(Exact name of Registrant as specified in its charter)
|
Diana Shipping Inc.
|
(Translation of Registrant's name into English)
|
Republic of The Marshall Islands
|
(Jurisdiction of incorporation or organization)
|
Pendelis 16, 175 64 Palaio Faliro, Athens, Greece
|
(Address of principal executive offices)
|
Mr. Ioannis Zafirakis
|
Tel: + 30-210-9470-100, Fax: + 30-210-9470-101
|
E-mail: izafirakis@dianashippinginc.com
|
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
|
Title of each class
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
New York Stock Exchange
|
Preferred Stock Purchase Rights
|
New York Stock Exchange
|
8.875% Series B Cumulative Redeemable
Perpetual Preferred Shares, $0.01 par value
|
New York Stock Exchange
|
None
|
||
(Title of Class)
|
None
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
U.S. GAAP
x
|
International Financial Reporting Standards as issued
by the International Accounting Standards Board
o
|
Other
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
|
32
|
Item 4A.
|
Unresolved Staff Comments
|
53
|
Item 5.
|
Operating and Financial Review and Prospects
|
53
|
Item 6.
|
Directors, Senior Management and Employees
|
75
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
80
|
Item 8.
|
Financial Information
|
83
|
Item 9.
|
The Offer and Listing
|
84
|
Item 10.
|
Additional Information
|
85
|
Item 11.
|
Quantitative and Qualitative Disclosures about Market Risk
|
95
|
Item 12.
|
Description of Securities Other than Equity Securities
|
95
|
PART II
|
||
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
96
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
96
|
Item 15.
|
Controls and Procedures
|
96
|
Item 16A.
|
Audit Committee Financial Expert
|
97
|
Item 16B.
|
Code of Ethics
|
97
|
Item 16C.
|
Principal Accountant Fees and Services
|
97
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
98
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
98
|
Item 16F.
|
Change in Registrant's Certifying Accountant
|
98
|
Item 16G.
|
Corporate Governance
|
98
|
Item 16H.
|
Mine Safety Disclosure
|
99
|
PART III | ||
Item 17. | Financial Statements | 100 |
Item 18. | Financial Statements | 100 |
Item 19. | Exhibits | 100 |
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
|
(in thousands of U.S. dollars,
|
|||||||||||||||||||
|
except for share and per share data, fleet data and average daily results)
|
|||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|||||||||||||||
Time charter revenues
|
$ | 164,005 | $ | 220,785 | $ | 255,669 | $ | 275,448 | $ | 239,342 | ||||||||||
Other revenues
|
447 | 2,447 | 1,117 | - | - | |||||||||||||||
Voyage expenses
|
8,119 | 8,274 | 10,597 | 12,392 | 11,965 | |||||||||||||||
Vessel operating expenses
|
77,211 | 66,293 | 55,375 | 52,585 | 41,369 | |||||||||||||||
Depreciation and amortization of deferred charges
|
64,741 | 62,010 | 55,278 | 53,083 | 44,686 | |||||||||||||||
General and administrative expenses
|
23,724 | 24,913 | 25,123 | 25,347 | 17,464 | |||||||||||||||
Foreign currency gains
|
(690 | ) | (1,374 | ) | (503 | ) | (1,598 | ) | (478 | ) | ||||||||||
|
||||||||||||||||||||
Operating income / (loss)
|
(8,653 | ) | 63,116 | 110,916 | 133,639 | 124,336 | ||||||||||||||
Interest and finance costs
|
(8,140 | ) | (7,618 | ) | (4,924 | ) | (5,213 | ) | (3,284 | ) | ||||||||||
Interest and other income
|
1,800 | 1,432 | 1,033 | 920 | 951 | |||||||||||||||
|
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
|
(in thousands of U.S. dollars,
|
|||||||||||||||||||
|
except for share and per share data, fleet data and average daily results)
|
|||||||||||||||||||
Loss from derivative instruments
|
(118 | ) | (518 | ) | (737 | ) | (1,477 | ) | (505 | ) | ||||||||||
Income / (loss) from investment in Diana Containerships Inc.
|
(6,094 | ) | (1,773 | ) | 1,207 | - | - | |||||||||||||
|
||||||||||||||||||||
Net income / (loss)
|
$ | (21,205 | ) | $ | 54,639 | $ | 107,495 | $ | 127,869 | $ | 121,498 | |||||||||
|
||||||||||||||||||||
Loss assumed by non controlling interests
|
$ | - | $ | - | $ | 2 | $ | 910 | $ | - | ||||||||||
|
||||||||||||||||||||
Net income / (loss) attributed to Diana Shipping Inc.
|
$ | (21,205 | ) | $ | 54,639 | $ | 107,497 | $ | 128,779 | $ | 121,498 | |||||||||
|
||||||||||||||||||||
Earnings / (loss) per common share, basic
|
$ | (0.26 | ) | $ | 0.67 | $ | 1.33 | $ | 1.60 | $ | 1.55 | |||||||||
|
||||||||||||||||||||
Earnings / (loss) per common share, diluted
|
$ | (0.26 | ) | $ | 0.67 | $ | 1.33 | $ | 1.59 | $ | 1.55 | |||||||||
|
||||||||||||||||||||
Weighted average number of common shares, basic
|
81,328,390 | 81,083,485 | 81,081,774 | 80,682,770 | 78,282,775 | |||||||||||||||
|
||||||||||||||||||||
Weighted average number of common shares, diluted
|
81,328,390 | 81,083,485 | 81,124,348 | 80,808,232 | 78,385,464 |
Balance Sheet Data:
|
|
|
|
|
|
|||||||||||||||
Cash and cash equivalents
|
$ | 240,633 | $ | 446,624 | $ | 416,674 | $ | 345,414 | $ | 282,438 | ||||||||||
Total current assets
|
251,868 | 466,986 | 432,691 | 354,649 | 297,156 | |||||||||||||||
Vessels' net book value
|
1,320,375 | 1,211,138 | 1,046,719 | 1,160,850 | 979,343 | |||||||||||||||
Property and equipment, net
|
22,826 | 22,774 | 21,659 | 21,842 | 200 | |||||||||||||||
Total assets
|
1,701,981 | 1,742,802 | 1,604,471 | 1,585,389 | 1,320,425 | |||||||||||||||
Total current liabilities
|
62,752 | 61,477 | 48,095 | 32,510 | 32,386 | |||||||||||||||
Deferred revenue, non-current portion
|
- | - | - | 4,227 | 11,244 | |||||||||||||||
Long-term debt (including current portion), net of deferred financing costs
|
431,557 | 459,112 | 373,338 | 383,623 | 281,481 | |||||||||||||||
Total stockholders' equity
|
1,253,392 | 1,266,424 | 1,208,878 | 1,169,930 | 999,325 |
Cash Flow Data:
|
|
|
|
|
|
|||||||||||||||
Net cash provided by operating activities
|
$ | 67,400 | $ | 119,886 | $ | 154,230 | $ | 178,292 | $ | 151,903 | ||||||||||
Net cash used in investing activities
|
(245,156 | ) | (169,913 | ) | (90,428 | ) | (252,313 | ) | (73,081 | ) | ||||||||||
Net cash provided by / (used in) financing activities
|
(28,235 | ) | 79,977 | 7,458 | 136,997 | 141,583 |
Fleet Data:
|
|
|
|
|
|
|||||||||||||||
Average number of vessels (1)
|
33.0 | 27.6 | 23.6 | 22.9 | 19.2 | |||||||||||||||
Number of vessels at year-end
|
36.0 | 30.0 | 24.0 | 25.0 | 20.0 | |||||||||||||||
Weighted average age of dry bulk vessels at year-end (in years)
|
6.6 | 6.0 | 6.3 | 5.4 | 4.9 | |||||||||||||||
Weighted average age of containerships at year-end (in years)
|
- | - | - | 0.6 | - |
|
As of and for the
|
|||||||||||||||||||
|
Year Ended December 31,
|
|||||||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
|
|
|||||||||||||||||||
Ownership days (2)
|
12,049 | 10,119 | 8,609 | 8,348 | 7,000 | |||||||||||||||
Available days (3)
|
12,029 | 9,998 | 8,474 | 8,208 | 6,930 | |||||||||||||||
Operating days (4)
|
11,944 | 9,865 | 8,418 | 8,180 | 6,857 | |||||||||||||||
Fleet utilization (5)
|
99.3 | % | 98.7 | % | 99.3 | % | 99.7 | % | 98.9 | % |
Average Daily Results:
|
|
|
|
|
|
|||||||||||||||
Time charter equivalent (TCE) rate (6)
|
$ | 12,959 | $ | 21,255 | $ | 28,920 | $ | 32,049 | $ | 32,811 | ||||||||||
Daily vessel operating expenses (7)
|
6,408 | 6,551 | 6,432 | 6,299 | 5,910 |
|
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,
|
|||||||||||||||||||
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
|
(in thousands of U.S. dollars, except for
|
|||||||||||||||||||
TCE rates, which are expressed in U.S. dollars, and available days)
|
||||||||||||||||||||
Time charter revenues
|
$ | 164,005 | $ | 220,785 | $ | 255,669 | $ | 275,448 | $ | 239,342 | ||||||||||
Less: voyage expenses
|
(8,119 | ) | (8,274 | ) | (10,597 | ) | (12,392 | ) | (11,965 | ) | ||||||||||
|
||||||||||||||||||||
Time charter equivalent revenues
|
$ | 155,886 | $ | 212,511 | $ | 245,072 | $ | 263,056 | $ | 227,377 | ||||||||||
|
||||||||||||||||||||
Available days
|
12,029 | 9,998 | 8,474 | 8,208 | 6,930 | |||||||||||||||
Time charter equivalent (TCE) rate
|
$ | 12,959 | $ | 21,255 | $ | 28,920 | $ | 32,049 | $ | 32,811 |
|
(7)
|
Daily vessel operating expenses, which include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, are calculated by dividing vessel operating expenses by ownership days for the relevant period.
