of the Bank.
|
(a)
|
(i)
(
Pari passu
)
ensure that the Indebtedness of the Borrower to the Bank under this Agreement and the Master Swap Agreement shall, without prejudice to the provisions of clauses 8.04 and 8.06 and the security intended to be created by the Security Documents, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract
(ii) (Subordination) ensure that the obligations (if any) of the Borrower to repay any loan advanced to it by its shareholder or any other member of the Group are at
all
times fully subordinated towards its obligations to the Bank under this Agreement and the other Security Documents and that any such loans or advances are and remain at all times on terms and conditions acceptable to the Bank in all respects;
|
(b)
|
(
Valuation of the Vessel
)
at least once every year and/or as and when the Bank at its sole discretion requests, provide the Bank, with a valuation of the Vessel from an Approved Shipbroker, at Borrower's own expense, provided that for so long as no Event of Default has occurred, the Borrower shall only be obliged to pay the fees and expenses of up to one valuation for the Vessel in any calendar year, such valuation to be made in Dollars, on the basis of sale for prompt delivery free of charter and free of Encumbrances for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer and made without physical inspection, unless required by the Bank,
(
"the basis of valuation"
);
|
(c)
|
(
Security Shortfall
)
If at any time the Security Value shall be less than the Security Requirement, the Bank may give notice to the Borrower requiring that such shortfall be remedied and the Borrower shall, within fifteen (15) days as of the date of receipt of such notice:
|
(d)
|
The value of the Vessel shall be determined for the purpose of the Clause 8.05(c) as provided in Clause 8.05(b) and shall be notified by the Bank to the Borrower. In the event that by written notice to the Bank (within two (2) Banking Days) such valuation is not accepted by the Borrower, the value of the Vessel in Dollars shall be determined by the first-class shipbroker originally appointed by the Bank and two further Approved Shipbrokers, one of whom shall be appointed by the Bank and one by the Borrower each of whom will value the Vessel on the basis set out in Clause 8.05(b) and the mean of the valuations of such Approved Shipbrokers shall constitute the value of the Vessel for the purposes of Clause 8.05(c) and shall be binding upon the parties hereto, provided however that the original valuation obtained by the Bank shall constitute the value of the Vessel if (i)no shipbroker is appointed by the Borrower within two Banking Days of delivery of the original valuation or (ii)the shipbroker appointed by the Borrower fails to submit the valuation to the Bank within fifteen (15) days of delivery of the original valuation. All costs in connection with such valuations and any valuation of any additional security provided pursuant to Clause 8.05(c) shall be borne by the Borrower.
|
(e)
|
Any valuation referred to in Clause 8.05 shall be addressed to the Bank.
|
a)
|
(
No Transfer of Assets
)
not convey, assign, transfer, sell, abandon, lend or otherwise dispose of or deal with any of its undertakings, real or personal property, assets or rights, or revenues whether present or future (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading but in any event excluding the Vessel) whether by one or a series of transactions related or not, without the prior written consent of the Bank;
|
b)
|
(
No Encumbrance of Assets
)
not allow any Encumbrance to subsist, arise or be created or extended over all or any part of its undertakings, property, assets or rights or revenues, whether present or future to secure or prefer any present or future Indebtedness or other liability or obligation of any Security Party (other than the Corporate Guarantor) or any other person without the prior written consent of the Bank.
|
(i)
|
any amounts payable by the Guarantor and/or any of its Subsidiaries under leases or similar arrangements over their respective periods;
|
(ii)
|
any credit to the Guarantor and/or any of its Subsidiaries from a supplier of goods or under any instalment purchase or other similar arrangement;
|
(iii)
|
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent they are guaranteed by the Guarantor;
|
(iv)
|
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or, under Applicable Accounting Principles, should be recorded in the notes to the Guarantor's Applicable Accounts; and
|
(v)
|
any deferred tax liabilities.
|
(i)
|
will maintain Safety Management Certificates for the Vessel and Document of Compliance for the Company; and
|
|
(ii)
|
will notify the Bank of any actual or threatened withdrawal of the Safety Management Certificates and/or the Document of Compliance; and
|
|
(iii)
|
will not change the Company during the term of the Loan without prior notice to the Bank;
|
|
(iv)
|
will not change the identity of the Designated Person or the Company during the term of the Loan without the prior written consent of the Bank such consent not to be unreasonably withheld; and
|
|
(v)
|
will notify the Bank of any "accident" or "major non-conformity", as each of those terms is defined in the Guidelines on the implementation of the International Safety Management Code by Administrations (adopted by the Assembly of the International Maritime Organization pursuant to Resolution A788(19)), and of the steps being taken to remedy the situation; and
|
|
(vi)
|
will procure that the Vessel remains at all times subject to a Safety Management System which complies with the ISM Code; and
|
|
(vii)
|
it will, and will procure that the Manager will:
|
|
a)
|
maintain at all times a valid and current ISSC in respect of the Vessel;
|
|
b)
|
immediately notify the Bank in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Vessel; and
|
|
c)
|
procure that the Vessel will comply at all times with the ISPS Code.
|
(1)
|
(
Compliance with ISM Code
)
comply with and ensure that any other Owner or operator of the Vessel complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the term of this Agreement.
|
(m)
|
(
Withdrawal of DOC and SMC
)
immediately inform the Bank and ensure that any Owner, the Manager or operator informs the Bank if there is any threatened or actual withdrawal of its operator's DOC or the SMC in respect of the Vessel.
|
(n)
|
(
Issuance of DOC and SMC
)
procure that any operator will promptly inform the Bank upon the issue to the Borrower or any operator of a DOC and to the Vessel of an SMC or the receipt by the Borrower or any operator of notification that its application for the same has been refused.
|
(o)
|
(
Deletion Certificate
)
deliver to the Bank certified copy of the deletion certificate within the time agreed with the Seller in the Memorandum of Agreement.
|
(p)
|
(
Inspection
)
ensure that the Bank with surveyors or other persons appointed by it (at the expense of the Borrower) for such purpose, may board the Vessel at all reasonable times for the purpose of inspecting it and its records and be afforded all proper facilities for such inspections and for this purpose reasonable advance notice of any intended drydocking of the Vessel (whether for the purpose of classification, survey or otherwise) is given to the Bank.
|
a)
|
(Use of the Loan)
use the Loan for its benefit and under its full responsibility and exclusively for the purposes specified in clauses 1.0I of this Agreement;
|
b)
|
(Compliance with Covenants)
duly and punctually perform all obligations under this Agreement and the other Security Documents;
|
c)
|
(
Payment on Demand
)
pay to the Bank on demand any sum of money which is payable by the Borrower to the Bank under this Agreement but in respect of which it is not specified in any other Clause when it is due and payable;
|
d)
|
(
Evidence of Compliance
)
upon request by the Bank from time to time provide such information and evidence to the Bank as the Bank would reasonably require to demonstrate compliance with the covenants and undertakings set forth in this Agreement and any other Security Document;
|
e)
|
(
Intra-Group transactions
)
ensure that any transactions, agreements or other arrangements (if any) entered into by the Borrower with any members of the Group, are entered into on an arm's length basis and for full value and consideration; and
|
f)
|
(
Consents and licences
)
without prejudice to clauses 6.01 and 7, obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, licence or approval of governmental or public bodies or authorities or courts and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;
|
a)
|
(
Validity
)
ensure and procure that all governmental or other consents required by law and/or any other steps required for the validity, enforceability and legality of this Agreement and the other Security Documents are maintained in full force and effect and/or appropriately taken;
|
b)
|
(
Earnings
)
ensure and procure that, unless and until directed by the Bank otherwise Wall the Earnings of the Vessel shall be paid to the Earnings Account and (ii)the persons from whom the Earnings are from time to time due are irrevocably instructed to pay them to the Earnings Account in accordance with the provisions hereof and of the relevant Security Documents;
|
c)
|
(
Taxes
)
pay all Taxes, assessments and other governmental charges when the same fall due, except to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves have been set aside for their payment if such proceedings fail; and
|
d)
|
(
Additional Documents
)
from time to time at the request of the Bank execute and deliver to the Bank or procure the execution and delivery to the Bank of all such documents as shall be deemed desirable at the sole discretion of the Bank for giving full effect to this Agreement, and for perfecting, protecting the value of or enforcing any rights or securities granted to the Bank under any one or more of this Agreement, the other Security Documents and any other documents executed pursuant hereto or thereto and in case that any Conditions Precedent have not been fulfilled prior to the Drawdown, such Conditions shall be complied with within five (5) days of Drawdown (unless the Bank agrees otherwise in writing) and failure to comply with this Covenant shall be an Event of Default.
|
a)
|
Failure by the Borrower to pay any sum due from the Borrower under this Agreement and/or any of the other Security Documents when due, or, in the case of any sum payable on demand, within three (3) Banking Days of such demand; or
|
b)
|
Failure by the Borrower to observe and perform any one or more of the covenants, terms or obligations contained in this Agreement (including Schedule 1) and/or any other Security Document relating to the Insurances; or
|
c)
|
Any breach by the Borrower of or omission of the Borrower to observe any of the covenants, terms, obligations or undertakings under this Agreement and/or any of the other Security Documents (other than failure to pay any sum when due or to comply with any obligation concerning the Insurances) and, in respect of any such breach or omission which in the opinion of the Bank is capable of remedy, such action as the Bank may require shall not have been taken within seven (7) days of the Bank notifying the Borrower of such required action to remedy the breach or omission; or
|
d)
|
An Event of Default or Potential Event of Default (in each case as defined in the Master Swap Agreement) has occurred and is continuing with the Borrower as the Defaulting Party (as defined in the Master Swap Agreement) under the Master Swap Agreement or an Early Termination Date has occurred or been or become capable of being effectively designated under the Master Swap Agreement by the Bank or the Master Swap Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason; or
|
a)
|
The Borrower is adjudicated or found bankrupt or insolvent or any order is made by any court in any country or territory in which the Borrower carries on business or to the jurisdiction of whose courts any part of its assets is subject, or resolution passed by the Borrower or petition presented for the winding-up or dissolution of the Borrower or for the appointment of a liquidator, trustee, administrator or conservator or compulsory manager or other similar officer of the whole or any part of the undertakings, assets, rights or revenues of the Borrower; or
|
b)
|
The Borrower becomes or is deemed to be insolvent or suspends payment of its debts or is (or is deemed to be) unable to or admits inability to pay its debts as they fall due or proposes or enters into any composition or other arrangement for the benefit of its creditors generally or proceedings are commenced in relation to the Borrower under any law, regulation or procedure relating to reconstruction or readjustment of debts; or
|
c)
|
Any corporate action, legal proceedings or other procedures or steps are taken, or negotiations commenced, by the Borrower or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such person and any of its creditors; or
|
d)
|
An encumbrancer takes possession or a receiver or similar officer is appointed of the whole or any part of the undertakings, assets, rights or revenues of the Borrower or a distress, execution, sequestration or other process is levied or enforced upon or sued out against any of the undertakings, assets, rights or revenues of the Borrower and is not discharged within seven (7) days; or
|
e)
|
All or a material part of the undertakings, assets, rights or revenues of the Borrower are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; or
|
f)
|
The Borrower suspends or ceases or threatens to suspend or cease to carry on its business; or
|
g)
|
Any event occurs or proceeding is taken with respect to the Borrower in any jurisdiction to which it is subject which has an effect equivalent or similar to any of the events mentioned in Clauses 9.02(a) to 9.02(f); or
|
h)
|
A meeting is convened by the Borrower for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital; or
|
i)
|
There occurs, in the opinion of the Bank, a materially adverse change in the financial condition of the Borrower; or
|
j)
|
Any other event occurs or circumstances arise which, in the opinion of the Bank, is likely materially and adversely to affect either (i)the ability of the Borrower to perform all or any of its obligations under or otherwise to comply with the terms of this Agreement and/or any of the other Security Documents, or (ii)the security created by this Agreement and/or any of the Security Documents; or
|
k)
|
There is any change in the beneficial ownership of the shares in the Borrower and/or in the Manager; or
|
l)
|
The Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Borrower and the Borrower shall fail to procure the release of the Vessel within a period of twenty (20) days thereafter; or
|
m)
|
The registration of the Vessel under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Bank; or
|
n)
|
The Flag State of the Vessel becomes involved in hostilities or civil war or there is a seizure of power in the Flag State of the Vessel by unconstitutional means if, in any such case such event could in the opinion of the Bank reasonably be expected to have a material adverse effect on the security constituted by any of the Security Documents; or
|
o)
|
The Borrower ceases at any time to be a wholly-owned direct Subsidiary of the Corporate Guarantor; or
|
p)
|
There is any change in the legal and/or beneficial ownership of any of the shares of the Manager, from that existing on the date of this Agreement; or
|
q)
|
The shares of the Corporate Guarantor are de-listed or cease to trade permanently on the New York Exchange; or
|
r)
|
Any person, or persons acting in concert (other than any financial institution acting as a passive investor), become at any time the legal or ultimate beneficial owners of a higher percentage of the total issued share capital of the Corporate Guarantor, than the percentage of the total issued share capital of the Corporate Guarantor, beneficially owned by Mr Simeon Pal ios at that time; or
|
s)
|
Mr. Simeon Palios ceases to hold an executive position in the Corporate Guarantor.
|
(a)
|
This Agreement or any of the other Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any party thereto (other than the Bank), or if any such party shall deny that it has any, or any further, liability thereunder or it becomes impossible or unlawful for the Borrower to fulfill any of its covenants and obligations contained in this Agreement or any of the Security Documents or for the Bank to exercise the rights vested in it thereunder or otherwise; or
|
(b)
|
Any consent, authorization, license or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by the Borrower to authorize or otherwise in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of this Agreement and/or any of the Security Documents or the performance by the Borrower of its obligations under this Agreement and/or any of the Security Documents is modified in a manner unacceptable to the Bank or is not granted or is revoked or terminated or expires and is not renewed or otherwise ceases to be in full force and effect; or
|
(c)
|
Any Encumbrance in respect of any of the property (or part thereof) which is the subject of the Security Documents (or any of them) is enforced; or
|
(a)
|
Any Security Party (other than the Borrower) fails to pay any sum due from it under this Agreement and/or any of the Security Documents when due, or, in the case of any sum payable on demand, within three (3) Banking Days of demand; or
|
(b)
|
Any Security Party (other than the Borrower) fails to observe and perform any one or more of the covenants, terms or obligations contained in this Agreement (including Schedule 1) and/or the other Security Documents relating to the Insurances; or
|
(c)
|
Any Security Party (other than the Borrower) commits any breach of or omits to observe any of the covenants, terms, obligations or undertakings expressed to be assumed by it under this Agreement and/or any of the Security Documents (other than failure to pay any sum when due or to observe or perform obligations relating to the Insurances) and, in respect of any such breach or omission which in the opinion of the Bank is capable of remedy, such action as the Bank may require shall not have been
|
|
taken within seven (7) days of the Bank notifying the relevant Security Party, of such required action to remedy the breach or omission; or
|
(d)
|
Any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party (other than the Borrower) in or pursuant to this Agreement or any of the other Security Documents or in any notice, certificate or statement referred to in or delivered under this Agreement or any of the other Security Documents is or proves to have been incorrect in any material respect; or
|
(e)
|
Any of the events referred to in Clauses 9.02 to 9.05 occurs (amended as appropriate) in relation to any Security Party (other than the Borrower); or
|
(f)
|
Any of the events specified in Clauses 9.02 to 9.05 occurs (amended as appropriate) with respect to any member of the Group which is not a Security Party and, in the sole opinion of the Bank, the ability of the Security Parties (or any of them) to perform all or any of their obligations under, or otherwise to comply with the terms of this Agreement and the other Security Documents may be materially and adversely affected thereby.