|
|
Ÿ
|
supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products;
|
|
Ÿ
|
changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products;
|
|
Ÿ
|
the location of regional and global exploration, production and manufacturing facilities;
|
|
Ÿ
|
the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products;
|
|
Ÿ
|
the globalization of production and manufacturing;
|
|
Ÿ
|
global and regional economic and political conditions, including armed conflicts and terrorist activities; embargoes and strikes;
|
|
Ÿ
|
natural disasters and other disruptions in international trade;
|
|
Ÿ
|
developments in international trade;
|
|
Ÿ
|
changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;
|
|
Ÿ
|
environmental and other regulatory developments;
|
|
Ÿ
|
currency exchange rates; and
|
|
Ÿ
|
weather.
|
|
Ÿ
|
the number of newbuilding deliveries;
|
|
Ÿ
|
the scrapping rate of older vessels;
|
|
Ÿ
|
vessel casualties; and
|
|
Ÿ
|
the number of vessels that are out of service, namely those that are laid-up, drydocked, awaiting repairs or otherwise not available for hire.
|
|
·
|
the prevailing level of charter hire rates;
|
|
·
|
general economic and market conditions affecting the shipping industry;
|
|
·
|
competition from other shipping companies and other modes of transportation;
|
|
·
|
the types, sizes and ages of vessels;
|
|
·
|
the supply and demand for vessels;
|
|
·
|
applicable governmental regulations;
|
|
·
|
technological advances; and
|
|
·
|
the cost of newbuildings.
|
|
·
|
locate and acquire suitable vessels;
|
|
·
|
identify and consummate acquisitions or joint ventures;
|
|
·
|
enhance our customer base;
|
|
·
|
manage our expansion; and
|
|
·
|
obtain required financing on acceptable terms.
|
|
·
|
pay dividends or make capital expenditures if we do not repay amounts drawn under our loan facilities, if there is a default under the loan facilities or if the payment of the dividend or capital expenditure would result in a default or breach of a loan covenant;
|
|
·
|
incur additional indebtedness, including through the issuance of guarantees;
|
|
·
|
change the flag, class or management of our vessels;
|
|
·
|
create liens on our assets;
|
|
·
|
sell our vessels;
|
|
·
|
enter into a time charter or consecutive voyage charters that have a term that exceeds, or which by virtue of any optional extensions may exceed a certain period;
|
|
·
|
merge or consolidate with, or transfer all or substantially all our assets to, another person; and
|
|
·
|
enter into a new line of business.
|
|
·
|
marine disaster;
|
|
·
|
terrorism;
|
|
·
|
environmental accidents;
|
|
·
|
cargo and property losses or damage;
|
|
·
|
business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and
|
|
·
|
piracy.
|
|
·
|
actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;
|
|
·
|
mergers and strategic alliances in the dry bulk shipping industry;
|
|
·
|
market conditions in the dry bulk shipping industry;
|
|
·
|
changes in government regulation;
|
|
·
|
shortfalls in our operating results from levels forecast by securities analysts;
|
|
·
|
announcements concerning us or our competitors; and
|
|
·
|
the general state of the securities market.
|
|
·
|
authorizing our board of directors to issue "blank check" preferred stock without shareholder approval;
|
|
·
|
providing for a classified board of directors with staggered, three year terms;
|
|
·
|
prohibiting cumulative voting in the election of directors;
|
|
·
|
authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote for the directors;
|
|
·
|
prohibiting shareholder action by written consent;
|
|
·
|
limiting the persons who may call special meetings of shareholders; and
|
|
·
|
establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings.
|
|
·
|
changes in our operating cash flow, capital expenditure requirements, working capital requirements and other cash needs;
|
|
·
|
restrictions under our existing or future credit facilities or any future debt securities on our ability to pay dividends if an event of default has occurred and is continuing or if the payment of the dividend would result in an event of default, or under certain facilities if it would result in the breach of certain financial covenants;
|
|
·
|
the amount of any cash reserves established by our board of directors; and
|
|
·
|
restrictions under Marshall Islands law, which generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares) or while a company is insolvent or would be rendered insolvent by the payment of such a dividend.
|
|
Vessel
|
Sister Ships*
|
Gross Rate (USD Per Day)
|
Com**
|
Charterer
|
Delivery Date to Charterer
|
Redelivery Date to Owners***
|
Notes
|
|
BUILT DWT
|
|||||||
|
Panamax Bulk Carriers
|
|||||||
|
|
|
|
|
|
|
|
|
1
|
DANAE
|
A
|
$8,250
|
5.00%
|
Intermare Transport GmbH, Hamburg
|
10-Mar-13
|
10-Sep-14 - 10-Jan-15
|
|
|
2001 75,106
|
|
|
|
|
|
|
|
2
|
DIONE
|
A
|
$9,700
|
5.00%
|
EDF Trading Limited, UK
|
19-Jul-12
|
19-Jul-14 - 19-Dec-14
|
|
|
2001 75,172
|
|
|
|
|
|
|
|
3
|
NIREFS
|
A
|
$8,000
|
5.00%
|
Intermare Transport GmbH, Hamburg
|
29-Jan-13
|
29-Jul-14 - 29-Jan-15
|
|
|
2001 75,311
|
|
|
|
|
|
|
|
4
|
ALCYON
|
A
|
$7,750
|
5.00%
|
EDF Trading Limited, UK
|
21-Dec-12
|
21-Nov-14 - 21-May-15
|
|
|
2001 75,247
|
|
|
|
|
|
|
|
5
|
TRITON
|
A
|
$11,000
|
5.00%
|
Bunge S.A., Geneva
|
16-Dec-13
|
1-Sep-14 31-Oct-14
|
|
|
2001 75,336
|
|
|
|
|
|
|
|
6
|
OCEANIS
|
A
|
$9,250
|
5.00%
|
Ultrabulk A/S, Copenhagen, Denmark
|
14-Aug-12
|
20-Apr-14 - 14-Jul-14
|
1
|
|
2001 75,211
|
|
|
|
|
|
|
|
7
|
THETIS
|
B
|
$8,300
|
5.00%
|
EDF Trading Limited, UK
|
1-Sep-13
|
1-Jul-15 - 1-Dec-15
|
2
|
|
2004 73,583
|
|
|
|
|
|
|
|
8
|
PROTEFS
|
B
|
$9,000
|
5.00%
|
Cargill International S.A., Geneva
|
14-Sep-12
|
14-Sep-14 - 14-Feb-15
|
|
|
2004 73,630
|
|
|
|
|
|
|
|
9
|
CALIPSO
|
B
|
$8,100
|
4.75%
|
Cargill International S.A., Geneva
|
29-Jul-13
|
29-Apr-15 - 29-Aug-15
|
|
|
|
|
|
|
|
|
|
|
|
2005 73,691
|
|
|
|
|
|
|
|
10
|
CLIO
|
B
|
$8,600
|
4.75%
|
Cargill International S.A., Geneva
|
22-Aug-13
|
22-May-15 - 22-Aug-15
|
3
|
|
2005 73,691
|
|
|
|
|
|
|
|
11
|
NAIAS
|
B
|
$9,250
|
5.00%
|
Ultrabulk A/S, Copenhagen, Denmark
|
2-Sep-12
|
28-Apr-14 - 2-Aug-14
|
1
|
|
2006 73,546
|
|
|
|
|
|
|
|
12
|
ARETHUSA
|
B
|
$7,300
|
5.00%
|
Cargill International S.A., Geneva
|
22-Nov-12
|
22-May-14 - 22-Nov-14
|
|
|
2007 73,593
|
|
|
|
|
|
|
|
13
|
ERATO
|
C
|
$6,500
|
5.00%
|
Cargill International S.A., Geneva
|
9-Jan-13
|
9-Jul-14 - 9-Jan-15
|
4
|
|
2004 74,444
|
|
|
|
|
|
|
|
14
|
CORONIS
|
C
|
$10,600
|
5.00%
|
EDF Trading Limited, UK
|
12-Mar-12
|
1-May-14 - 27-Jun-14
|
1
|
|
2006 74,381
|
|
|
|
|
|
|
|
15
|
MELITE
|
D
|
$7,750
|
5.00%
|
Cargill International S.A., Geneva
|
28-Dec-12
|
1-Jul-14 - 1-Jan-15
|
|
|
2004 76,436
|
|
|
|
|
|
|
|
16
|
MELIA
|
D
|
$9,700
|
3.75%
|
Rio Tinto Shipping Pty, Ltd., Melbourne
|
17-Apr-13
|
2-May-14 - 17-May-14
|
1
|
|
2005 76,225
|
|
|
|
|
|
|
|
17
|
ARTEMIS
|
|
$9,375
|
3.75%
|
Rio Tinto Shipping Pty, Ltd., Melbourne
|
26-Aug-13
|
26-Jun-15 - 26-Oct-15
|
|
|
2006 76,942
|
|
|
|
|
|
|
|
18
|
LETO
|
|
$12,900
|
5.00%
|
EDF Trading Limited, UK
|
17-Jan-12
|
20-Apr-14 - 17-Nov-14
|
1
|
|
2010 81,297
|
|
|
|
|
|
|
|
19
|
CRYSTALIA
|
E
|
$15,800
|
5.00%
|
Glencore Grain B.V., Rotterdam
|
21-Feb-14
|
21-Aug-15 - 21-Nov-15
|
|
|
2014 77,525
|
|
|
|
|
|
|
|
|
Kamsarmax Bulk Carriers
|
|||||||
20
|
MAIA
|
F
|
$10,900
|
5.00%
|
Glencore Grain B.V., Rotterdam
|
27-Feb-13
|
12-Aug-14 - 27-Feb-15
|
|
|
2009 82,193
|
|
|
|
|
|
|
|
21
|
MYRSINI
|
F
|
$15,500
|
4.75%
|
Clearlake Shipping Pte. Ltd., Singapore
|
12-Oct-13
|
12-Feb-14
|
5
|
|
|
|
|
|
|
12-Feb-14
|
15-Feb-15 - 10-May-15
|
|
|
2010 82,117
|
|
|
|
|
|
|
|
22
|
MYRTO
|
F
|
$9,000
|
5.00%
|
Cargill International S.A., Geneva
|
25-Jan-13
|
25-Jul-14 - 25-Jan-15
|
|
|
2013 82,131
|
|
|
|
|
|
|
|
|
Post-Panamax Bulk Carriers
|
|||||||
23
|
ALCMENE
|
|
$7,250
|
5.00%
|
ADM International Sarl, Rolle, Switzerland
|
22-Feb-13
|
7-Aug-14 - 22-Feb-15
|
|
|
2010 93,193
|
|
|
|
|
|
|
|
24
|
AMPHITRITE
|
|
$10,000
|
5.00%
|
Bunge S.A., Geneva
|
15-Aug-12
|
31-May-14 - 30-Oct-14
|
6
|
|
|
|
|
|
|
|
|
|
|
2012 98,697
|
|
|
|
|
|
|
|
25
|
POLYMNIA
|
|
$7,600
|
5.00%
|
Bunge S.A., Geneva
|
16-Jan-13
|
16-Jul-14 - 16-Jan-15
|
7,8
|
|
2012 98,704
|
|
|
|
|
|
|
|
|
Capesize Bulk Carriers
|
|||||||
26
|
NORFOLK
|
|
$10,700
|
4.50%
|
Clearlake Shipping Pte. Ltd., Singapore
|
16-Jan-13
|
16-Jul-14 - 16-Jan-15
|
5
|
|
2002 164,218
|
|
|
|
|
|
|
|
27
|
ALIKI
|
|
$26,500
|
5.00%
|
Minmetals Logistics Group Co. Ltd., Beijing
|
1-Mar-11
|
1-Feb-16 - 1-Apr-16
|
|
|
2005 180,235
|
|
|
|
|
|
|
|
28
|
BALTIMORE
|
|
$15,000
|
5.00%
|
RWE Supply & Trading GmbH, Essen
|
8-Jul-13
|
8-Jul-16 - 8-Jan-17
|
|
|
2005 177,243
|
|
|
|
|
|
|
|
29
|
SALT LAKE CITY
|
|
$13,000
|
5.00%
|
Morgan Stanley Capital Group Inc.