|
(a)
|
Any Security Party and/or any other Relevant Party and/or any of their respective Environmental Affiliates fails to comply with any Environmental Law or any Environmental Approval or the Vessel or any other Relevant Ship is involved in any incident which gives rise or which may give rise to any Environmental Claim, if in any such case, such non compliance or incident or the consequences thereof could (in the opinion of the Bank) reasonably be expected to have a material adverse effect on the business assets, operations, property or financial condition of the Borrower or any other Security Party or on the security created by any of the Security Documents; or
|
(b)
|
any Security Party or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which the Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including without limitation, liability for Environmental Claims arising in jurisdictions where the Vessel operate or trade) is or may be liable to cancellation, qualification or exclusion at any time.
|
(i)
|
The Bank may without prejudice to any other rights of the Bank, at any time after the happening of an Event of Default:
|
(a)
|
by notice to the Borrower declare that the obligation of the Bank to make the Commitment available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or
|
(b)
|
by notice to the Borrower declare that the Loan and all interest and commitment commission accrued and all other sums payable under this Agreement and the other Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable without any further diligence, presentment, demand of payment, protest or notice which are expressly waived by the Borrower; and/or
|
(c)
|
withdraw the declaration contained in the notice under sub-clauses (a) and (b) above with effect from the date specified in such notice.
|
(ii)
|
(
Enforcement
).
The Bank may, at any time after the occurrence of an Event of Default put into force and exercise all or any of the rights, powers and remedies under this Agreement and/or under any other Security Documents in its own name and behalf.
|
a)
|
(
Initial and Amendment expenses
)
all expenses (including legal, printing and out-of-pocket expenses) incurred by the Bank in connection with the negotiation, preparation and execution of this Agreement and the other Security Documents and of any amendment or extension of or the granting of any waiver or consent under this Agreement and/or any of the Security Documents and/or in connection with any proposal by the Borrower to constitute additional security pursuant to Clause 8.05(c), whether any such security shall in fact be constituted or not;
|
b)
|
(
Enforcement expenses
)
all expenses (including legal and out-of-pocket expenses) incurred by the Bank in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, this Agreement and/or any of the other Security Documents, or otherwise in respect of the moneys owing under this Agreement and/or any of the other Security Documents or the contemplation or preparation of the above, whether they have been effected or not; and
|
c)
|
(
Other expenses
)
any and all other Expenses as defined in Clause 1.02.
|
d)
|
the legal costs of the Bank's appointed lawyer, in respect of the preparation of this Agreement and the other Security Documents as well as the legal costs of the foreign lawyers (if these are available) in respect of the registration of the Security Documents or any search or opinion given to the Bank in respect of the Security Parties or the Vessel or the Security Documents. The said legal costs to be due and payable on the date of drawdown.
|
a)
|
Express authority is hereby given by the Borrower to the Bank to accept (at the sole discretion of the Bank) all tested or untested communications given by facsimile, cable or otherwise, regarding any or all of the notices, requests, instructions or other communications under this Agreement, subject to any restrictions which may be imposed by the Bank relating to such communications including, without limitation (if so required by the Bank), the obligation to confirm such communications by letter.
|
b)
|
The Borrower shall recognise any and all of the said notices, requests, instructions or other communications as legal, valid and binding, when these notices, requests, instructions or communications come from the fax number mentioned in Clause 13.09 or any other fax number usually used by it or its managing company.
|
c)
|
The Borrower hereby assumes full responsibility for the execution of the said notices, requests, instructions or communications by the Bank and promises and recognises that the Bank shall not be held responsible for any loss, liability or expense that may result from such notices, requests, instructions or other communications, except in cases of gross negligence or wilful misconduct by the Bank. It is hereby undertaken by the Borrower to indemnify in full the Bank from and against all actions, proceedings, damages, costs, claims, demands, expenses and any and all direct and/or indirect losses which the Bank or any third party may suffer, incur or sustain by reason of the Bank following such notices, requests, instructions or communications, except in cases of gross negligence or wilful misconduct by the Bank.
|
d)
|
With regard to notices, requests, instructions or communications issued by electronic and/or mechanical processes (e.g. by facsimile), the risk of equipment malfunction, including, without limitation, transmission errors, omissions and distortions is assumed fully and accepted by the Borrower, except in cases of gross negligence or wilful misconduct by the Bank.
|
e)
|
The risks of misunderstandings and errors of notices, requests, instructions or communications being given as mentioned above, are for the Borrower and the Bank will be indemnified in full pursuant to this Clause 10.
|
f)
|
The Bank shall have the right to ask the Borrower to furnish any information the Bank may require to establish the authority of any person purporting to act on behalf of the Borrower for these notices, requests, instructions or communications but it is expressly agreed that there is no obligation for the Bank to do so. The Bank shall be fully protected in, and the Bank shall incur no liability to the Borrower for acting upon the said notices, requests, instructions or communications which were believed by the Bank in good faith to have been given by the Borrower or by any of their authorised representative(s).
|
g)
|
It is undertaken by the Borrower to safeguard the function and the security of the electronic and mechanical appliance(s) such as fax(es), as well as the code word list, if any, and to take adequate precautions to protect it from loss and to prevent its terms becoming known to any persons not directly concerned with its use. The Borrower shall hold the Bank harmless and indemnified from all claims, losses, damages and expenses which the Bank may incur by reason of the failure of the Borrower to comply with the obligations under this Clause and/or this Agreement.
|
h)
|
The Bank may at any time, without disclosing to the Borrower the reason (and such discretion of the Bank is expressly admitted by the Borrower hereby) refuse to execute the notices, requests, instructions or communications of the Borrower, or any part thereof given by fax without incurring any responsibility for loss, liability
or expense arising out of such refusal.
|
a)
|
Duly registered first priority maritime mortgage over the Vessel accompanied by deed of covenants as appropriate on the basis of the provisions of the applicable law providing the highest degree of security for the Bank (the
"Mortgage"
);
|
b)
|
First priority general assignment of all the Insurances and Earnings and Requisition Compensation of the Vessel in form and substance satisfactory to the Bank and respective notices of assignment (the
"Assignment of Insurances and Earnings"
);
|
c)
|
First priority specific assignment of the Approved Charter in form and substance satisfactory to the Bank and respective notice of assignment and acknowledgement by the Approved Charterer in form and substance satisfactory to the Bank (the
"Assignment of Charter"
);
|
d)
|
The Corporate Guarantee;
|
e)
|
A first priority pledge on the Earnings Account as per Clause 11.06 in form and substance satisfactory to the Bank (the
"Earnings Account Pledge"
);
|
f)
|
A first priority pledge on the Cash Collateral Account as per Clause 11.06 (a) in form and substance satisfactory to the Bank (the
"Cash Collateral Account Pledge"
);
|
g)
|
The Manager's Undertaking;
|
a)
|
firstly in or towards payment of Expenses and all sums other than principal or interest which may be due to the Bank under this Agreement and the Security Documents or any of them at the time of application;
|
b)
|
secondly in or towards any default interest;
|
c)
|
thirdly in or towards any arrears of interest due in respect of the Loan or any part thereof;
|
d)
|
fourthly in or towards repayment of the Loan whether the same is due and payable or not;
|
e)
|
fifthly sums owing to the Bank under the Master Swap Agreement, the Master Agreement Security Deed any other documents executed or to be executed pursuant to such documents;
|
f)
|
sixthly the surplus (if any) shall be paid to the Borrower, or to whomsoever else shall be entitled thereto.
|
a)
|
to apply any credit balance standing upon any account of the Borrower with any branch of the Bank and in whatever currency in or towards satisfaction of any sum due to the Bank from the Borrower under this Agreement and/or any of the other Security Documents;
|
b)
|
in the name of the Borrower and/or the Bank to do all such acts and execute
all
such documents as may be necessary or expedient to effect such application; and
|
c)
|
to combine and/or consolidate all or any accounts in the name of the Borrower with the Bank.
|
(a)
|
The Borrower shall procure that all moneys payable in respect of the Earnings of the Vessel shall be paid to the Earnings Account free from Encumbrances (save for Encumbrances in favour of the Bank).
|
(b)
|
Subject to Clause 11.06 (j), until the occurrence of an Event of Default (whereupon the provisions of the Earnings Account Charge shall apply), subject to compliance with the payment obligations under this Agreement and the Master Swap Agreement and subject to no Event of Default having occurred, moneys for the time being credited to the Earnings Account may be available to the Borrower and (subject as aforesaid) may be withdrawn from the Earnings Account to be used for any purpose not inconsistent with the Borrower other obligations' under this Agreement. The Borrower shall not be entitled to draw from the Earnings Account if an Event of Default has occurred.
|
(c)
|
The Borrower, at its own costs and expenses, undertakes with the Bank to comply with or cause to be complied with any written requirement of the Bank from time to time as to the location or relocation of the Earnings Account and will from time to time enter into such documentation as the Bank may require in order to create or maintain a security interest in the Earnings Account.
|
(d)
|
Subject to Clause 11.06 (j), upon the occurrence of an Event of Default or at any time thereafter (if the Event of Default is continuing) the Bank shall be entitled to set off and apply all sums standing to the credit of the Earnings Account and accrued interest (if any) without notice to the Borrower in the manner specified in Clause 11.03 (and express and irrevocable authority is hereby given by the Borrower to the Bank so to set off and apply the same and the Bank shall be released to the extent of such set off and application).
|
(e)
|
The Borrower shall not assign, transfer or suffer any Encumbrance to arise over the whole or any part of the Earnings Account (other than pursuant to the Earnings Account Charge).
|
(a)
|
For so long as any moneys are owing under this Agreement, the Borrower may freely credit the Cash Collateral Account with moneys in an amount equal to or less than the amount of the Loan but no less than Dollars Five Hundred Thousand ($500,000).
|
(b)
|
A first priority pledge shall be granted or (as the context may require) has been granted by the Borrower, as collateral provider, in favour of the Bank, as collateral taker, over all monies credited to the Cash Collateral Account and over all claims of the Borrower thereunder, in form and substance satisfactory to the Bank (the
"Cash Collateral Pledge").
|
(c)
|
Both the agreement for the opening of the Cash Collateral Account and the Cash Collateral Account Pledge shall include, inter alia, "a close-out netting provision" under law 3301/2004 and Directive 2002/47/EC of the European Parliament and the Council of 6 June 2002 on financial collateral arrangements (the
"Cash Collateral Legislation ").
|
(d)
|
Any amount owing under this Agreement and the Master Swap Agreement or any other Security Document (whether in respect of costs, interest, principal or otherwise) when due and payable in accordance with their respective terms (whether by acceleration or otherwise) shall be paid out of the monies funds deposited with the Cash Collateral Account by way of set off and the Borrower hereby expressly authorizes the Bank to so apply such funds.
|
(e)
|
The period(s) for the moneys deposited with the Cash Collateral Account shall be so fixed as to allow the application provided in sub-paragraphs (c) and (d) above.
|
(f)
|
Notwithstanding the Cash Collateral Pledge prior to and until the occurrence of an Enforcement Event (whereupon the provisions of the Cash Collateral Pledge and sub-clause (g) of this Clause 11.06 shall apply) and prior to and until the occurrence of an Event of Default, monies for the time being credited to the Cash Collateral Account shall be freely available to the Borrower and may be withdrawn from the Cash Collateral Account in accordance with its terms.
|
(g)
|
Upon the occurrence of an Enforcement Event, both any amount standing to the Cash Collateral Account (regardless of any fixed interest period) and the Loan together with any accrued interest shall become, immediately and automatically without any notice, due and payable and shall be set off and a net sum equal to any difference shall be payable by the party from whom the larger amount is due to the other party (Close Out netting).
|
(h)
|
For the purposes of this Clause 11.06 "Enforcement Event" means in respect of the Bank and/or the Borrower "winding up proceedings" or "reorganization measures" (as these terms are defined in the Cash Collateral Legislation) or any other event (except an Event of Default) which prevents or results in preventing the Borrower from withdrawing the funds deposited to the Cash Collateral Account, whether this is by virtue of a provision of any law, regulation, statutory rule or regulatory requirement or any request or order of any central bank, monetary, regulatory or other authority or any court or otherwise.
|
(i)
|
For the avoidance of doubt, it is agreed that moneys paid or to be paid to the Earnings Account as per Clause 11.05 are not part of the Cash Collateral Account.
|
(j)
|
Similarly, the Earnings Account Pledge and the agreement for the opening of the Earnings Account or any addendum thereto, shall include, inter alia, "a close-out netting provision" as referred to in Clause 11.06 (c). The provisions of this Clause 11.06 (c), (d) (f), (g), (h) and (i) shall apply mutatis mutandis.
|
(k)
|
The Borrower shall not assign, transfer or suffer any Encumbrance (other than the Cash Collateral Pledge) over the whole or any part of the Cash Collateral Account.
|
(l)
|
The provisions of this Clause 11.06 are without prejudice to any other rights of the Bank under this Agreement, the ISDA Master Agreement and/or any other Security Document or under law.
|
(a)
|
the Bank shall notify the Borrower in writing of such event promptly upon its becoming aware of the same; and
|
(b)
|
with effect from the then immediately forthcoming Interest Period:
|
|
(i)
|
the split Margin as provided in the definition of Margin in clause 1.02 shall cease;
|
|
(ii)
|
the Margin to be applied to the whole of the Loan thereafter shall be two point fifty per cent (2.50%) per annum;
|
|
(iii)
|
the definition of "Margin" shall be amended to mean two point fifty per cent (2.50%) per annum;
|
(i)
|
If less than the full amount of the Loan remains outstanding following a prepayment under this Agreement (which includes a prepayment in full of the Loan to zero) and the Bank in its sole discretion agrees, following a written request of the Borrower, that the Borrower may be permitted to maintain all or part of a Designated Transaction in any amount not wholly matched with or linked to all or part of the Loan, the Borrower shall within ten (10) days of being notified by the Swap Provider of such requirement either (i) provide the Swap Provider with, or procure the provision to the Swap Provider of, such additional security as shall in the opinion of the Swap Provider be adequate to secure the performance of such Designated Transaction, which additional security shall take such form, be constituted by such documentation, and be entered into between such parties, as the Swap Provider in its sole discretion may approve or require, and each document comprising such additional security shall constitute a Credit Support Document (as defined in the Master Swap Agreement); or (ii) reverse, offset, unwind or otherwise terminate wholly or partially the continuing Designated Transactions so that the aggregate notional amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time;
|
|
(ii) |
If a Designated Transaction has been entered into but no Advance, in case that the Commitment has been agreed to be drawn in Advances, is drawn down under this Agreement and the Swap Provider in its sole discretion agrees, following a written request of the Borrower, that the Borrower may be permitted to maintain all or part of a Designated Transaction, the Borrower shall within ten (10) days of being notified by the Swap Provider of such requirement either: (i) provide the Swap Provider with, or procure the provision to the Swap Provider of, such additional security as shall in the opinion of the Swap Provider be adequate to secure the performance of such Designated Transaction, which addition security
|
shall take such form, be constituted by such documentation, and be entered into between such parties, as the Swap Provider in its absolute discretion may approve or require, and each document comprising such additional security shall constitute a Credit Support Document (as defined in the Master Swap Agreement); or (ii) reverse, offset, unwind or otherwise terminate wholly or partially the continuing Designated Transactions so that the aggregate notional amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time;
|
a)
|
(
Binding Effect
).