|
11-Aug-12
|
11-Jun-14 - 11-Dec-14
|
|
|
2005 171,810
|
|
|
|
|
|
|
|
30
|
SIDERIS GS
|
G
|
$13,500
|
4.75%
|
Cargill International S.A., Geneva
|
14-Mar-13
|
14-Dec-14 - 14-Jun-15
|
|
|
2006 174,186
|
|
|
|
|
|
|
|
31
|
SEMIRIO
|
G
|
$14,000
|
4.75%
|
Cargill International S.A., Geneva
|
19-Mar-13
|
19-Jan-15 - 19-Jun-15
|
|
|
2007 174,261
|
|
|
|
|
|
|
|
32
|
BOSTON
|
G
|
$14,250
|
4.75%
|
Clearlake Shipping Pte. Ltd., Singapore
|
24-Aug-13
|
9-Aug-15 - 8-Feb-16
|
5
|
|
2007 177,828
|
|
|
|
|
|
|
|
33
|
HOUSTON
|
G
|
$20,500
|
4.75%
|
Clearlake Shipping Pte. Ltd., Singapore
|
3-Dec-13
|
19-Oct-14 - 18-Feb-15
|
5
|
|
2009 177,729
|
|
|
|
|
|
|
|
34
|
NEW YORK
|
G
|
$48,000
|
3.75%
|
Nippon Yusen Kaisha, Tokyo (NYK)
|
3-Mar-10
|
3-Jan-15 - 3-May-15
|
|
|
2010 177,773
|
|
|
|
|
|
|
|
35
|
P. S. PALIOS
|
|
$18,350
|
5.00%
|
RWE Supply & Trading GmbH, Essen
|
3-Dec-13
|
18-Sep-15 - 31-Dec-15
|
|
|
2013 179,134
|
|
|
|
|
|
|
|
|
Newcastlemax Bulk Carriers
|
|||||||
36
|
LOS ANGELES
|
H
|
$18,000
|
5.00%
|
EDF Trading Limited, UK
|
9-Feb-12
|
9-Dec-15 - 9-Apr-16
|
|
|
2012 206,104
|
|
|
|
|
|
|
|
37
|
PHILADELPHIA
|
H
|
$18,000
|
5.00%
|
EDF Trading Limited, UK
|
17-May-12
|
17-Jan-16 - 17-Jul-16
|
|
|
2012 206,040
|
|
|
|
|
|
|
|
|
Vessels Under Construction
|
|||||||
38
|
HULL H2529
|
E
|
-
|
-
|
-
|
-
|
- - -
|
9
|
|
(tbn ATALANDI)
|
|
|
|
|
|
|
|
|
2014 76,000
|
|
|
|
|
|
|
|
39
|
HULL DY6006
|
|
-
|
-
|
-
|
-
|
- - -
|
10
|
|
2016 82,000
|
|
|
|
|
|
|
|
40
|
HULL H2548
|
I
|
-
|
-
|
-
|
-
|
- - -
|
10
|
|
2016 208,500
|
|
|
|
|
|
|
|
41
|
HULL H2549
|
I
|
-
|
-
|
-
|
-
|
- - -
|
10
|
|
2016 208,500
|
|
|
|
|
|
|
|
* 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 Based on latest information.
|
||||||||
2 Vessel off-hire for unscheduled maintenance from February 12, 2014 to March 7, 2014.
|
||||||||
3 Vessel off-hire for drydocking from December 12, 2013 to January 2, 2014.
|
||||||||
4 Vessel off-hire for unscheduled maintenance from February 14, 2014 to February 23, 2014.
|
||||||||
5 Clearlake Shipping Pte. Ltd., Singapore is a member of the Gunvor Group.
|
||||||||
6 The charterer has the option to employ the vessel for a further 11 to 14 month period at a gross charter rate of US$11,300 per day. The optional period, if exercised, must be declared on or before the end of the 21st month of employment and will only commence at the end of the 24th month.
|
||||||||
7 The charterer has the option to further employ the vessel for about 11 to a maximum 13 months at a gross charter rate of US$11,000 per day. The optional period, if exercised, must be declared on or before the 22nd month of employment and will only commence at the end of the 24th month.
|
||||||||
8 Prior to October 12, 2013, chartered to Augustea Bunge Maritime Limited, Malta.
|
||||||||
9 Based on latest information received by the yard.
|
||||||||
10 Year of delivery and dwt are based on shipbuilding contract.
|
·
|
Very Large Ore Carriers (VLOC)
. Very large ore carriers have a carrying capacity of more than 200,000 dwt and are a comparatively new sector of the dry bulk carrier fleet. VLOCs are built to exploit economies of scale on long-haul iron ore routes.
|
·
|
Capesize
. Capesize vessels have a carrying capacity of 110,000-199,999 dwt. Only the largest ports around the world possess the infrastructure to accommodate vessels of this size. Capesize vessels are primarily used to transport iron ore or coal and, to a much lesser extent, grains, primarily on long-haul routes.
|
·
|
Post-Panamax
. Post-Panamax vessels have a carrying capacity of 80,000-109,999 dwt. These vessels tend to have a shallower draft and larger beam than a standard Panamax vessel with a higher cargo capacity. These vessels have been designed specifically for loading high cubic cargoes from draught restricted ports, although they cannot transit the Panama Canal.
|
·
|
Panamax
. Panamax vessels have a carrying capacity of 60,000-79,999 dwt. These vessels carry coal, iron ore, grains, and, to a lesser extent, minor bulks, including steel products, cement and fertilizers. Panamax vessels are able to pass through the Panama Canal, making them more versatile than larger vessels with regard to accessing different trade routes. Most Panamax and Post-Panamax vessels are "gearless," and therefore must be served by shore-based cargo handling equipment. However, there are a small number of geared vessels with onboard cranes, a feature that enhances trading flexibility and enables operation in ports which have poor infrastructure in terms of loading and unloading facilities.
|
·
|
Handymax/Supramax
. Handymax vessels have a carrying capacity of 40,000-59,999 dwt. These vessels operate in a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks. Within the Handymax category there is also a sub-sector known as Supramax. Supramax bulk carriers are ships between 50,000 to 59,999 dwt, normally offering cargo loading and unloading flexibility with on-board cranes, or "gear," while at the same time possessing the cargo carrying capability approaching conventional Panamax bulk carriers.
|
·
|
Handysize
.
Handysize vessels have a carrying capacity of up to 39,999 dwt. These vessels are primarily involved in carrying minor bulk cargoes. Increasingly, ships of this type operate within regional trading routes, and may serve as trans-shipment feeders for larger vessels. Handysize vessels are well suited for small ports with length and draft restrictions. Their cargo gear enables them to service ports lacking the infrastructure for cargo loading and unloading.
|
·
|
We own a modern, high quality fleet of dry bulk carriers
. We believe that owning a modern, high quality fleet reduces operating costs, improves safety and provides us with a competitive advantage in securing favorable time charters. We maintain the quality of our vessels by carrying out regular inspections, both while in port and at sea, and adopting a comprehensive maintenance program for each vessel.
|
·
|
Our fleet includes nine 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 28 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 more than 40 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.
|
|
·
|
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 of the 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 occasion 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 Time Charter Equivalent, or 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,
|
|||||||||||
2013
|
2012
|
2011
|
||||||||||
Ownership days
|
12,049 | 10,119 | 8,609 | |||||||||
Available days
|
12,029 | 9,998 | 8,474 | |||||||||
Operating days
|
11,944 | 9,865 | 8,418 | |||||||||
Fleet utilization
|
99.3 | % | 98.7 | % | 99.3 | % | ||||||
Time charter equivalent (TCE) rate (1)
|
$ | 12,959 | $ | 21,255 | $ | 28,920 |
|
·
|
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 (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)
|
|||
|
|
|
2013
|
2012
|
||
1
|
Alcmene
|
93,193
|
2010
|
36.0*
|
37.5*
|
|
2
|
Alcyon
|
75,247
|
2001
|
10.9
|
11.6*
|
|
3
|
Aliki
|
180,235
|
2005
|
79.1*
|
83.7*
|
|
4
|
Amphitrite
|
98,697
|
2012
|
23.9
|
24.7
|
|
5
|
Arethusa
|
73,593
|
2007
|
26.8*
|
28.1*
|
|
6
|
Artemis
|
76,942
|
2006
|
20.1
|
|
|
7
|
Baltimore
|
177,243
|
2005
|
27.3
|
|
|
8
|
Boston
|
177,828
|
2007
|
84.2*
|
88.4*
|
|
9
|
Calipso
|
73,691
|
2005
|
14.4
|
15.1*
|
|
10
|
Clio
|
73,691
|
2005
|
14.8
|
15.5*
|
|
11
|
Coronis
|
74,381
|
2006
|
29.4*
|
31.0*
|
|
12
|
Danae
|
75,106
|
2001
|
12.8
|
13.6*
|
|
13
|
Dione
|
75,172
|
2001
|
12.6
|
13.4*
|
|
14
|
Erato
|
74,444
|
2004
|
26.5*
|
28.0*
|
|
15
|
Houston
|
177,729
|
2009
|
53.1*
|
55.3*
|
|
16
|
Leto
|
81,297
|
2010
|
29.8*
|
31.1*
|
17
|
Los Angeles
|
206,104
|
2012
|
55.8*
|
57.9*
|
|
18
|
Maia
|
82,193
|
2009
|
19.8
|
|
|
19
|
Melia
|
76,225
|
2005
|
19.1
|
20.0*
|
|
20
|
Melite
|
76,436
|
2004
|
28.5*
|
30.1*
|
|
21
|
Myrsini
|
82,117
|
2010
|
22.7
|
|
|
22
|
Myrto
|
82,131
|
2013
|
25.8
|
|
|
23
|
Naias
|
73,546
|
2006
|
28.5*
|
29.9*
|
|
24
|
New York
|
177,773
|
2010
|
54.0*
|
56.2*
|
|
25
|
Nirefs
|
75,311
|
2001
|
11.0
|
11.6*
|
|
26
|
Norfolk
|
164,218
|
2002
|
95.9*
|
102.5*
|
|
27
|
Oceanis
|
75,211
|
2001
|
11.2
|
11.8*
|
|
28
|
Philadelphia
|
206,040
|
2012
|
56.6*
|
58.7*
|
|
29
|
Polymnia
|
98,704
|
2012
|
23.8
|
24.6
|
|
30
|
Protefs
|
73,630
|
2004
|
14.1
|
14.8*
|
|
31
|
PS Palios
|
179,134
|
2013
|
52.0
|
|
|
32
|
Salt Lake City
|
171,810
|
2005
|
122.5*
|
129.5*
|
|
33
|
Semirio
|
174,261
|
2007
|
73.5*
|
77.2*
|
|
34
|
Sideris GS
|
174,186
|
2006
|
66.4*
|
69.8*
|
|
35
|
Thetis
|
73,583
|
2004
|
26.3*
|
27.8*
|
|
36
|
Triton
|
75,336
|
2001
|
11.2
|
11.7*
|
|
|
Total
|
4,056,438
|
|
1,320.4
|
1,211.1
|
*
|
Indicates dry bulk vessels for which we believe, as of December 31, 2013 and 2012, 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 $410 million and $587 million, respectively.
|
Average estimated daily time charter equivalent rate used
|
Average break even rate
|
|||||||
Panamax/Kamsarmax/Post-Panamax
|
$ | 26,746 | $ | 12,524 | ||||
Capesize/Newcastlemax
|
$ | 48,802 | $ | 19,656 |
1-year
(period)
|
Impairment charge
(in USD million)
|
3-year
(period)
|
Impairment charge
(in USD million)
|
5-year
(period)
|
Impairment charge
(in USD million)
|
|||||||||||||||||||
Panamax/Kamsarmax/Post-Panamax
|
$ | 10,099 | 57.1 | $ | 11,489 | 57.1 | $ | 15,436 | - | |||||||||||||||
Capesize/Newcastlemax
|
$ | 15,760 | 339.1 | $ | 15,461 | 339.1 | $ | 22,525 | 210.5 |
|
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)
|
$ | 451,096 | $ | 47,589 | $ | 269,681 | $ | 66,876 | $ | 66,950 | ||||||||||
Estimated Interest Payments on Loan Agreements (1)
|
27,092 | 7,982 | 10,726 | 4,744 | 3,640 | |||||||||||||||
Construction contracts (2)
|
129,015 | 21,724 | 107,291 | - | - | |||||||||||||||
Broker services agreement (3)
|
1,562 | 1,250 | 312 | - | - | |||||||||||||||
Preferred dividends (4)
|
28,861 | 5,080 | 11,538 | 11,538 | 705 | |||||||||||||||
|
||||||||||||||||||||
Total
|
$ | 637,626 | $ | 83,625 | $ | 399,548 | $ | 83,158 | $ | 71,295 |
|
(1)
|
As of December 31, 2013, we had an aggregate principal of $433.1 million of indebtedness outstanding under our loan facilities. Estimated interest payments represent projected interest payments on our long term debt, which are based on the weighted average LIBOR rate in 2013 plus the margin of our loan agreements in 2013 as well as the margin of the loan agreement we entered into with Commonwealth Bank of Australia on January 9, 2014.
|
|
(2)
|
As of December 31, 2013, we had paid predelivery installments of an aggregate amount of $23.2 million for the construction of our two Panamax dry bulk carriers, plus one predelivery installment of an aggregate amount of $14.6 million for the construction of each of our two Newcastlemax dry bulk carriers. On February 20, 2014, we paid $17.4 million plus additional costs for extras and bunkers, for the delivery of one of our Panamax vessels under construction and we expect to pay the delivery installment for the other Panamax in April 2014. On January 8, 2014, we entered, through a separate wholly owned subsidiary, into a shipbuilding contract with Yangzhou Dayang Shipbuilding Co., Ltd. and Shanghai Sinopacific International Trade Co., Ltd., for the construction of a Kamsarmax dry bulk vessel of approximately 82,000 dwt for a contract price of $28.8 million. As of the date of this report, we have not paid any installments for the construction of our Kamsarmax dry bulk carrier. We expect to take delivery of our two Newcastlemax dry bulk carriers and our Kamsarmax dry bulk carrier in 2016.
|
|
(3)
|
On March 4, 2014, DSS entered into an agreement with Diana Enterprises, a related party company, for the provision of brokerage services for a monthly fee of $104,166 effective from January 1, 2014, which replaced the previous agreement dated March 15, 2013. The agreement will expire on March 31, 2015.
|
|
(4)
|
On February 24, 2014 we completed an offering of 2,600,000 shares of Series B Perpetual Preferred Stock, at the price of $25.0 per share, and dividends are payable at a rate equal to 8.875% per annum. At any time on or after February 14, 2019, the Series B Preferred Shares may be redeemed, in whole or in part, at a redemption price of $25.00 per share, plus an amount equal to all accumulated and unpaid dividends thereon to the date of redemption, whether or not declared. The table above presents our obligations for dividend payments until February 14, 2019. The table above does not include the payment for the redemption, which is at our option.
|
Name
|
|
Age
|
|
Position
|
Simeon Palios
|
|
72
|
|
Class I Director, Chief Executive Officer and Chairman
|
Anastasios Margaronis
|
|
58
|
|
Class I Director and President
|
Ioannis Zafirakis
|
|
42
|
|
Class I Director, Executive Vice President and Secretary
|
Andreas Michalopoulos
|
42
|
Chief Financial Officer and Treasurer
|
||
Maria Dede
|
41
|
Chief Accounting Officer
|
||
William (Bill) Lawes
|
|
70
|
|
Class II Director
|
Konstantinos Psaltis
|
|
75
|
|
Class II Director
|
Boris Nachamkin
|
|
80
|
|
Class III Director
|
Apostolos Kontoyannis
|
|
65
|
|
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)
|
15,442,013 | 18.5 | % | ||||||
Massachusetts Financial Services Company (2)
|
8,498,530 | 10.2 | % | |||||||
|
All officers and directors as a group (3)
|
17,374,405 | 20.8 | % |
|
(1)
|
Currently, Mr. Simeon Palios beneficially owns 1,155,473 restricted common shares granted through the Company's Equity Incentive Plan and 14,286,540 shares indirectly through Corozal Compania Naviera S.A. ("Corozal") and Ironwood Trading Corp. ("Ironwood") over which Mr. Simeon Palios exercises sole voting and dispositive power. As of December 31, 2011, 2012, 2013 and currently, Mr. Simeon Palios owned indirectly through Corozal and Ironwood 17.3%, 17.4%, 17.2% and 17.1%, respectively, of our outstanding common stock.
|
|
(2)
|
Massachusetts Financial Services Company
("
MFS") has filed a Schedule 13G/A on February 13, 2014 reporting their ownership of 10.3% of our outstanding common stock as of December 31, 2013.
|
|
(3)
|
Mr. Simeon Palios is our only director or officer that beneficially owns 5% 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.