This Agreement shall be binding upon and inure to the benefit of the Bank and the Borrower and their respective successors and assigns.
|
b)
|
(
Assignment by the Borrower
).
The Borrower and any other parties to the Security Documents may not assign any rights and/or obligations under this Agreement or any of the other Security Documents or any documents executed pursuant to this Agreement and/or the other Security Documents without the prior written consent of the Bank.
|
c)
|
(
Assignment by the Bank
).
The Bank may at any time, assign, transfer, or offer participations to other banks or financial institutions or any other person in whole or in part, or in any manner dispose of all or any of its rights and/or obligations arising or accruing under this Agreement or any of the other Security Documents or any documents executed pursuant to this Agreement and/or the other Security Documents. The Bank may disclose to a potential assignee, transferee or participant or to any other person who may propose entering into contractual relations with the Bank in relation to this Agreement such information about the Borrower and the Security Parties as the Bank shall consider appropriate.
|
d)
|
(
Documentation
).
If the Bank assigns, transfers or in any other manner grants participation in respect of all or any part of its rights or benefits or transfers
all
or any of its obligations as provided in this Clause 13.01 the Borrower undertakes, immediately on being requested to do so by the Bank, to enter into and procure that each Security Party enters into such documents as may be necessary or desirable to transfer to the assignee, transferee or participant all or the relevant part of the interest of the Bank in the Security Documents and all relevant references in this Agreement to the Bank shall thereafter be construed as a reference to the Bank and/or assignee, transferee or participant of the Bank to the extent of their respective interests and, in the case of a transfer of all or part of the obligations of the Bank, the Borrower shall thereafter look only to the assignee, transferee or participant in respect of that proportion of the obligations of the Bank under this Agreement assumed by such assignee, transferee or participant. The Borrower hereby expressly consents to any subsequent transfer of the rights and obligations of the Bank and undertakes that it shall join in and execute such supplemental or substitute agreements as may be necessary to enable the Bank to assign and/or transfer and/or grant participation in respect of its rights and obligations to another branch or to one or more banks or financial institutions in a syndicate or otherwise, In case that the circumstances provided for in Clauses 5.03, 5.04, 10.01 and 12 of this Agreement arise in the relations between the Bank and any participant to which the Bank may offer participation, the Borrower shall make the relevant payments provided for in the said Clauses 5.03, 5.04, 10.01 and 12 to the Bank for onward payment to the participant.
|
e)
|
(
Change of Lending Branch
).
The Bank shall be at liberty to transfer the Loan to any branch or branches, and upon notification of any such transfer, the word "Bank" in this Agreement and in the other Security Documents shall mean the Bank, acting through such branch or branches and the terms and provisions of this Agreement and of the other Security Documents shall be construed accordingly.
|
a)
|
(
Language
).
All certificates, instruments and other documents to be delivered under or supplied in connection with this Agreement or any of the other Security Documents shall be in the Greek or the English language (or such other language as the Bank shall agree) or shall be accompanied by a certified Greek translation upon which the Bank shall be entitled to rely.
|
b)
|
(
Certification of documents
).
Any copies of documents delivered to the Bank shall be duly certified as true, complete and accurate copies by appropriate authorities or legal counsel practicing in Greece or otherwise as it will be acceptable to the Bank at the sole discretion of the Bank.
|
c)
|
(
Certification of signature
).
Signatures on Board or shareholder resolutions, Secretary's certificates and any other documents are, at the discretion of the Bank, to be verified for their genuineness by appropriate Consul or other competent authority.
|
a)
|
be in writing delivered personally or by first-class prepaid letter (airmail if available), or cable or shall be served through a process server or subject to Clause 10.07 by fax;
|
b)
|
be deemed to have been received, subject as otherwise provided in this Agreement or the relevant Security Document, in the case of fax, at the time of dispatch as per transmission report (provided that if the date of despatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day) and in the case of a cable 24 hours after despatch and in the case of a letter when delivered or served personally or five (5) days after it has been put into the post; and
|
c)
|
be sent:
|
|
(1)
|
if to be sent to any Security Party, to
|
|
(2)
|
if to be sent to the Bank, to
|
a)
|
Each of the parties hereto agree and undertake to keep confidential any documentation and any confidential information concerning the business, affairs, directors or employees of the other which comes into its possession during this Agreement and not to use any such documentation, information for any purpose other than for which it was provided.
|
b)
|
The Borrower acknowledges and accepts that the Bank may be required by law or that it may be appropriate for the Bank to disclose information and deliver documentation relating to the Borrower and the transactions and matters in relation to this Agreement and/or the other Security Documents to governmental or regulatory agencies and authorities.
|
c)
|
The Borrower acknowledges and accepts that in case of occurrence of any of the Events of Default the Bank may disclose information and deliver documentation relating to the Borrower and the transactions and matters in relation to this Agreement and/or the other Security Documents to third parties including in particular any technical advisors, accountants and legal advisors to the extend that this is necessary for the enforcement or the contemplation of enforcement of the Bank's rights or for any other purpose for which in the opinion of the Bank, such disclosure should be useful or appropriate for the interests of the Bank or otherwise and the Borrower expressly authorises any such disclosure and delivery.
|
d)
|
The Borrower acknowledges and accepts that the Bank may be prohibited or it may be inappropriate for the Bank to disclose information to the Borrower by reason of law or duties of confidentiality owed or to be owed to other persons.
|
a)
|
This Agreement and any non-contractual obligations connected with this Agreement shall be governed by and construed in accordance with Greek Law.
|
b)
|
Any dispute arising out of or in connection with this Agreement is subject to the exclusive jurisdiction of the courts of Piraeus, Greece. The foregoing provision, which is for the benefit of the Bank, shall not limit the right of the Bank to start proceedings in any other court or any other country.
|
c)
|
If it is decided by the Bank that any such proceedings should be commenced in any other country, then any objections as to the jurisdiction or any claim as to the inconvenience of the forum is hereby waived by the Borrower and it is agreed and undertaken by the Borrower to instruct lawyers in that country to accept service of legal process and not to contest the validity of such proceedings as far as the jurisdiction of the court or courts involved is concerned.
|
SIGNED by
|
||
Mr. Andreas Nikolaos Michalopoulos
for and on behalf of
the Borrower
BIKAR SHIPPING COMPANY INC.,
in the presence of
|
/s/ Andreas Nikolaos Michalopoulos
|
|
Liliy Timayeni
Attorney at Law, Pireaus Bar
57 Notara Str., 18535 Piraeus
|
SIGNED by
|
||
CHRISTINA MARGELOU
|
/
s/
CHRISTINA MARGELOU
|
|
and by
|
||
KRIKOR JANIKIAN
for and on behalf of
EMPORIKI BANK OF GREECE S.A.
in the presence of
|
/s/ KRIKOR JANIKIAN
|
Signed
For and on behalf of
Owner
Dated ____________________
|
|
Clause
|
Page
|
|
1
|
Purpose and definitions
|
1
|
2
|
The Total Commitment
|
12
|
3
|
Interest and Interest Periods
|
14
|
4
|
Repayment and prepayment
|
16
|
5
|
Fees and expenses
|
17
|
6
|
Payments and taxes; accounts and calculations
|
18
|
7
|
Representations and warranties
|
20
|
8
|
Undertakings
|
26
|
9
|
Conditions
|
32
|
10
|
Events of Default
|
33
|
11
|
Indemnities
|
37
|
12
|
Unlawfulness and increased costs
|
38
|
13
|
Security, set-off and pro-rata payments
|
40
|
14
|
Operating Account
|
42
|
15
|
Assignment, transfer and lending office
|
43
|
16
|
Arranger, Agent and Security Agent
|
46
|
17
|
Notices and other matters
|
55
|
18
|
Governing law and jurisdiction
|
57
|
Schedule 1 The Banks and their Commitments
|
59
|
|
Schedule 2 Documents and evidence required as conditions precedent
|
60
|
|
Schedule 3 Form of Drawdown Notice
|
66
|
|
Schedule 4 Transfer Certificate
|
67
|
|
Schedule 5 Form of Master Swap Agreement
|
72
|
|
Schedule 6 Form of Swap Assignment
|
73
|
|
Schedule 7 Form of Corporate Guarantee
|
74
|
|
Schedule 8 Form of Mortgage
|
75
|
Schedule 9 Form of Deed of Covenant
|
76
|
Schedule 10 Form of Manager's Undertaking
|
77
|
Schedule 11 Form of Charter Assignment
|
78
|
Schedule 12 Form of Account Assignment
|
79
|
Schedule 13 Form of Share Pledge
|
80
|
Schedule 14 Form of Trust Deed
|
81
|
Schedule 15 Mandatory Cost formula
|
82
|
(1)
|
JEMO SHIPPING COMPANY INC
. as Borrower;
|
(2)
|
NORDEA BANK FINLAND PLC
,
LONDON BRANCH
as Arranger, Agent, Security Agent and Account Bank;
|
(3)
|
THE BANKS AND FINANCIAL INSTITUTIONS
whose names and addresses are set out in schedule 1 as Banks; and
|
(4)
|
NORDEA BANK FINLAND PLC
as Swap Provider.
|
1
|
Purpose and definitions
|
1.1
|
Purpose
|
|
(a)
|
financing part of the acquisition cost of the Ship on or after its Delivery; and
|
|
(b)
|
financing certain fees and expenses payable by the Borrower in connection with this Agreement.
|
1.2
|
Definitions
|
|
(a)
|
any law or regulation implementing the Basel II Accord; or
|
|
(b)
|
any Basel II Approach adopted by that Bank,
|
|
(a)
|
the rate for such period as displayed on Reuters page LIBOR01 (British Bankers' Association Interest Settlement Rate) (or such other page as may replace such page LIBOR01 on such system or on any other system of the information vendor for the time being designated by the British Bankers' Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers' Association's Recommended Terms and Conditions ("
BBAIRS
"
terms) applicable at the relevant time) at or about 11:00 a.m. (London time) on the Quotation Date for such period; or
|
|
(b)
|
if on such date no such rate is displayed, the rate (rounded upwards to the nearest 1/16th of one per cent) quoted to the Agent by the Reference Bank at the request of the Agent
as the Reference Bank's offered rate for deposits of Dollars in an amount equal or approximately equal to the amount in relation to which LIBOR is to be determined and for a period equivalent to such period to prime banks in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for such period;
|
|
(a)
|
on the business, assets, nature of assets, operations, prospects, liabilities or condition (financial or otherwise) of any Security Party, any member of the Group or the Group as a whole; or
|
|
(b)
|
on the ability of any of the Borrower, the Corporate Guarantor, the Manager or any other Security Party to comply with any of their respective obligations under the Security Documents or any of them; or
|
|
(c)
|
on the legality, validity or enforceability of any of the Security Documents or any of the rights or remedies of the Creditors or any of them thereunder;
|
|
(a)
|
the actual, constructive, compromised or arranged total loss of the Ship; or
|
|
(b)
|
the Compulsory Acquisition of the Ship; or
|
|
(c)
|
the hijacking, theft, piracy, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the Ship) by a person (including a Government Entity, or persons acting or purporting to act on behalf of a Government Entity), unless the Ship be released and restored to the Borrower from such hijacking, theft, piracy, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof;
|
1.3
|
Headings
|
1.4
|
Construction of certain terms
|
1.4.1
|
references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules;
|
1.4.2
|
references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties;
|
1.4.3
|
references to a
"regulation
" include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority and, for the avoidance of doubt, shall include any Basel II Regulation or any Basel III Regulation;
|
1.4.4
|
words importing the plural shall include the singular and vice versa;
|
1.4.5
|
references to a time of day are to London time;
|
1.4.6
|
references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity;
|
1.4.7
|
"
control
"
means, in relation to a body corporate:
|
|
(a)
|
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise, directly or indirectly) to:
|
|
(i)
|
cast, or control the casting of, more than 50 per cent of the maximum number of votes that might be cast at a general meeting of such body corporate; or
|
|
(ii)
|
appoint or remove all, or the majority, of the directors or other equivalent officers of such body corporate; or
|
|
(iii)
|
give directions with respect to the operating and financial policies of such body corporate with which the directors or other equivalent officers of such body corporate are obliged to comply; or
|
|
(b)
|
the holding beneficially of more than 50 per cent of the issued share capital of such body corporate (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital);
|
1.4.8
|
two or more persons are "
acting in concert
if, pursuant to an agreement or understanding (whether formal or informal), they actively co-operate, through the acquisition (directly or indirectly) of shares in the Corporate Guarantor by any of them, either directly or indirectly to obtain or consolidate control of the Corporate Guarantor;
|
1.4.9
|
references to a "
guarantee
"
include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "
guaranteed
"
shall be construed accordingly; and
|
1.4.10
|
references to any enactment shall be deemed to include references to such enactment as re-enacted, amended or extended.
|
1.5
|
Majority Banks
|
1.6
|
Banks' Commitment
|
2
|
The Total Commitment
|
2.1
|
Agreement to lend
|
2.2
|
Obligations several
|
2.3
|
Interests several
|
2.4
|
Drawdown
|
2.5
|
Amount
|
2.6
|
Availability
|
2.7
|
Termination of Total Commitment
|
2.8
|
Application of proceeds
|
2.9
|
Derivative transactions
|
2.9.1
|
If, at any time during the Security Period, the Borrower wishes to enter into interest rate swap or other derivative transactions with the Swap Provider for any purpose whatsoever, including for the benefit of the Group and/or for the purpose of hedging all or any part of its exposure under this Agreement to interest rate fluctuations, it shall advise the Swap Provider in writing.
|
2.9.2
|
Any such swap or other derivative transaction shall be concluded with the Swap Provider under the Master Swap Agreement provided however that no such swap or other derivative transaction shall be concluded unless the Swap Provider first agrees to it in writing. For the avoidance of doubt, other than the Swap Provider's agreement in writing referred to in the preceding sentence no prior approval is required by the Borrower from all or any of the other Creditors before concluding any such swap or other derivative transaction. If and when any such swap or other derivative transaction has been concluded, it shall constitute a Designated Transaction, and the Borrower shall sign a Confirmation with the Swap Provider and advise the Agent promptly after concluding any Designated Transaction.
|
3
|
Interest and Interest Periods
|
3.1
|
Normal interest rate
|
3.2
|
Selection of Interest Periods
|
3.3
|
Determination of Interest Periods
|
3 3.1
|
the first Interest Period shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the last day of the previous Interest Period;
|
3.3.2
|
if any Interest Period would otherwise overrun a Repayment Date, then, in the case of the last Repayment Date such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date or Repayment Dates the Loan shall be divided into parts so that there is one part in the amount of the repayment instalment or instalments due on each Repayment Date falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3; and
|
3.3.3
|
if the Borrower fails to specify the duration of an Interest Period in accordance with the provisions of clause 3.2 and this clause 3.3 such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause 3.3.
|
3.4
|
Default interest
|
3.5
|
Notification of Interest Periods and interest rate
|
3.6
|
Market disruption; non-availability
|
3.6.1
|
If and whenever, at any time prior to the commencement of any Interest Period:
|
|
(a)
|
the Agent shall have determined (which determination shall, in the absence of manifest error, be conclusive) that adequate and fair means do not exist for ascertaining LIBOR during such Interest Period; or
|
|
(b)
|
the Reference Bank does not supply the Agent with a quotation for the purposes of calculating LIBOR (where such a quotation is required having regard to paragraph (b) of the definition of "LIBOR" in clause 1.2); or
|
|
(c)
|
the Agent shall have received notification from Banks whose aggregate
Contributions are not less than one-third (1/3
rd
) of the Loan or (prior to the Drawdown Date whose aggregate Commitments are not less than one-third (1/3
rd
) of the Total Commitment), that deposits in Dollars are not available to such Banks in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan or their Contributions for such Interest Period or that LIBOR does not accurately reflect the cost to such Banks of obtaining such deposits,
|
3.6.2
|
During the period of ten (10) days after any Determination Notice has been given by the Agent under clause 3.6.1, each Bank shall certify an alternative basis (the "
Alternative Basis
")
for funding its Commitment and/or for maintaining its Contribution. The Alternative Basis may at the relevant Bank's sole and unfettered discretion (without limitation) include alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds to such Bank (including Mandatory Cost, if any) equivalent to the Margin. The Agent shall calculate the arithmetic mean of the Alternative Bases provided by the relevant Banks (the "
Substitute Basis
")
and certify the same to the Borrower, the Banks and the Swap Provider. The Substitute Basis so certified shall be binding upon the Borrower and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Agent notifies the Borrower that none of the circumstances specified in clause 3.6.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply.
|
4
|
Repayment and prepayment
|
4.1
|
Repayment
|
4.2
|
Voluntary prepayment
|
4.3
|
Mandatory prepayment on Total Loss or sale
|
4.3.1
|
Before the Drawdown Date
|
4.3.2
|
After the Drawdown Date
|
4.3.3
|
Interpretation
|
|
(a)
|
in the case of an actual total loss of the Ship, on the actual date and at the time the Ship was lost or, if such date is not known, on the date on which the Ship was last reported;
|
|
(b)
|
in the case of a constructive total loss of the Ship, upon the date and at the time notice of abandonment of the Ship is given to the insurers of the Ship for the time being;
|
|
(c)
|
in the case of a compromised or arranged total loss of the Ship, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the insurers of the Ship;
|
|
(d)
|
in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and
|
|
(e)
|
in the case of hijacking, theft, piracy, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to Compulsory Acquisition of the Ship) by any person (including a Government Entity, or persons purporting to act on behalf of a Government Entity), which deprives the Borrower of the use of the Ship for more than thirty (30) days, upon the expiry of the period of thirty (30) days after the date upon which the relevant hijacking, theft, piracy, condemnation, capture, seizure, arrest, detention or confiscation occurred.
|
4.4
|
Amounts payable on prepayment
|
4.5
|
Notice of prepayment; reduction of repayment instalments; re
-
borrowing
|
4.5.1
|
No prepayment may be effected under clause 4.2 unless the Borrower shall have given the Agent at least five (5) Banking Days' prior written notice of its intention to make such prepayment. Every notice of prepayment shall be effective only on actual receipt by the Agent, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrower to make such prepayment on the date specified.
|
4.5.2
|
Any amount prepaid pursuant to clause 4.2 or clause 8.2.1(a) shall be applied in reducing the repayment instalments under clause 4.1 (including the balloon payment) proportionately.
|
4.5.3
|
No amount prepaid under this Agreement may be reborrowed.
|
4 5.4
|
The Borrower may not prepay the Loan or any part thereof save as expressly provided in this Agreement.
|
4.6
|
Unwinding of Designated Transactions
|
5
|
Fees and expenses
|
5.1
|
Fees
|
5.1.1
|
for the account of the Arranger, an arrangement fee of such amount and payable at such time as specified in the Fee Letter; and
|
5.1.2
|
for the account of each Bank (i) if the Drawdown Date occurs by 28 February 2012, on the day falling one day before the Drawdown Date or (ii) if the Drawdown Date does not occur by 28 February 2012, on 28 February 2012 and on the last day of each calendar month thereafter, until the earlier of (a) the Drawdown Date and (b) the Termination Date, and on the earlier of such dates,
|
5.2
|
Expenses
|
5.2.1
|
in connection with the negotiation, preparation, execution and, where relevant, registration of the Security DoCuments and of any amendment or extension of or the granting of any waiver or consent under, any of the Security Documents and the syndication of the Loan; and
|
5.2.2
|
in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, any of the Security Documents, or otherwise in respect of the moneys owing under any of the Security Documents,
|
5.3
|
Value added Tax
|
5.4
|
Stamp and other duties
|
6
|
Payments and taxes; accounts and calculations
|
6.1
|
No set-off or counterclaim
|
6.2
|
Payment by the Banks
|
6.3
|
Non-Banking Days
|
6.4
|
Calculations
|
6.5
|
Certificates conclusive
|
6.6
|
Grossing-up for Taxes
|
6.6.1
|
If at any time the Borrower is required to make any deduction
or
withholding in respect of Taxes from any payment due under any of the Security Documents for the account of any Creditor or if the Agent or, as the case may be, the Security Agent is required to make any such deduction or withholding from a payment to a Bank, the sum due from the Borrower in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the relevant Creditor receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrower shall indemnify each Creditor against any losses or costs incurred by it by reason of any failure of the Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrower shall promptly deliver to the Agent any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.
|
6.6.2
|
For the avoidance of doubt, clause 6.6.1 does not apply in respect of sums due from the Borrower to the Swap Provider under or in connection with the Master Swap Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Swap Agreement shall apply.
|
6.7
|
Loan account
|
6.8
|
Agent may assume receipt
|
6.9
|
Partial payments
|
6.9.1
|
firstly, in or towards payment, on a pro-rata basis, of any unpaid costs, expenses and fees owing to the Arranger, the Agent or the Security Agent under, or in relation to, the Security Documents;
|
6.9.2
|
secondly, in or towards payment, on a pro-rata basis, of any unpaid costs, expenses and fees owing to the Banks or the Account Bank under or in relation to, the Security Documents;
|
6.9.3
|
thirdly, in or towards payment to the Banks, on a pro-rata basis, of any accrued interest which shall have become due under any of the Security Documents (other than the Master Swap Agreement) but remains unpaid;
|
6.9.4
|
fourthly, in or towards payment to the Banks, on a pro-rata basis, for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan prepaid and which amounts are so payable under this Agreement;
|
6.9.5
|
fifthly, in or towards payment to the Banks, on a pro rata basis, of any principal in respect of the Loan which shall have become due but remains unpaid;
|
6.9.6
|
sixthly, in or towards payment to the Swap Provider of any sums owing to it under the Master Swap Agreement; and
|
6.9.7
|
seventhly, towards payment to the relevant person of any other sum which shall have become due under any of the Security Documents but remains unpaid (and, if more than one such sum so remains unpaid, on a pro-rata basis).
|
7
|
Representations and warranties
|
7.1
|
Continuing representations and warranties
|
7.1.1
|
Due incorporation
|
7.1.2
|
Corporate power
|
7.1.3
|
Binding obligations
|
7.1.4
|
No conflict with other obligations
|
|
(a)
|
contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Borrower or any other Security Party is subject; or
|
|
(b)
|
conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which the Borrower or any other Security Party is a party or is subject or by which it or any of its property is bound; or
|
|
(c)
|
contravene or conflict with any provision of the constitutional documents of the Borrower or any other Security Party; or
|
|
(d)
|
result in the creation or imposition of or oblige the Borrower or any member of the Group or any other Security Party to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of the Borrower or any member of the Group or any other Security Party;
|
7.1.5
|
No litigation
|
7.1.6
|
No filings required
|
7.1.7
|
Choice of law
|
7.1.8
|
No immunity
|
7 1.9
|
Financial statements correct and complete
|
7.1.10
|
Consents obtained
|
7.1.11
|
Shareholdings
|
|
(a)
|
each of the Borrower and the Manager is a wholly-owned direct Subsidiary of the Corporate Guarantor; and
|
|
(b)
|
no less than 18% of the issued share capital and of the issued voting share capital of the Corporate Guarantor is ultimately beneficially owned by Permitted Holders;
|
7.1.12
|
Compliance with laws and regulations
|
7.1.13
|
No Material Adverse Effect
|
7.1.14
|
Borrower's own account
|
7.1.15
|
Solvency
|
|
(a)
|
neither the Borrower nor any other Relevant Party is unable, or admits or has admitted its inability, to pay its debts or has suspended making payments on any of its debts;
|
|
(b)
|
neither the Borrower nor any other Relevant Party by reason of actual or anticipated financial difficulties has commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness;
|
|
(c)
|
the value of the assets of the Borrower and the other Relevant Parties is not less than their respective liabilities (taking into account contingent and prospective liabilities); and
|
|
(d)
|
no moratorium has been, or may, in the reasonably foreseeable future be, declared in respect of any Indebtedness of the Borrower or any other Relevant Party.
|
7.2
|
Initial representations and warranties
|
7.2.1
|
Pari passu and subordinated indebtedness
|
|
(a)
|
the obligations of the Borrower under this Agreement and the Master Swap Agreement and the obligations of the Corporate Guarantor under the Corporate Guarantee are direct, general and unconditional obligations of the Borrower and the Corporate Guarantor, respectively, and rank at least pan passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrower with the exception of any obligations which are mandatorily preferred by law and not by contract;
|
|
(b)
|
any Indebtedness of the Borrower or the Corporate Guarantor owing to any of its respective shareholders or other members of the Group is subordinated in all respects to the Borrower's obligations under this Agreement and the Master Swap Agreement (in the case of the Borrower) and to the Corporate Guarantor's obligations under the Corporate Guarantee (in the case of the Corporate Guarantor);
|
7.2.2
|
No default under other Indebtedness
|
7.2.3
|
Information - full disclosure
|
7.2.4
|
No withholding Taxes
|
7.2.5
|
No Default
|
7.2.6
|
The Ship
|
|
(a)
|
in the absolute ownership of the Borrower who will on and after the Drawdown Date be the sole, legal and beneficial owner of the Ship;
|
|
(b)
|
registered in the name of the Borrower under the laws and flag of the Flag State through the Registry;
|
|
(c)
|
operationally seaworthy and in every way fit for service; and
|
|
(d)
|
classed with the Classification free of all requirements and recommendations from the Classification Society;
|
7.2 7
|
Ship's employment
|
7.2.8
|
Freedom from Encumbrances
|
7.2.9
|
Compliance with Environmental Laws and Approvals
|
|
(a)
|
the Borrower and the other Relevant Parties and, to the best of the Borrower's knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have complied with the provisions of all Environmental Laws;
|
|
(b)
|
the Borrower and the other Relevant Parties and, to the best of the Borrower's knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have obtained all Environmental Approvals and is in compliance with all such Environmental Approvals; and
|
|
(c)
|
neither the Borrower nor any other Relevant Party nor, to the best of the Borrower's knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have received notice of any Environmental Claim that the Borrower or any
other Relevant Party or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval;
|
7.2.10
|
No Environmental Claims
|
7.2.11
|
No potential Environmental Claims
|
7.2.12
|
Copies true and complete
|
7.2.13
|
DOC and SMC
|
7.2.14
|
ISPS Code
|
7.3
|
Repetition of representations and warranties
|
7.3.1
|
be deemed to repeat the representations and warranties in clauses 7.1 and 7.2 as if made with reference to the facts and circumstances existing on such day; and
|
7.3.2
|
be deemed to further represent and warrant to each of the Creditors that the then latest audited financial statements delivered to the Agent and/or the Security Agent by the Borrower under clause 8.1.5 of this Agreement and clause 5.1.4 of the Corporate Guarantee have been prepared in accordance with the Applicable Accounting Principles which have been consistently applied and present fairly and accurately the financial position of the Borrower and the consolidated financial position of the Group, respectively, as at the end of the financial period to which the same relate and the results of the operations of the Borrower and the consolidated results of the operations of the Group, respectively, for the financial period to which the same relate and, as at the end of such financial period, neither the Borrower nor the Corporate Guarantor nor any other member of the Group, nor the Group had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements.