In addition, Mr. Zafirakis owns 40,000 Series B Preferred Shares, or 1.5% of the outstanding Series B Preferred Shares, Mr. Michalopoulos owns 28,000 Series B Preferred Shares, or 1.1% of the outstanding Series B Preferred Shares. All officers and directors as a group own 89,850 Series B Preferred Shares, or 3.5% of the outstanding Series B Preferred Shares.
|
|
A.
|
Consolidated statements and other financial information
|
|
2014
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||||||||
Period
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
|||||||||||||||||||||||
Annual
|
|
|
$ | 13.64 | $ | 7.47 | $ | 9.87 | $ | 6.31 | $ | 12.64 | $ | 6.93 | $ | 16.27 | $ | 11.19 | $ | 18.52 | $ | 10.15 | |||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||
1st quarter
|
|
|
$ | 10.71 | $ | 7.47 | $ | 9.87 | $ | 7.80 | |||||||||||||||||||||||||
2nd quarter
|
|
|
10.79 | 9.12 | 8.90 | 7.07 | |||||||||||||||||||||||||||||
3rd quarter
|
|
|
12.83 | 9.65 | 8.09 | 6.31 | |||||||||||||||||||||||||||||
4th quarter
|
|
|
13.64 | 10.49 | 7.64 | 6.53 | |||||||||||||||||||||||||||||
|
|
|
September
|
|
|
$ | 12.83 | $ | 11.22 | ||||||||||
October
|
|
|
12.60 | 11.30 | ||||||||||||
November
|
|
|
12.02 | 10.49 | ||||||||||||
December
|
|
|
13.64 | 11.14 | ||||||||||||
January
|
$ | 13.31 | $ | 11.61 | ||||||||||||
February
|
13.07 | 11.90 | ||||||||||||||
March*
|
13.55 | 11.75 | ||||||||||||||
|
Period
|
High
|
Low
|
||||||
February 21, 2014 to February 28, 2014
|
$ | 24.90 | $ | 24.57 | ||||
March 1, 2014 to March 26, 2014
|
25.30 | 24.90 |
|
(1)
|
It is organized in a qualified foreign country which, as defined, is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of the Shipping Income for which exemption is being claimed under Section 883 of the Code, or the "Country of Organization Requirement"; and
|
|
(2)
|
It can satisfy any one of the following two stock ownership requirements:
|
|
·
|
more than 50% of its stock, in terms of value, is beneficially owned by qualified shareholders which, as defined, includes individuals who are residents of a qualified foreign country, or the "50% Ownership Test"; or
|
|
·
|
its stock is "primarily and regularly" traded on an established securities market located in the United States or a qualified foreign country, or the "Publicly Traded Test".
|
|
·
|
at least 75% of the Company's gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or
|
|
·
|
at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, such passive income.
|
|
·
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common stock;
|
|
·
|
the amount allocated to the current taxable year and any taxable years before the Company became a PFIC would be taxed as ordinary income; and
|
|
·
|
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
|
·
|
the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to that gain, the gain is taxable in the United States only if attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or
|
|
·
|
the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.
|
|
·
|
fails to provide an accurate taxpayer identification number;
|
|
·
|
is notified by the IRS that he has failed to report all interest or dividends required to be shown on his U.S. federal income tax returns; or
|
|
·
|
in certain circumstances, fails to comply with applicable certification requirements.
|
Exhibit
Number
|
Description
|
|
1.1
|
Amended and Restated Articles of Incorporation of Diana Shipping Inc. (originally known as Diana Shipping Investment Corp.) (1)
|
|
1.2
|
Amended and Restated By-laws of the Company (2)
|
|
1.3
|
Statement of Designation of the 8.875% Series B Cumulative Redeemable Perpetual Preferred Shares (13)
|
|
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 (11)
|
|
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 (11)
|
|
4.14
|
Loan Agreement with Nordea Bank Finland Plc dated February 7, 2012 (11)
|
|
4.15
|
Supplemental Loan Agreement with Nordea Bank Finland Plc dated June 21, 2012 (12)
|
|
4.16
|
Loan Agreement with Nordea Bank Finland Plc dated December 20, 2012 (12)
|
|
4.17
|
Loan Agreement, dated June 18, 2013, by and among Tuvalu Shipping Company Inc., Jabat Shipping Company Inc., and Deutsche Bank AG dated June 18, 2013
|
|
4.18
|
Loan Agreement, dated May 24, 2013, by and among Erikub Shipping Company Inc., Wotho Shipping Company Inc., DNB Bank ASA, and Export-Import Bank of China
|
|
4.19
|
Loan Agreement, dated January 9, 2014, by and among Taka Shipping Company Inc., Fayo Shipping Company Inc., and Commonwealth Bank of Australia
|
4.20
|
Loan Agreement, dated May 20, 2013, by and between Eluk Shipping Company Inc. and Diana Shipping Inc.
|
4.21
|
Administrative Services Agreement, dated October 1, 2013, by and between Diana Shipping Inc. and Diana Shipping Services S.A.
|
4.22
|
Brokerage Services Agreement, dated March 15, 2013, by and among Diana Shipping Services S.A. and Diana Enterprises Inc.
|
4.23
|
Brokerage Services Agreement, dated March 4, 2014, by and among Diana Shipping Services S.A. and Diana Enterprises Inc.
|
4.24
|
Amended and Restated Non-Competition Agreement, by and between Diana Shipping Inc. and Diana Containerships Inc.
|
8.1
|
Subsidiaries of the Company
|
11.1
|
Code of Ethics (10)
|
12.1
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
|
12.2
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
|
13.1
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
13.2
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
15.1
|
Consent of Independent Registered Public Accounting Firm
|
101
|
The following materials from the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2013, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of December 31, 2012 and 2013; (ii) Consolidated Statements of Operations for the years ended December 31, 2011, 2012 and 2013; (iii) Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2011, 2012 and 2013; (iv) Consolidated Statements of Stockholders' Equity for the years ended December 31, 2011, 2012 and 2013; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2012 and 2013; and (v) the Notes to Consolidated Financial Statements
|
(1)
|
Filed as Exhibit 1 to the Company's Form 6-K filed on May 29, 2008.
|
(2)
|
Filed as Exhibit 3.1 to the Company's Form 6-K filed on February 13, 2014.
|
(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.
|
(11)
|
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F on April 20, 2012.
|
(12)
|
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F on March 22, 2013.
|
(13)
|
Filed as an Exhibit 3.3 to the Company's Form 8-A filed on February 13, 2014.
|
DIANA SHIPPING INC.
|
CONSOLIDATED BALANCE SHEETS
|
December 31, 2013 and 2012
|
(Expressed in thousands of U.S. Dollars – except for share and per share data)
|
The accompanying notes are an integral part of these consolidated financial statements.