|
8
|
Undertakings
|
8.1
|
General
|
8.1.1
|
Notice of Default and certain other events
|
8 1.2
|
Consents and licences; compliance with laws and regulations
|
|
(a)
|
without prejudice to clauses 7.1 and 9, obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, licence or approval of governmental or public bodies or authorities or courts and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Security Documents and the Underlying Documents; and
|
|
(b)
|
comply and will procure that the Corporate Guarantor will comply, with the terms and conditions of all laws, regulations, agreements, licences and concessions material to the carrying out of its business;
|
8.1.3
|
Use of proceeds
|
8.1.4
|
Pari passu and subordination
|
|
(a)
|
its obligations under this Agreement and the Master Swap Agreement shall at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract; and
|
|
(b)
|
its Indebtedness (if any) to its shareholders or any other member of the Group is on terms acceptable to the Agent in its absolute discretion and is and shall remain at all times fully subordinated towards its obligations under this Agreement and the Master Swap Agreement;
|
8.1.5
|
Financial statements
|
|
(a)
|
consolidated financial statements of the Group (comprising a balance sheet statement, an income statement, a cash flow analysis and accompanying notes) in accordance
with the Applicable Accounting Principles consistently applied in respect of each financial year (namely, each 12-month period ending on 31 December of each calendar year) and cause the same to be reported on by the Group's auditors;
|
|
(b)
|
unaudited consolidated financial statements of the Group (comprising a balance sheet statement, an income statement, a cash flow analysis and accompanying notes) in accordance with the Applicable Accounting Principles consistently applied in respect of each financial quarter of each financial year (namely, each 3-month, 6-month, 9-month and 12-month periods (including on a year to date basis), respectively, ending on 31 March, 30 June, 30 September and 31 December of each calendar year),
|
|
(i)
|
in the case of audited financial statements, one hundred and eighty (180) days after the end of the financial period to which they relate (namely, not later than 30 June of each calendar year);
|
|
(ii)
|
in the case of unaudited financial statements, ninety (90) days after the end of the financial period to which they relate (namely, not later than 30 June, 30 September, 31 December and 31 March, respectively, of each calendar year);
|
8.1.6
|
Valuations and Compliance Certificate
|
|
(a)
|
at the same time as the Borrower and/or the Corporate Guarantor provide the Agent and/or the Security Agent with annual audited consolidated financial statements of the Group pursuant to clause 8.1.5 of this Agreement and clause 5.1.4 of the Corporate Guarantee (namely, not later than 30 June of each calendar year) and, if a Default has occurred, at any other time as and when the Agent in its absolute discretion shall require, provide the Agent with valuations of the Ship made in accordance with clause 8.2.2;
|
|
(b)
|
at the same time as the Borrower and/or the Corporate Guarantor provide the Agent and/or the Security Agent with consolidated financial statements of the Group pursuant to clause 8.1.5 of this Agreement and clause 5.1.4 of the Corporate Guarantee (namely, not later than 31 March, 30 June, 30 September and 31 December of each calendar year) and, if a Default has occurred, at any other time as and when the Agent in its absolute discretion shall require, deliver to the Agent a Compliance Certificate (including any supporting schedules or other information and evidence as the Agent may require) duly signed by a director and an authorised signatory of the Borrower and the Corporate Guarantor, and otherwise in accordance with clause 5.1.5 of the Corporate Guarantee;
|
8.1.7
|
Delivery of report
|
8.1.8
|
Provision of further information
|
8.1.9
|
Obligations under Security Documents
|
8.1.10
|
Compliance with Code
|
8.1.11
|
Issuance of DOC and SMC
|
8.1.12
|
Withdrawal of DOC and SMC
|
8.1.13
|
ISPS Code compliance
|
|
(a)
|
maintain at all times a valid and current ISSC in respect of the Ship;
|
|
(b)
|
immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Ship; and
|
|
(c)
|
procure that the Ship will comply at all times with the ISPS Code;
|
8.1.14
|
Employment
|
|
(a)
|
deliver a certified copy of each such charterparty or other contract to the Agent forthwith after its execution;
|
|
(b)
|
forthwith following a demand made by the Agent (acting on the instructions of the Majority Banks):
|
|
(i)
|
execute a specific assignment (in such form as the Agent (acting on the instructions of the Majority Banks in their absolute discretion) may require) of any such charterparty or other contract in favour of the Security Agent and any notice of assignment required in connection therewith; and
|
|
(ii)
|
procure the service of any such notice of assignment on the relevant charterer or other counterparty of the Borrower, and the acknowledgement of such notice by the relevant charterer or other counterparty;
|
|
(c)
|
upon the Agent's request deliver to the Agent such documents and evidence of the type referred to in schedule 2, in relation to any such assignment or any other related matter
referred to in this clause 8.1.14, as the Agent (acting on the instructions of the Majority Banks in their sole discretion) shall require; and
|
|
(d)
|
pay on the Agent's demand all legal costs and other costs incurred by the Agent and/or the Banks and/or the Security Agent in connection with or in relation to any such assignment or any other related matter referred to in this clause 8.1.14;
|
8.1.15
|
Know your customer information
|
8.1.16
|
Money laundering
|
8.2
|
Security value maintenance
|
8.2.1
|
Security shortfall
|
|
(a)
|
prepay such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to the Security Value; or
|
|
(b)
|
constitute to the satisfaction of the Creditors such further security for the Loan and any amounts owing under the Master Swap Agreement as shall be acceptable to the Banks having a value for security purposes (as determined by the Agent in its absolute discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date,
|
8.2.2
|
Valuation of Ship
|
|
(a)
|
The Ship shall, for the purposes of this Agreement, be valued in Dollars as and when the Agent shall require (whether for the purpose of testing compliance with clause 8.2.1 or at any other time acting on the instructions of the Majority Banks) by two (2) of the Approved Shipbrokers, selected by the Borrower or, failing such selection by the Borrower, selected by the Agent (acting on the instructions of the Majority Banks in their
sole discretion). Each such valuation shall not be older than 30 days, shall be addressed to the Agent (with a copy to the Borrower) and made without, unless required by the Agent, physical inspection, without taking into account the benefit of any charterparty or other engagement concerning the Ship and it shall
be
made on the basis of a sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing buyer and a willing seller. The arithmetic mean of such two (2) valuations shall constitute the value of the Ship for the purposes of this clause 8.2 and the other provisions of this Agreement and the other Security Documents.
|
|
(b)
|
The value of the Ship determined in accordance with the provisions of this clause 8.2 shall be binding upon the parties hereto until such time as any further such valuations shall be obtained in respect of the Ship.
|
8.2.3
|
Information
|
8.2.4
|
Costs
|
8.2.5
|
Valuation of additional security
|
8.2.6
|
Documents and evidence
|
8.3
|
Negative undertakings
|
8.3.1
|
Negative pledge
|
8.3.2
|
No merger
|
8.3.3
|
Disposals
|
8.3.4
|
Other business
|
8.3.5
|
Acquisitions
|
8.3.6
|
Other obligations
|
8.3.7
|
No borrowing
|
8.3.8
|
Repayment of borrowings
|
8.3.9
|
Guarantees
|
8.3.10
|
Loans
|
8.3.11
|
Sureties
|
8.3.12
|
Share capital and distribution
|
8.3.13
|
Subsidiaries
|
8.3.14
|
Constitutional documents
|
8.3.15
|
Intra-Group transactions
|
8.3.16
|
Designated Transactions
|
8.3.17
|
Financial Year
|
8.3.18
|
Shareholdings
|
9
|
Conditions
|
9.1
|
Documents and evidence
|
9.1.1
|
on or prior to the giving of the Drawdown Notice for the Loan, the documents and evidence specified in Part 1 of schedule 2 in form and substance satisfactory to the Agent; and
|
9.1.2
|
on or prior to the drawdown of the Loan, the documents and evidence specified in Part 2 of schedule 2 in form and substance satisfactory to the Agent.
|
9.2
|
General conditions precedent
|
9.2.1
|
the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3.2(b), (ii) clause 4 of the Corporate Guarantee and (iii) clause 3 of the Share Pledge, are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; and
|
9.2.2
|
no Default shall have occurred and be continuing or would result from the making of the Loan; and
|
9.2.3
|
no events, facts, conditions or circumstances shall exist or have arisen or occurred (and neither the Agent nor any Bank shall have become aware of other events, facts, conditions or circumstances not previously known to it), which the Agent (acting on the instructions of the Majority Banks) shall determine, has had or could reasonably be expected to have, a Material Adverse Effect.
|
9.3
|
Waiver of conditions precedent
|
10
|
Events of Default
|
10.1
|
Events
|
10.1.1
|
Non-payment:
any Security Party fails to pay any sum payable by it under any of the Security Documents at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or
|
10.1.2
|
Master Swap Agreement:
(a) an Event of Default or Potential Event of Default (in each case as defined in the Master Swap Agreement) has occurred and is continuing with the Borrower as the Defaulting Party (as defined in the Master Swap Agreement) under the Master Swap Agreement or (b) an Early Termination Event (as defined in the Master Swap Agreement) has occurred with the Borrower as the sole Affected Party (as defined in the Master Swap Agreement) has occurred or has been or will become capable of being effectively designated under the Master Swap Agreement by the Swap Provider, or
|
10.1.3
|
Breach of Insurances and certain other obligations:
the Borrower or the Manager or any other person fails to obtain and/or maintain the Insurances in accordance with the requirements of the relevant Ship Security Documents or if any insurer in respect of the Insurances cancels the Insurances or disclaims liability by reason, in either case, of misstatement in any proposal for the Insurances or for any other failure or default on the part of the Borrower or any other person, or the Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clauses 8.2 or 8.3 or the Corporate Guarantor commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clauses 5.2 or 5.3 of the Corporate Guarantee; or
|
10.1.4
|
Breach of other obligations:
any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1, 10.1.2 and 10.1.3 above) and, in respect of any such breach or omission which in the opinion of the Agent (following consultation with the Banks) is capable of remedy, such action as the Agent (acting on the instructions of the Majority Banks) may require shall not have been taken within thirty (30) days of the Agent notifying the relevant Security Party of such default and of such required action; or
|
10.1.5
|
Misrepresentation:
any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or
|
10.1.6
|
Cross-default
: any Borrowed Money of any Security Party or any other Relevant Party is not paid when due or any Borrowed Money of any Security Party or any other Relevant Party becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party or other Relevant Party of a voluntary right of prepayment), or any creditor of any Security Party or any other Relevant Party becomes entitled to declare any such Borrowed Money due and payable or any facility or commitment available to any Security Party or any other Relevant Party relating to Borrowed Money is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party or other Relevant Party shall have satisfied the Banks that such withdrawal, suspension or cancellation will not affect or prejudice in any way the relevant Security Party's or other Relevant Party's ability to pay its debts as they fall due and fund its commitments, or any guarantee given by any Security Party or any other Relevant Party in respect of Borrowed Money is not honoured when due and called upon
Provided that
the amount or aggregate amount at any one time, of all Borrowed Money of any Security Party or any other Relevant Party in relation to which any of the foregoing events shall have occurred and be continuing, is equal to or greater than Ten million Dollars ($10,000,000) or its equivalent in the currency which the same is denominated or payable. For the avoidance of doubt for the purpose of this clause 10.1.6 "Borrowed Money" shall exclude Borrowed Money owing under this Agreement and/or the other Security Documents; or
|
10.1.7
|
Legal process
: any judgment or order made against any Security Party or other Relevant Party is not stayed or complied with within seven (7) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party or other Relevant Party and is not discharged within seven (7) days; or
|
10.1.8
|
Insolvency
: any Security Party or other Relevant Party is unable or admits inability to pay its debts as they fall due; or suspends making payments on any of its debts or announces an intention to do so; or becomes insolvent, or has assets the value of which is less than the value of its liabilities (taking into account contingent and prospective liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or any corporate action legal proceedings or other procedure or step is taken in relation to any of the above; or
|
10.1.9
|
Reduction or loss of capital
: a meeting is convened by any Security Party or other Relevant Party for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital; or
|
10.1.10
|
Winding up
: any corporate action, legal proceedings or other procedure or step is taken for the purpose of winding-up any Security Party or other Relevant Party or an order is made or resolution passed for the winding up of any Security Party or other Relevant Party or a notice is issued convening a meeting for the purpose of passing any such resolution; or
|
10.1.11
|
Administration
: any petition is presented, notice given, or other step is taken for the purpose of the appointment of an administrator of any Security Party or other Relevant Party or the Agent believes that any such petition or other step is imminent or an administration order is made in relation to any Security Party or other Relevant Party; or
|
10.1.12
|
Appointment of receivers and managers
: any administrative or other receiver, liquidator, compulsory manager or other similar officer is appointed of any Security Party or other Relevant Party or any part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any part of the assets of any Security Party or other Relevant Party; or
|
10.1.13
|
Compositions
: any corporate action, legal proceedings or other procedures or steps are taken, or negotiations commenced, by any Security Party or other Relevant Party or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such person and any of its creditors; or
|
10.1.14
|
Analogous proceedings:
there occurs, in relation to any Security Party or other Relevant Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Agent, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.7 to 10.1.13 (inclusive) or any Security Party or other Relevant Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or
|
10.1.15
|
Cessation of business:
any Security Party or any other Relevant Party suspends or ceases or threatens to suspend or cease to carry on its business; or
|
10.1.16
|
Seizure:
all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party or any other Relevant Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; or
|
10.1.17
|
Invalidity:
any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or
|
10.1 18
|
Unlawfulness:
it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for a Creditor to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or
|
10.1 19
|
Repudiation:
any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or
|
10.1.20
|
Encumbrances enforceable:
any Encumbrance (other than Permitted Liens) in respect
of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or
|
10.1.21
|
Material Adverse Effect:
any
event, condition, fact or circumstance occurs, arises or exists which, in the opinion of the Agent (acting on the instructions of the Majority Banks), has had or is reasonably expected to have a Material Adverse Effect; or
|
10.1.22
|
Arrest:
the Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Borrower and the Borrower shall fail to procure the release of the Ship within a period of ten (10) days thereafter; or
|
10.1.23
|
Registration:
the registration of the Ship under the laws and flag of the Flag State is cancelled or terminated without the prior written consent of the Agent (acting on the instructions of the Majority Banks) or if such registration of the Ship is not renewed at least forty five (45) days prior to expiry of such registration; or
|
10.1.24
|
Unrest:
the Flag State becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means; or
|
10.1.25
|
Environment:
the Borrower and/or any other Relevant Party and/or any Security Party fails to comply with any Environmental Law or any Environmental Approval or the Ship or any other Relevant Ship is involved in any incident which gives rise or may give rise to an Environmental Claim; or
|
10.1.26
|
P&l:
the Borrower or the Manager or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which the Ship
is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where the Ship operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or
|
10.1.27
|
Shareholdings at any time
:
|
|
(a)
|
either of the Borrower or the Manager ceases to be a wholly-owned direct Subsidiary of the Corporate Guarantor; or
|
|
(b)
|
a Change of Control occurs; or
|
10.1.28
|
Operating Account:
moneys are withdrawn from the Operating Account other than in accordance with clause 14; or
|
10.1.29
|
Manager:
the Ship is managed by a person other than the Manager without the prior written consent of the Agent (acting on the instructions of the Majority Banks); or
|
10.1.30
|
Licenses
,
etc:
any license, authorisation, consent or approval at any time necessary to enable any Security Party to comply with its obligations under the Security Documents or the Underlying Documents is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect or if any exchange control or other law or regulation shall exist which would make any transaction under the Security Documents or the Underlying Documents or the continuation thereof, unlawful or would prevent the performance by any Security Party of any term of any of the Security Documents or the Underlying Documents; or
|
10.1.31
|
Listing:
the shares of the Corporate Guarantor are de-listed or cease to trade permanently on the New York Stock Exchange; or
|
10.1.32
|
Material events:
any other event occurs or circumstance arises which, in the opinion of the Agent (acting on the instructions of the Majority Banks), is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents or any of the Underlying Documents or (ii) the security created by any of the Security Documents.
|
10.2
|
Acceleration
|
10.2.1
|
the obligation of each Bank to make its Commitment available shall be terminated, whereupon the Total Commitment shall be reduced to zero forthwith; and/or
|
10.2.2
|
the Loan and all interest and commitment commission accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.
|
10.3
|
Demand basis
|
10.4
|
Position of Swap Provider
|
11
|
Indemnities
|
11.1
|
Miscellaneous indemnities
|
11.1.1
|
any default in payment by the Borrower of any sum under any of the Security Documents when due; or
|
11.1.2
|
the occurrence of any other Event of Default; or
|
11.1.3
|
any prepayment of the Loan (or any part thereof) being made under clauses 4.3, 8.2.1(a) or 12.1 or any other repayment or prepayment of the Loan or part thereof being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; or
|
11.1.4
|
the Loan not being made for any reason (excluding any default by any Creditor) after the Drawdown Notice has been given,
|
11.2
|
Currency indemnity
|
11.3
|
Environmental indemnity
|
11.4
|
Central Bank or European Central Bank reserve requirements indemnity
|
11.5
|
General indemnity
|
12
|
Unlawfulness and increased costs
|
12.1
|
Unlawfulness
|
12.2
|
Increased costs
|
12.2.1
|
subject any Bank to Taxes or change the basis of Taxation of any Bank with respect to any payment
under
any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of such Bank imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or
|
12.2.2
|
increase the cost to, or impose an additional cost on, any Bank or its holding company in making or keeping such Bank's Commitment available or maintaining or funding all or part of such Bank's Contribution; and/or
|
12.2.3
|
reduce the amount payable or the effective return to any Bank under any of the Security Documents; and/or
|
12.2.4
|
reduce any Bank's or its holding company's rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to such Bank's obligations under any of the Security Documents; and/or
|
12.2.5
|
require any Bank or its holding company to make a payment or forego a return on or calculated by reference to any amount received or receivable by such Bank under any of the Security Documents; and/or
|
12.2.6
|
require any Bank or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of its Commitment or its Contribution from its capital for regulatory purposes,
|
|
(a)
|
such Bank shall (through the Agent) notify the Borrower in writing of such event promptly upon its becoming aware of the same; and
|
|
(b)
|
the Borrower shall on demand made at any time, whether or not such Bank's Contribution has been repaid, pay to the Agent for the account of such Bank the amount which such Bank specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Bank or its holding company regards as confidential) is required to compensate such Bank and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment , foregone return or loss.
|
12.3
|
Exception
|
12.4
|
Mitigation
|
12.4.1
|
be prejudicial to such Bank (or, as the case may be, its holding company); or
|
12.4.2
|
have an adverse effect on such Bank's or its holding company's business, operations, administration or financial condition; or
|
12.4.3
|
involve such Bank or its holding company in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent, with any regulation or such Bank's general banking policies; or
|
12.4.4
|
involve such Bank or its holding company in any expense (unless indemnified to its satisfaction) or tax disadvantage.
|
13
|
Security, set-off and pro-rata payments
|
13.1
|
Application of moneys
|
13.1.1
|
first in or towards payment of all unpaid costs, expenses and fees which may be owing to the Arranger, the Agent or the Security Agent under any of the Security Documents;
|
13.1.2
|
secondly, in or towards payment of any unpaid costs, expenses and fees payable to the Banks or the Account Bank or any of them;
|
13.1.3
|
thirdly, in or towards payment of any arrears of interest owing in respect of the Loan or any part thereof;
|
13.1.4
|
fourthly, in or towards payment to any Bank for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid or prepaid and which amounts are so payable under this Agreement;
|
13.1.5
|
fifthly, in or towards repayment of the Loan (whether the same is due and payable or not);
|
13.1.6
|
sixthly, in or towards payment to the Swap Provider, on a pro rata basis, of any sums owing to it under the Master Swap Agreement;
|
13.1.7
|
seventhly, in or towards payment to any Creditor (other than the Swap Provider) of any other sums owing to it under any of the Security Documents (and if any such sums are owing to more than one Creditor, as between such Creditors on a pro rata basis); and
|
13.1.8
|
eighthly, the surplus (if any) shall be paid to the Borrower or to whomsoever else may be entitled to receive such surplus.
|
13.2
|
Pro-rata payments
|
13.2.1
|
If at any time any Bank (the "
Recovering Bank
")
receives or recovers any amount owing to it by the Borrower under this
-
Agreement by direct payment, set-off or in any manner other than by payment through the Agent pursuant to clauses 6.1 or 6.9 (not being a payment received from a Transferee Bank or a sub-participant in such Bank's Contribution or any other payment of an amount due to the Recovering Bank for its sole account pursuant to clauses 3.6, 5, 6.6, 11.1, 11.2, 12.1 or 12.2), the Recovering Bank shall, within two (2) Banking Days of such receipt or recovery (a "
Relevant Receipt
")
notify the Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Bank would have received if the Relevant Receipt had been received by the Agent and distributed pursuant to clauses 6.1 or 6.9 (as the case may be) then:
|
|
(a)
|
within two (2) Banking Days of demand by the Agent, the Recovering Bank shall pay to the Agent an amount equal (or equivalent) to the excess;
|
|
(b)
|
the Agent shall treat the excess amount so paid by the Recovering Bank as if it were a payment made by the Borrower and shall distribute the same to the Banks (other than the Recovering Bank) in accordance with clause 6.9; and
|
|
(c)
|
as between the Borrower and the Recovering Bank the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrower to the other Banks shall, to the extent of the amount so re-distributed to them, be treated as discharged.
|
13.2.2
|
If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Bank (whether to a liquidator or otherwise), each Bank to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Bank repay to the Recovering Bank such Bank's pro-rata share of the amount which has to be refunded by the Recovering Bank.
|
13.2.3
|
Each Bank shall on request supply to the Agent such information as the Agent may from time to time request for the purpose of this clause 13.2.
|
13.2.4
|
Notwithstanding the foregoing provisions of this clause 13.2, no Recovering Bank shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to legal proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such proceedings or commence and diligently pursue separate proceedings to enforce its rights in the same or another court (unless the proceedings instituted by the Recovering Bank are instituted by it without prior notice having been given to such party through the Agent).
|
13.3
|
Set-off
|
13.3.1
|
The Borrower authorises the Agent and each Bank (without prejudice to any of the Agent's or such Bank's rights at law. in equity or otherwise), at any time and without notice to the Borrower, to apply any credit balance to which the Borrower is then entitled standing upon any account of the Borrower with any branch of such Creditor in or towards satisfaction of any sum due and payable from the Borrower to the Agent or such Bank, as the case may be, under any of the Security Documents. For this purpose, the Agent and each Bank is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application.
|
13.3.2
|
No Creditor shall be obliged to exercise any right given to it by this clause 13.3. Each Bank shall notify the Agent and the Agent shall notify the Borrower forthwith upon the exercise or purported exercise of any right of set-off giving full details in relation thereto and the Agent shall inform the other Banks. Nothing in this clause 13.3 shall be effective to create a charge or other Encumbrance.
|
13.3.3
|
Nothing in the clause 13.3 shall be effective to create a charge or other security interest.
|
13.4
|
No release
|
13.5
|
No charge
|
14
|
Operating Account
|
14.1
|
General
|
14.1.1
|
on or before the Drawdown Date, open the Operating Account (and provide the Agent and the Account Bank with any information or documents requested by them under clause 8.1.15 to enable the Account Bank to do so); and
|
14.1.2
|
procure that all moneys payable to the Borrower in respect of the Earnings of the Ship and any moneys payable to the Borrower under the Master Swap Agreement shall, unless and until the Agent (acting on the instructions of the Majority Banks) directs to the contrary pursuant to clause 2.1.1 of the Deed of Covenant be paid to the Operating Account Provided however that if any of the moneys paid to the Operating Account are payable in a currency other than Dollars, the Account Bank shall (and the Borrower hereby irrevocably and unconditionally instructs the Account Bank to) convert such moneys into Dollars at the Account Bank's spot rate of exchange at the relevant time for the purchase of Dollars with such currency and the term "
spot
rate of exchange
"
shall include any premium and costs of exchange payable in connection with the purchase of Dollars with such currency.
|
14.2
|
Operating Accounts: withdrawals
|
14.2.1
|
to pay any amount to the Agent in or towards payments of any instalments of interest or any repayments, reductions or other payments of principal, or any other amounts then payable pursuant to the Security Documents;
|
14.2.2
|
to pay the proper and reasonable expenses of the Ship (including management fees under the Management Agreements);
|
14.2.3
|
to pay the proper and reasonable expenses of administering the Borrower's affairs; and
|
14.2.4
|
to make any payments of dividends to the extent permitted by clause 8.3.12 or any other payments on behalf of the Borrower which are not prohibited by this Agreement or any of the other Security Documents.
|
14.3
|
Account terms
|
14.4
|
Application of Operating Account
|
14.5
|
Charging of Operating Account
|
15
|
Assignment, transfer and lending office
|
15.1
|
Benefit and burden
|
15.2
|
No assignment by Borrower
|
15.3
|
Transfers by Banks
|
15.3.1
|
a Transfer Certificate may be in respect of a Bank's rights in respect of all, or part of, its Commitment and shall be in respect of the same proportion of its Contribution;
|
15.3.2
|
a Transfer Certificate shall only be in respect of rights and obligations of the Transferor Bank in its capacity as a Bank and shall not transfer its rights and obligations as Agent, Security Agent or in any other capacity, as the case may be and such other rights and obligations may only be transferred in accordance with any applicable provisions of this Agreement;
|
15.3.3
|
a Transfer Certificate shall take effect in accordance with English law as follows:
|
|
(a)
|
to the extent specified in the Transfer Certificate, the Transferor Bank's payment rights and all its other rights (other than those referred to in clause 15.3.2 above) under this Agreement are assigned to the Transferee Bank absolutely, free of any defects in the Transferor Bank's title and of any rights or equities which the Borrower had against the Transferor Bank;
|
|
(b)
|
the Transferor Bank's Commitment is discharged to the extent specified in the Transfer Certificate;
|
|
(c)
|
the Transferee Bank becomes a Bank with a Contribution and a Commitment of the amounts specified in the Transfer Certificate;
|
|
(d)
|
the Transferee Bank becomes bound by all the provisions of this Agreement and the Security Documents which are applicable to the Banks generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent, the Security Agent and the Arranger in accordance with the provisions of clause 16 and to the extent that the Transferee Bank becomes bound by those provisions, the Transferor Bank ceases to be bound by them; and
|
|
(e)
|
the Transferee Bank becomes entitled to all the rights under this Agreement which are applicable to the Banks generally, including but not limited to those relating to the Majority Banks and those under clauses 3.6, 5 and 12 and to the extent that the Transferee Bank becomes entitled to such rights, the Transferor Bank ceases to be entitled to them;
|
15.3.4
|
the rights and equities of the Borrower or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim; and
|
15.3.5
|
the Borrower, the Account Bank, the Security Agent, the Swap Provider and the other Creditors hereby irrevocably authorise and instruct the Agent to sign any such Transfer Certificate on their behalf and undertake not to withdraw, revoke or qualify such authority or instruction at any time. Promptly upon its signature of any Transfer Certificate, the Agent shall notify the Borrower, the Transferor Bank, the Transferee Bank and the other Banks.
|
15.4
|
Reliance on Transfer Certificate
|
15.4.1
|
The Agent shall be entitled to rely on any Transfer Certificate believed by it to be genuine and correct and to have been presented or signed by the persons by whom it purports to have been presented or signed, and shall not be liable to any of the parties to this Agreement and the Security Documents for the consequences of such reliance.
|
15.4.2
|
The Agent shall at all times during the continuation of this Agreement maintain a register in which it shall record the name, Commitments, Contributions and administrative details (including the lending office) from time to time of the Banks holding a Transfer Certificate and the date at which the transfer referred to in such Transfer Certificate held by each Bank was transferred to such Bank, and the Agent shall make the said register available for inspection by any Bank, the Security Agent or the Borrower during normal banking hours upon receipt by the Agent of reasonable prior notice requesting the Agent to do so.
|
15.4.3
|
The entries on the said register shall, in the absence of manifest error, be conclusive in determining the identities of the Commitments, the Contributions and the Transfer Certificates held by the Banks from time to time and the principal amounts of such Transfer Certificates and may be relied upon by the Agent, the other Creditors and the other Security Parties for all purposes in connection with this Agreement and the Security Documents.
|
15.5
|
Transfer fees and expenses
|
15.6
|
Documenting transfers
|
15.7
|
Sub-participation
|
15.8
|
Lending office
|
15.9
|
Disclosure of information
|
15.10
|
Replacement of a Bank
|
15.10.1
|
If at any time:
|
|
(a)
|
any Bank becomes an Increased Cost Bank; or
|
|
(b)
|
any Bank becomes a Non-Consenting Bank,
|
15.10.2
|
The Borrower shall have no right to replace the Arranger, the Agent, the Account Bank or the Security Agent and none of the foregoing shall create on any Creditor, nor any Creditor shall have, any obligation towards the Borrower to find a replacement Bank or such other entity. No member of the Group may make any payment or assume any obligation (whether by way of fees, expenses or otherwise) to or on behalf of the replacement Bank as an inducement for the replacement Bank to become a Bank.