|
DIANA SHIPPING INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
For the year ended December 31, 2013, 2012 and 2011
|
(Expressed in thousands of U.S. Dollars – except for share and per share data)
|
|
|
|
|
|||||||||
|
2013
|
2012
|
2011
|
|||||||||
REVENUES:
|
|
|
|
|||||||||
Time charter revenues
|
$ | 164,005 | $ | 220,785 | $ | 255,669 | ||||||
Other revenues (Note 4(b))
|
447 | 2,447 | 1,117 | |||||||||
|
||||||||||||
EXPENSES:
|
||||||||||||
Voyage expenses (Note 12)
|
8,119 | 8,274 | 10,597 | |||||||||
Vessel operating expenses (Note 12)
|
77,211 | 66,293 | 55,375 | |||||||||
Depreciation and amortization of deferred charges (Note 2)
|
64,741 | 62,010 | 55,278 | |||||||||
General and administrative expenses
|
23,724 | 24,913 | 25,123 | |||||||||
Foreign currency gain
|
(690 | ) | (1,374 | ) | (503 | ) | ||||||
Operating income / (loss)
|
$ | (8,653 | ) | $ | 63,116 | $ | 110,916 | |||||
|
||||||||||||
OTHER INCOME / (EXPENSES):
|
||||||||||||
Interest and finance costs (Note 13)
|
(8,140 | ) | (7,618 | ) | (4,924 | ) | ||||||
Interest and other income (Note 4(b))
|
1,800 | 1,432 | 1,033 | |||||||||
Loss from derivative instruments (Note 16)
|
(118 | ) | (518 | ) | (737 | ) | ||||||
Income/(loss) from investment in Diana Containerships Inc. (Note 3)
|
(6,094 | ) | (1,773 | ) | 1,207 | |||||||
Total other expenses, net
|
$ | (12,552 | ) | $ | (8,477 | ) | $ | (3,421 | ) | |||
|
||||||||||||
Net income / (loss)
|
$ | (21,205 | ) | $ | 54,639 | $ | 107,495 | |||||
|
||||||||||||
Loss assumed by non-controlling interests
|
- | - | 2 | |||||||||
|
||||||||||||
Net income / (loss) attributed to Diana Shipping Inc.
|
$ | (21,205 | ) | $ | 54,639 | $ | 107,497 | |||||
|
||||||||||||
Earnings / (loss) per common share, basic and diluted
(Note 14)
|
$ | (0.26 | ) | $ | 0.67 | $ | 1.33 | |||||
|
||||||||||||
Weighted average number of common shares, basic
(Note 14)
|
81,328,390 | 81,083,485 | 81,081,774 | |||||||||
|
||||||||||||
Weighted average number of common shares, diluted
(Note 14)
|
81,328,390 | 81,083,485 | 81,124,348 |
DIANA SHIPPING INC.
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
|
For the year ended December 31, 2013, 2012 and 2011
|
(Expressed in thousands of U.S. Dollars)
|
|
2013
|
2012
|
2011
|
|||||||||
Net income / (loss)
|
$ | (21,205 | ) | $ | 54,639 | $ | 107,495 | |||||
Comprehensive loss assumed by non-controlling interests
|
- | - | 2 | |||||||||
Other comprehensive income/(loss) (Actuarial gain/(loss))
|
(30 | ) | 306 | (96 | ) | |||||||
Comprehensive income/(loss)
|
$ | (21,235 | ) | $ | 54,945 | $ | 107,401 | |||||
|
||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
DIANA SHIPPING INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
|
|
|||||||||||||||
For the years ended December 31, 2013, 2012 and 2011
|
|
|
|||||||||||||||
(Expressed in thousands of U.S. Dollars – except for share and per share data)
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock | ||||||||||||||||||||||||||||||||
# of Shares | Par Vale |
Additional
Paid-in
Capital
|
Other
Comprehensive
Income/
(Loss)
|
Retained
Earnings
|
Diana
Shipping Inc.
Total Equity
|
Non
Controlling
Interests
|
Total
Equity
|
|||||||||||||||||||||||||
BALANCE, December 31, 2010
|
81,955,813 | $ | 820 | $ | 908,467 | $ | (16 | ) | $ | 222,246 | $ | 1,131,517 | $ | 38,413 | $ | 1,169,930 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income / (loss)
|
- | $ | - | $ | - | $ | - | $ | 107,497 | $ | 107,497 | $ | (2 | ) | $ | 107,495 | ||||||||||||||||
Issuance of restricted and other common stock and compensation cost
|
617,695 | 6 | 8,141 | - | - | 8,147 | - | 8,147 | ||||||||||||||||||||||||
Stock repurchased and retired
|
(154,091 | ) | (2 | ) | (1,185 | ) | - | - | (1,187 | ) | - | (1,187 | ) | |||||||||||||||||||
Spin-off of Diana Containerships Inc.
|
- | - | (19 | ) | - | (36,981 | ) | (37,000 | ) | (38,411 | ) | (75,411 | ) | |||||||||||||||||||
Actuarial loss
|
- | - | - | (96 | ) | - | (96 | ) | - | (96 | ) | |||||||||||||||||||||
BALANCE, December 31, 2011
|
82,419,417 | $ | 824 | $ | 915,404 | $ | (112 | ) | $ | 292,762 | $ | 1,208,878 | $ | - | $ | 1,208,878 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income
|
- | $ | - | $ | - | $ | - | $ | 54,639 | $ | 54,639 | $ | - | $ | 54,639 | |||||||||||||||||
Issuance of restricted stock and compensation cost
|
667,614 | 7 | 8,638 | - | - | 8,645 | - | 8,645 | ||||||||||||||||||||||||
Stock repurchased and retired
|
(853,607 | ) | (9 | ) | (6,035 | ) | - | - | (6,044 | ) | - | (6,044 | ) | |||||||||||||||||||
Actuarial gain
|
- | - | - | 306 | - | 306 | - | 306 | ||||||||||||||||||||||||
BALANCE, December 31, 2012
|
82,233,424 | $ | 822 | $ | 918,007 | $ | 194 | $ | 347,401 | $ | 1,266,424 | $ | - | $ | 1,266,424 | |||||||||||||||||
Net loss
|
- | $ | - | $ | - | $ | - | $ | (21,205 | ) | $ | (21,205 | ) | $ | - | $ | (21,205 | ) | ||||||||||||||
Issuance of restricted stock and compensation cost (Note 11)
|
607,946 | 6 | 8,197 | - | - | 8,203 | - | 8,203 | ||||||||||||||||||||||||
Actuarial loss
|
- | - | - | (30 | ) | - | (30 | ) | - | (30 | ) | |||||||||||||||||||||
BALANCE, December 31, 2013
|
82,841,370 | $ | 828 | $ | 926,204 | $ | 164 | $ | 326,196 | $ | 1,253,392 | $ | - | $ | 1,253,392 |
The accompanying notes are an integral part of these consolidated financial statements.