|
15.10.3
|
The Borrower may only replace a Non-Consenting Bank or an Increased Cost Bank if that replacement takes place no later than 60 days after:
|
|
(a)
|
the date on which the Non-Consenting Bank becomes a Non-Consenting Bank; or
|
|
(b)
|
the date on which the Increased Cost Bank demands payment of the relevant additional amounts.
|
15.10.4
|
No Bank replaced under this clause 15.10 may be required to pay or surrender to that replacement Bank or other entity any of the fees received by it.
|
15.10.5
|
In the case of a replacement of an Increased Cost Bank, the Borrower shall pay the relevant additional amounts to that Increased Cost Bank prior to it being replaced and the payment of those additional amounts shall be a condition to replacement.
|
15.10 6
|
For the purposes of this clause 15.10:
|
|
(a)
|
an
''Increased Cost Bank
"
is a Bank to whom the Borrower becomes obliged to pay any additional amount under clause 6.6 or clause 12.2 in circumstances where (i) the Borrower is also obliged to pay such additional amount to other Banks under the same clause and (ii) the additional amounts which such Bank is seeking to recover from the Borrower under such clause are materially higher than the equivalent amounts sought by the other such Banks under the same clause; and
|
|
(b)
|
a "
Non-Consenting Bank
"
is a Bank who does not agree to a waiver, consent or amendment where:
|
|
(i)
|
the Borrower or the Agent has requested the Banks to consent to a departure from, or waiver of, any provision of the Security Documents or to agree to any amendment thereto;
|
|
(ii)
|
the waiver, consent or amendment in question requires the agreement of the Majority Banks or all the Banks;
|
|
(iii)
|
a period of not less than 30 days has elapsed from the date the waiver, consent or amendment was requested;
|
|
(iv)
|
the Majority Banks have agreed to such waiver, consent or amendment; and
|
|
(v)
|
the Borrower has notified such Bank that it will treat it as a Non-Consenting Bank.
|
16
|
Arranger, Agent and Security Agent
|
16.1
|
Appointment of the Agent
|
16.1.1
|
to execute such documents as may be approved by the Majority Banks for execution by the Agent; and
|
16.1.2
|
(whether or not by or through employees or agents) to take such action on such Bank's or, as the case may be, the Swap Provider's behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Agent by this Agreement and/or any other Security Document, together with such powers and discretions as are reasonably incidental thereto.
|
16.2
|
Agent's actions
|
16.3
|
Agent's duties
|
16.3.1
|
promptly notify each Bank of the contents of each notice, certificate or other document received by it from the Borrower under or pursuant to clauses 8.1.1, 8.1.5 and 8.1.7; and
|
16.3.2
|
(subject to the other provisions of this clause 16) take (or instruct the Security Agent to take) such action or, as the case may be, refrain from taking (or authorise the Security Agent to refrain from taking) such action with respect to the exercise of any of its rights, remedies, powers and discretions as agent, as the Majority Banks may direct.
|
16.4
|
Agent's rights
|
16.4.1
|
in the exercise of any right, remedy, power or discretion in relation to any matter, or in any context, not expressly provided for by this Agreement or any of the other Security Documents, act or, as the case may be, refrain from acting (or authorise the Security Agent to act or refrain from acting) in accordance with the instructions of the Banks, and shall be fully protected in so doing;
|
16.4.2
|
unless and until it shall have received directions from the Majority Banks, take such action or, as the case may be, refrain from taking such action (or authorise the Security Agent to take or refrain from taking such action) in respect of a Default of which the Agent has actual knowledge as it shall deem advisable in the best interests of the Banks and the Swap Provider (but shall not be obliged to do so);
|
16.4.3
|
refrain from acting (or authorise the Security Agent to refrain from acting) in accordance with any instructions of the Banks to institute any legal proceedings arising out of or in connection with this Agreement or any of the other Security Documents until it and/or the Security Agent has been indemnified and/or secured to its satisfaction against any and all costs, expenses or liabilities (including legal fees) which it would or might incur as a result;
|
16.4.4
|
deem and treat (a) each Bank as the person entitled to the benefit of the Contribution of such Bank for all purposes of this Agreement unless and until a Transfer Certificate shall have been filed with the Agent pursuant to clause 15.3 and shall have become effective, and (b) the office set opposite the name of each of the Banks in schedule 1 or, as the case may be, in any relevant Transfer Certificate to be such Bank's lending office unless and until a written notice of change of lending office shall have been received by the Agent and the Agent may act upon any such notice unless and until the same is superseded by a further such notice;
|
16.4.5
|
rely as to matters of fact which might reasonably be expected to be within the knowledge of any Security Party upon a certificate signed by any director or officer of the relevant Security Party on behalf of the relevant Security Party; and
|
16.4.6
|
do anything which is in its opinion necessary or desirable to comply with any law or regulation in any jurisdiction.
|
16.5
|
No liability of Arranger or Agent
|
16.5.1
|
be obliged to make any enquiry as to the use of any of the proceeds of the Loan unless (in the case of the Agent) so required in writing by a Bank, in which case the Agent shall promptly make the appropriate request to the Borrower; or
|
16.5.2
|
be obliged to make any enquiry as to any breach or default by the Borrower or
any other Security Party in the performance or observance of any of the provisions of this Agreement or any of the other Security Documents or as to the existence of a Default unless (in the case of the Agent) the Agent has actual knowledge thereof or has been notified in writing thereof by a Bank, in which case the Agent shall promptly notify the Banks of the relevant event or circumstance; or
|
16.5.3
|
be obliged to enquire whether or not any representation or warranty made by the Borrower or any other Security Party pursuant to this Agreement or any of the other Security Documents is true; or
|
16 5.4
|
be obliged to do anything (including, without limitation, disclosing any document or information) which would, or might in its opinion, be contrary to any law or regulation or be a breach of any duty of confidentiality or otherwise be actionable or render it liable to any person; or
|
16.5.5
|
be obliged to account to any Bank or the Swap Provider for any sum or the profit element of any sum received by it for its own account; or
|
16.5.6
|
be obliged to institute any legal proceedings arising out of or in connection with this Agreement or any of the other Security Documents other than on the instructions of the Majority Banks; or
|
16.5.7
|
be liable to any Bank or the Swap Provider for any action taken or omitted under or in connection with this Agreement or any of the other Security Documents unless caused by its gross negligence or wilful misconduct.
|
16.6
|
Non-reliance on Arranger or Agent
|
16.7
|
No responsibility on Arranger or Agent for Borrower's performance
|
16.7.1
|
on account of the failure of any Security Party to perform its obligations under any of the Security Documents; or
|
16.7.2
|
for the financial condition of any Security Party; or
|
16.7.3
|
for the completeness or accuracy of any statements, representations or warranties in any of the Security Documents or any document delivered under any of the Security Documents; or
|
16.7.4
|
for the execution, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of any of the Security Documents or of any certificate, report or other document executed or delivered under any of the Security Documents; or
|
16 7.5
|
to investigate or make any enquiry into the title of the Borrower or any other Security Party to the Ship or any other security or any part thereof; or
|
16.7.6
|
for the failure to register any of the Security Documents with any official or regulatory body or office or elsewhere; or
|
16.7.7
|
for taking or omitting to take any other action under or in relation to any of the Security Documents or any aspect of any of the Security Documents; or
|
16.7.8
|
on account of the failure of the Security Agent to perform or discharge any of its duties or obligations under the Security Documents; or
|
16.7.9
|
otherwise in connection with the Agreement or its negotiation or for acting (or, as the case may be, refraining from acting) in accordance with the instructions of the Banks or the Swap Provider.
|
16.8
|
Reliance on documents and professional advice
|
16.9
|
Other dealings
|
16.10
|
Rights of Agent as Bank; no partnership
|
16.11
|
Amendments and waivers
|
16.11.1
|
Subject to clause 16.11.2, the Agent may, with the consent of the Majority Banks (or if and to the extent expressly authorised by the other provisions of any of the Security Documents) and, if so instructed by the Majority Banks, the Agent shall:
|
|
(a)
|
agree (or authorise the Security Agent to agree) amendments or modifications to any of the Security Documents with any Security Party; and/or
|
|
(b)
|
vary or waive breaches of, or defaults under, or otherwise excuse performance of, any provision of any of the other Security Documents by any Security Party (or authorise the Security Agent to do so).
|
16.11.2
|
Except with the prior written consent of all the Banks, the Agent shall have no authority on behalf of the Banks or the Swap Provider to agree (or authorise the Security Agent to agree) with any Security Party any amendment or modification to any of the Security Documents or to grant (or authorise the Security Agent to grant) waivers in respect of breaches or defaults or to vary or excuse (or authorise the Security Agent to vary or excuse) performance of or under any of the Security Documents by any Security Party, if the effect of such amendment, modification, waiver or excuse would be to:
|
|
(a)
|
reduce the Margin;
|
|
(b)
|
postpone the due date of, or reduce the amount of any payment of principal, interest or other amount payable by any Security Party under any of the Security Documents;
|
|
(c)
|
change the currency in which any amount is payable by any Security Party under any of the Security Documents;
|
|
(d)
|
increase any Bank's Commitment;
|
|
(e)
|
extend the Termination Date;
|
|
(f)
|
change any provision of any of the Security Documents which expressly or implied requires the approval or consent of all the Banks such that the relevant approval or consent may be given otherwise than with the sanction of all the Banks;
|
|
(g)
|
change the order of distribution under clause 6.9 or clause 13.1 or change clause 13.2;
|
|
(h)
|
change this clause 16.11;
|
|
(i)
|
change the definition of "
Majority Banks
"
in clause 1.2; or
|
16.12
|
Reimbursement and indemnity by Banks
|
16.13
|
Retirement of Agent
|
16.13.1
|
The Agent may, having given to the Borrower, the Swap Provider and each of the Banks not less than thirty (30) days' notice of its intention to do so, retire from its appointment as Agent under this Agreement, provided that no such retirement shall take effect unless there has been appointed by the Banks and the Swap Provider as a successor agent:
|
|
(a)
|
a Related Company of the Agent nominated by the Agent which the Banks and the Swap Provider hereby irrevocably and unconditionally agree to appoint or, failing such nomination,
|
|
(b)
|
a Bank nominated by the Majority Banks or, failing such a nomination,
|
|
(c)
|
any reputable and experienced bank or financial institution nominated by the retiring Agent;
|
16.13.2
|
Upon any such successor as aforesaid being appointed, the retiring Agent shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Agent. The retiring Agent shall (at the expense of the Borrower) provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under the Security Documents.
|
16.14
|
Appointment and retirement of Security Agent
|
16.14.1
|
Appointment
|
16.14.2
|
Retirement
|
|
(a)
|
a Related Company of the Security Agent nominated by the Security Agent which the Banks hereby irrevocably and unconditionally agree to appoint or, failing such nomination,
|
|
(b)
|
a bank or trust corporation nominated by the Majority Banks or, failing such a nomination,
|
|
(c)
|
any bank or trust corporation nominated by the retiring Security Agent,
|
16.15
|
Powers and duties of the Security Agent
|
16.15.1
|
The Security Agent shall have no duties, obligations or liabilities to any of the Banks, the Swap Provider or the Agent beyond those expressly stated in any of the Security Documents. Each of the Banks, the Swap Provider and the Agent hereby authorises the Security Agent to enter into and execute:
|
|
(a)
|
each of the Security Documents to which the Security Agent is or is intended to be a party; and
|
|
(b)
|
any and all such other Security Documents as may be approved by the Agent in writing (acting on the instructions of the Majority Banks) for entry into by the Security Agent,
|
16.15.2
|
Subject to clause 16.15.3 the Security Agent may, with the prior consent of the Majority Banks communicated in writing by the Agent, concur with any of the Security Parties to:
|
|
(a)
|
amend, modify or otherwise vary any provision of the Security Documents to which the Security Agent is or is intended to be a party; or
|
|
(b)
|
waive breaches of, or defaults under, or otherwise excuse performance of, any provision of the Security Documents to which the Security Agent is or is intended to be a party.
|
16.15.3
|
The Security Agent shall not concur with any Security Party with respect to any of the matters described in clause 16.11.2 without the consent of all the Banks communicated in writing by the Agent.
|
16.15.4
|
The Security Agent shall (subject to the other provisions of this clause 16) take such action or, as the case may be, refrain from taking such action, with respect to any of its rights, powers and discretions as security agent and trustee, as the Agent may direct. Subject as provided in the foregoing provisions of this clause, unless and until the Security Agent shall have received such instructions from the Agent, the Security Agent may, but shall not be obliged to, take (or refrain from taking) such action under or pursuant to the Security Documents referred to in clause 16.15.1 as the Security Agent shall deem advisable in the best interests of the Creditors provided that (for the avoidance of doubt), to the extent that this clause might otherwise be construed as authorising the Security Agent to take, or refrain from taking, any action of the nature referred to in clause 16.15.2 - and for which the prior consent of the Banks is expressly required under clause 16.15.3 - clauses 16,15.2 and 16.15.3 shall apply to the exclusion of this clause.
|
16.15.5
|
None of the Banks nor the Agent nor the Swap Provider shall have any independent power to enforce any of the Security Documents referred to in clause 16.15.1 or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to such Security Documents or any of them or otherwise have direct recourse to the security and/or guarantees constituted by such Security Documents or any of them except through the Security Agent.
|
16.15.6
|
For the purpose of this clause 16, the Security Agent may, rely and act in reliance upon any information from time to time furnished to the Security Agent by the Agent (whether pursuant to clause 16.15.7 or otherwise) unless and until the same is superseded by further such information, so that the Security Agent shall have no liability or responsibility to any party as a consequence of placing reliance on and acting in reliance upon any such information unless the Security Agent has actual knowledge that such information is inaccurate or incorrect.
|
16.15.7
|
Without prejudice to the foregoing each of the Agent, the Swap Provider and the Banks (whether directly or through the Agent) shall provide the Security Agent with such written information as it may reasonably require for the purpose of carrying out its duties and obligations under the Security Documents referred to in clause 16.15.1.
|
16.15.8
|
Each Bank shall reimburse the Security Agent (rateably in accordance with such Bank's Commitment or, following draw down, its Contribution), to the extent that the Security Agent is not reimbursed by the Borrower, for the costs, charges and expenses incurred by the Agent which are expressed to be payable by the Borrower under clause 5.2 including (in each case) the fees and expenses of legal or other professional advisers. Each Bank shall on demand indemnify the Security Agent (rateably in accordance with such Bank's Commitment or, following draw down, its Contribution) against all liabilities, damages, costs and claims whatsoever incurred by the Security Agent in connection with any of the Security Documents or the performance of its duties under any of the Security Documents or any action taken or omitted by the Security Agent under any of the Security Documents, unless such liabilities, damages, costs or claims arise from the Security Agent's own gross negligence or wilful misconduct.
|
16.16
|
Trust provisions
|
16.16.1
|
The trusts constituted or evidenced in or by this Agreement and the Trust Deed shall remain in full force and effect until whichever is the earlier of:
|
|
(a)
|
the expiration of a period of eighty (80) years from the date of this Agreement; and
|
|
(b)
|
receipt by the Security Agent of confirmation in writing by the Agent that there is no longer outstanding any Indebtedness (actual or contingent) which is secured or guaranteed or otherwise assured by or under any of the Security Documents,
|
16.16.2
|
In its capacity as trustee in relation to the Security Documents specified in clause 16.15.1, the Security Agent shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of any of those Security Documents), have all the same powers and discretions as a natural person acting as the beneficial owner of such property and/or as are conferred upon the Security Agent by any of those Security Documents.
|
16.16.3
|
It is expressly declared that, in its capacity as trustee in relation to the Security Documents specified in clause 16.15.1, the Security Agent shall be entitled to invest moneys forming part of the security and which, in the opinion of the Security Agent, may not be paid out promptly following receipt in the name or under the control of the Security Agent in any of the investments for the time being authorised by law for the investment by trustees of trust moneys or in any other property or investments whether similar to the aforesaid or not or by placing the same on deposit in the name or under the control of the Security Agent as the Security Agent may think fit without being under any duty to diversify its investments and the Security Agent may at any time vary or transpose any such property or investments for or into any others of a like nature and shall not be responsible for any loss due to depreciation in value or otherwise of such property or investments. Any investment of any part or all of the security may, at the discretion of the Security Agent, be made or retained in the names of nominees.
|
16.17
|
Independent action by Creditors
|
16.18
|
Common Agent and Security Agent
|
16.19
|
Co-operation to achieve agreed priorities of application
|
16.20
|
Prompt distribution of proceeds
|
16.21
|
Change
of Reference Bank
|
17
|
Notices and other matters
|
17.1
|
Notices
|
17.1.1
|
be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form;
|
17.1.2
|
be deemed to have been received, subject as otherwise provided in the relevant Security Document, in the case of a letter, when delivered personally or three (3) days after it has been put in to the post and, in the case of a facsimile transmission or other means of
telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and
|
17.1.3
|
be sent:
|
|
(a)
|
if to the Borrower at:
|
c/o Diana Shipping Services S.A.
|
||
Pendelis 16
|
||
Palaio Faliro
|
||
175 64 Athens
|
||
Greece
|
||
Fax no: +30 210 942 4975
|
||
Att: Mr Andreas Michalopoulos
|
|
(b)
|
if to the Arranger, the Agent, the Security Agent or the Account Bank at:
|
Nordea Bank Finland Plc, London Branch
|
||
8th Floor, City Place House
|
||
55 Basinghall Street
|
||
London EC2V 5NB
|
||
England
|
||
Fax no: +44 207 726 9188
|
||
Att: Shipping Department
|
||
with a copy to:
|
||
Fax no: +44 207 726 9102
|
||
Att: Loan Administration
|
|
(c)
|
if to a Bank, to its address or facsimile number specified in schedule 1 or, in the case of a Transferee Bank, in any relevant Transfer Certificate; and
|
|
(d)
|
if to the Swap Provider, to its address or facsimile number specified in paragraph (a) of Part 4 of the Schedule to the Master Swap Agreement,
|
17.2
|
Notices through the Agent
|
17.3
|
No implied waivers, remedies cumulative
|
17.4
|
English language
|
17.5
|
Further assurance
|
17.6
|
Conflicts
|
18
|
Governing law and jurisdiction
|
18.1
|
Law
|
18.2
|
Submission to jurisdiction
|
18.3
|
Process agent
|
18.4
|
Contracts (Rights of Third Parties) Act 1999
|
Name
|
Lending office and contact details
|
Commitment $
|
Nordea Bank Finland Plc
,
London Branch
|
Lending office
|
16,125,000
|
8th Floor, City Place House
55 Basinghall Street
London EC2V 5NB
England
Contact details for notices
8th Floor, City Place House
55 Basinghall Street
London EC2V 5NB
England
Fax: +44 207 726 9188
Attn: Shipping Department
With a copy to:
Fax: +44 207 726 9102
Attn: Loan Administration
|
||
TOTAL COMMITMENT
|
16
,
125
,
000
|
1
|
Constitutional documents
|
2
|
Corporate authorisations
|
|
(a)
|
being true and correct;
|
|
(b)
|
being duly passed at meetings of the directors of such Security Party or such other party and, if required, of the shareholders of such Security Party or such other party each duly convened and held;
|
|
(c)
|
not having been amended, modified or revoked; and
|
|
(d)
|
being in full force and effect,
|
3
|
Specimen signatures
|
4
|
Certificates of incumbency
|
5
|
Borrower's consents and approvals
|
6
|
Other consents and approvals
|
7
|
Certified copies of the Underlying Documents
|
8
|
Financial statements
|
9
|
Marshall Islands opinion
|
10
|
Further opinions
|
11
|
Security Documents
|
12
|
Borrower's process agent
|
13
|
Corporate Guarantor's process agent
|
14
|
Registration forms
|
15
|
Bank account
|
16
|
"KYC"
|
17
|
Fees and commitment commission
|
18
|
Further conditions precedent
|
1
|
Drawdown notice
|
2
|
Conditions precedent
|
3
|
Ship conditions
|
|
(a)
|
Registration and Encumbrances
|
|
(b)
|
Classification
|
|
(c)
|
Insurance
|
4
|
Title and no Encumbrances
|
5
|
Delivery Documents
|
6
|
Security Documents
|
7
|
Mortgage registration
|
8
|
Notices of assignment
|
9
|
Security Parties' process agent
|
10
|
Registration forms
|
11
|
Insurance opinion
|
12
|
Panamanian opinion
|
13
|
Bahamas opinion
|
14
|
Marshall Islands opinion
|
15
|
Further opinions
|
16
|
DOC and application for SMC
|
17
|
ISPS Code Compliance
|
|
(a)
|
evidence satisfactory to the Agent that the Ship is subject to a ship security plan which complies with the ISPS Code; and
|
|
(b)
|
a copy certified (in a certificate dated no earlier than five (5) Banking Days prior to the Drawdown Date) as a true and complete copy by an officer of the Borrower of the ISSC for the Ship and the continuous synopsis record required by the ISPS Code in respect of the Ship;
|
18
|
Fees and commissions
|
19
|
Further conditions precedent
|
To:
|
Nordea Bank Finland Plc, London Branch
|
(a)
|
no event or circumstance has occurred and is continuing which constitutes a Default;
|
(b)
|
the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3.2 of the Loan Agreement, (ii) clause 4 of the Corporate Guarantee and (iii) clause 3 of the Share Pledge, are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;
|
(c)
|
the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded; and
|
(d)
|
no events, conditions, facts or circumstances exist, have arisen or occurred since 31 December 2010 which have had or could be reasonably expected to have a Material Adverse Effect; and
|
(e)
|
we will use the proceeds of the Loan for our benefit and under our full responsibility and exclusively for the purpose specified in the Loan Agreement.
|
To:
|
NORDEA BANK FINLAND PLC, LONDON BRANCH as agent on its own behalf and on behalf of the Borrower, the Banks, the Account Bank, the Arranger, the Swap Provider and the Security Agent defined in the Loan Agreement referred to below.
|
1
|
The Transferor Bank with full title guarantee assigns to the Transferee Bank absolutely all rights
and interests (present, future or contingent) which the Transferor Bank has as a Bank under or by virtue of the Loan Agreement and all the Security Documents in relation to that part of the [Contribution] [Commitment] of the Transferor Bank (or its predecessors in title) details of which are set out below:
|
Date of Loan
|
Amount of Loan
|
Transferor Bank's
[Contribution]
[Commitment]
to Loan
|
Maturity Date
|
|
2
|
By virtue of this Transfer Certificate and clause 15 of the Loan Agreement, the Transferor Bank is discharged [entirely from its [Contribution] [Commitment] which amounts to $[
]] [from [ ] per centum ([ ]%) of its [Contribution] [Commitment], which percentage represents $[ ]].
|
3
|
The Transferee Bank hereby requests the Agent (on behalf of itself, the Borrower, the Account Bank, the Arranger, the Security Agent, the Swap Provider and the Banks) to accept the executed copies of this Transfer Certificate as being delivered pursuant to and for the purposes of clause 15.3 of the Loan Agreement so as to take effect in accordance with the terms thereof on [date of transfer].
|
4
|
The Transferee Bank:
|
4.1
|
confirms that it has received a copy of the Loan Agreement and the other Security Documents together with such other documents and information as it has required in connection with the transaction contemplated thereby;
|
4.2
|
confirms that it has not relied and will not hereafter rely on the Transferor Bank, the Agent, the Arranger, the Security Agent, the Swap Provider, the Account Bank or the Banks to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of the Loan Agreement, any of the Security Documents or any such documents or information;
|
4.3
|
agrees that it has not relied and will not rely on the Transferor Bank, the Agent, the Arranger, the Security Agent, the Swap Provider, the Account Bank or the Banks to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower, or any other Security Party (save as otherwise expressly provided therein);
|
4.4
|
warrants that it has power and authority to become a party to the Loan Agreement and has taken all necessary action to authorise execution of this Transfer Certificate and to obtain all necessary approvals and consents to the assumption of its obligations under the Loan Agreement and the Security Documents; and
|
4.5
|
if not already a Bank, appoints (i) the Agent to act as its agent and (ii) the Security Agent to act as its security agent, and trustee in each case as provided in the Loan Agreement and the Security Documents and agrees to be bound by the terms of the Loan Agreement and the other Security Documents.
|
5
|
The Transferor Bank:
|
5.1
|
warrants to the Transferee Bank that it has full power to enter into this Transfer Certificate and has taken all corporate action necessary to authorise it to do so;
|
5.2
|
warrants to the Transferee Bank that this Transfer Certificate is binding on the Transferor Bank under the laws of England, the country in which the Transferor Bank is incorporated and the country in which its lending office is located; and
|
5.3
|
agrees that it will, at its own expense, execute any documents which the Transferee Bank reasonably requests for perfecting in any relevant jurisdiction the Transferee Bank's title under this Transfer Certificate or for a similar purpose.
|
6
|
The Transferee Bank hereby undertakes with the Transferor Bank and each of the other parties to the Loan Agreement and the other Security Documents that it will perform in accordance with its terms all those obligations which by the terms of the Loan Agreement and the other Security Documents will be assumed by it after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect.
|
7
|
By execution of this Transfer Certificate on their behalf by the Agent and in reliance upon the representations and warranties of the Transferee Bank, the Borrower, the Agent, the Arranger, the Security Agent, the Account Bank, the Swap Provider and the Banks accept the Transferee Bank as a party to the Loan Agreement and the Security Documents with respect to all those rights and/or obligations which by the terms of the Loan Agreement
|
8
|
None of the Transferor Bank, the Agent, the Arranger, the Security Agent, the Account Bank, the Swap Provider or the Banks:
|
8.1
|
makes any representation or warranty nor assumes any responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Loan Agreement or any of the Security Documents or any document relating thereto; or
|
8.2
|
assumes any responsibility for the financial condition of the Borrower or any other Security Party or any party to any such other document or for the performance and observance by the Borrower or any other Security Party or any party to any such other document (save as otherwise expressly provided therein) and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded (except as aforesaid).
|
9
|
The Transferor Bank and the Transferee Bank each undertake that they will on demand fully indemnify the Agent in respect of any claim, proceeding, liability or expense which relates to or results from this Transfer Certificate or any matter concerned with or arising out of it unless caused by the Agent's gross negligence or wilful misconduct, as the case may be.
|
10
|
The agreements and undertakings of the Transferee Bank in this Transfer Certificate are given to and for the benefit of and made with each of the other parties to the Loan Agreement and the Security Documents.
|
11
|
This Transfer Certificate shall be governed by, and shall be construed in accordance with, English law.
|
Transferor Bank
|
Transferee Bank
|
|||||||
By:
|
By:
|
|||||||
Dated:
|
Dated:
|
|||||||
By: | ||
Dated: |
Subsidiary
|
Country of Incorporation
|
Ailuk Shipping Company Inc.
|
Marshall Islands
|
Bikini Shipping Company Inc.
|
Marshall Islands
|
Bikar Shipping Company Inc.
|
Marshall Islands
|
Gala Properties Inc.
|
Marshall Islands
|
Jaluit Shipping Company Inc.
|
Marshall Islands
|
Jemo Shipping Company Inc.
|
Marshall Islands
|
Kili Shipping Company Inc.
|
Marshall Islands
|
Knox Shipping Company Inc.
|
Marshall Islands
|
Lae Shipping Company Inc.
|
Marshall Islands
|
Lib Shipping Company Inc.
|
Marshall Islands
|
Majuro Shipping Company Inc.
|
Marshall Islands
|
Namu Shipping Company Inc.
|
Marshall Islands
|
Taka Shipping Company Inc.
|
Marshall Islands
|
Buenos Aires Compania Armadora S.A.
|
Panama
|
Cerada International S.A.
|
Panama
|
Changame Compania Armadora S.A.
|
Panama
|
Chorrera Compania Armadora S.A.
|
Panama
|
Cypres Enterprises Corp.
|
Panama
|
Darien Compania Armadora S.A.
|
Panama
|
Diana Shipping Services S.A.
|
Panama
|
Eaton Marine S.A.
|
Panama
|
Husky Trading, S.A.
|
Panama
|
Panama Compania Armadora S.A.
|
Panama
|
Skyvan Shipping Company S.A.
|
Panama
|
Texford Maritime S.A.
|
Panama
|
Urbina Bay Trading, S.A.
|
Panama
|
Vesta Commercial, S.A.
|
Panama
|
Marfort Navigation Company Limited
|
Cyprus
|
Silver Chandra Shipping Company Limited
|
Cyprus
|
Bulk Carriers (USA) LLC
|
United States (Delaware)
|