|
DIANA SHIPPING INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the year ended December 31, 2013, 2012 and 2011
|
(Expressed in thousands of U.S. Dollars)
|
2013
|
2012
|
2011
|
||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|||||||||
Net income / (loss)
|
$ | (21,205 | ) | $ | 54,639 | $ | 107,495 | |||||
Adjustments to reconcile net income / (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization of deferred charges
|
64,741 | 62,010 | 55,278 | |||||||||
Amortization of financing costs
|
473 | 379 | 278 | |||||||||
Amortization of free lubricants benefit
|
(98 | ) | (180 | ) | (115 | ) | ||||||
Compensation cost on restricted stock (Note 11)
|
8,203 | 8,645 | 8,095 | |||||||||
Actuarial gain / (loss)
|
(30 | ) | 306 | (96 | ) | |||||||
Change in fair value of derivative instruments
|
(616 | ) | (36 | ) | 39 | |||||||
Loss / (income) from investment in Diana Containerships Inc., net of dividends receivable (Note 3)
|
5,094 | 2,273 | (707 | ) | ||||||||
(Increase) / Decrease in:
|
||||||||||||
Receivables
|
5,889 | (1,022 | ) | (5,982 | ) | |||||||
Due from related parties
|
294 | (350 | ) | 24 | ||||||||
Inventories
|
(684 | ) | (467 | ) | (737 | ) | ||||||
Prepaid expenses and other assets
|
345 | (2,514 | ) | (1,404 | ) | |||||||
Prepaid charter revenue
|
5,353 | 3,056 | 3,050 | |||||||||
Other non-current assets
|
(793 | ) | - | - | ||||||||
Increase / (Decrease) in:
|
||||||||||||
Accounts payable
|
416 | (134 | ) | 1,833 | ||||||||
Due to related parties
|
(43 | ) | 38 | (53 | ) | |||||||
Accrued liabilities
|
(479 | ) | 533 | 297 | ||||||||
Deferred revenue
|
451 | (5,309 | ) | (9,489 | ) | |||||||
Other liabilities
|
135 | 99 | (489 | ) | ||||||||
Drydock costs
|
(46 | ) | (2,080 | ) | (3,087 | ) | ||||||
Net Cash provided by Operating Activities
|
$ | 67,400 | $ | 119,886 | $ | 154,230 | ||||||
|
||||||||||||
Cash Flows from Investing Activities:
|
||||||||||||
Payments for vessel acquisitions, improvements and construction (Notes 5 and 6)
|
(198,581 | ) | (171,195 | ) | (58,284 | ) | ||||||
Cash disposed-off upon partial spin-off of Diana Containerships Inc.
|
- | - | (12,024 | ) | ||||||||
Acquisition of additional interest in Diana Containerships Inc. (Note 3)
|
- | - | (20,000 | ) | ||||||||
Cash dividends from investment in Diana Containerships Inc. (Note 3)
|
4,000 | 2,835 | 100 | |||||||||
Loan to Diana Containerships Inc. (Note 4)
|
(50,000 | ) | - | - | ||||||||
Payments for property and equipment (Note 7)
|
(575 | ) | (1,553 | ) | (220 | ) | ||||||
Net Cash used in Investing Activities
|
$ | (245,156 | ) | $ | (169,913 | ) | $ | (90,428 | ) | |||
|
||||||||||||
Cash Flows from Financing Activities:
|
||||||||||||
Proceeds from long-term debt (Note 9)
|
18,000 | 118,550 | 15,000 | |||||||||
Proceeds from dividend reinvestment
|
- | - | 20 | |||||||||
Payments for repurchase of common stock (Note 11)
|
- | (6,044 | ) | (1,187 | ) | |||||||
Financing costs
|
(452 | ) | (557 | ) | (45 | ) | ||||||
Loan payments (Note 9)
|
(45,783 | ) | (31,972 | ) | (6,330 | ) | ||||||
Net Cash provided by / (used in) Financing Activities
|
$ | (28,235 | ) | $ | 79,977 | $ | 7,458 | |||||
|
||||||||||||
Net increase / (decrease) in cash and cash equivalents
|
(205,991 | ) | 29,950 | 71,260 | ||||||||
|
||||||||||||
Cash and cash equivalents at beginning of the year
|
446,624 | 416,674 | 345,414 | |||||||||
|
||||||||||||
Cash and cash equivalents at end of the year
|
$ | 240,633 | $ | 446,624 | $ | 416,674 | ||||||
|
||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest payments, net of amounts capitalized
|
$ | 7,169 | $ | 6,709 | $ | 4,630 | ||||||
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
|
1.
|
Basis of Presentation and General Information
|
KAMSARMAX VESSELS
|
|||||||
19
|
Tuvalu Shipping Company Inc. (Note 6)
|
Myrto
|
Marshall Islands
|
82,131
|
Jan 2013
|
Jan 2013
|
Marshall Islands
|
20
|
Jabat Shipping Company Inc. (Note 6)
|
Maia
|
Marshall Islands
|
82,193
|
Aug 2009
|
Feb 2013
|
Marshall Islands
|
21
|
Makur Shipping Company Inc. (Notes 6)
|
Myrsini
|
Marshall Islands
|
82,117
|
Mar 2010
|
Oct 2013
|
Marshall Islands
|
POST-PANAMAX VESSELS
|
|||||||
22
|
Majuro Shipping Company Inc.
|
Alcmene
|
Marshall Islands
|
93,193
|
Jan 2010
|
Nov 2010
|
Marshall Islands
|
23
|
Guam Shipping Company Inc
|
Amphitrite
|
Marshall Islands
|
98,697
|
Aug 2012
|
Aug 2012
|
Marshall Islands
|
24
|
Palau Shipping Company Inc.
|
Polymnia
|
Marshall Islands
|
98,704
|
Nov 2012
|
Nov 2012
|
Marshall Islands
|
CAPESIZE VESSELS
|
|||||||
25
|
Jaluit Shipping Company Inc.
|
Sideris GS
|
Marshall Islands
|
174,186
|
Nov 2006
|
Nov 2006
|
Marshall Islands
|
26
|
Bikini Shipping Company Inc.
|
New York
|
Marshall Islands
|
177,773
|
Mar 2010
|
Mar 2010
|
Marshall Islands
|
27
|
Gala Properties Inc.
|
Houston
|
Marshall Islands
|
177,729
|
Oct 2009
|
Oct 2009
|
Marshall Islands
|
28
|
Kili Shipping Company Inc.
|
Semirio
|
Marshall Islands
|
174,261
|
Jun 2007
|
Jun 2007
|
Marshall Islands
|
29
|
Knox Shipping Company Inc.
|
Aliki
|
Marshall Islands
|
180,235
|
Mar 2005
|
Apr 2007
|
Marshall Islands
|
30
|
Lib Shipping Company Inc.
|
Boston
|
Marshall Islands
|
177,828
|
Nov 2007
|
Nov 2007
|
Marshall Islands
|
31
|
Marfort Navigation Company Ltd.
|
Salt Lake City
|
Cyprus
|
171,810
|
Sep 2005
|
Dec 2007
|
Cyprus
|
32
|
Silver Chandra Shipping Company Ltd.
|
Norfolk
|
Cyprus
|
164,218
|
Aug 2002
|
Feb 2008
|
Cyprus
|
33
|
Bokak Shipping Company Inc. (Note 6)
|
Baltimore
|
Marshall Islands
|
177,243
|
Mar 2005
|
Jun 2013
|
Marshall Islands
|
34
|
Pulap Shipping Company Inc. (Note 6)
|
PS Palios
|
Marshall Islands
|
179,134
|
Jan 2013
|
Dec 2013
|
Marshall Islands
|
NEWCASTLEMAX VESSELS
|
|||||||
35
|
Lae Shipping Company Inc.
|
Los Angeles
|
Marshall Islands
|
206,104
|
Feb 2012
|
Feb 2012
|
Marshall Islands
|
36
|
Namu Shipping Company Inc.
|
Philadelphia
|
Marshall Islands
|
206,040
|
May 2012
|
May 2012
|
Marshall Islands
|
UNDER CONSTRUCTION
|
|||||||
37
|
Erikub Shipping Company Inc. (Notes 5, 10 and 17)
|
H2528 (named Crystalia)
|
Greek
|
77,525
|
Feb 2014
|
Feb 2014
|
Marshall Islands
|
38
|
Wotho Shipping Company Inc. (Notes 5 and 10)
|
H2529 (tbr Atalandi)
|
-
|
76,000
|
-
|
Expected in 2014
|
Marshall Islands
|
39
|
Aster Shipping Company Inc. (Notes 5 and 10)
|
H2548
|
-
|
208,500
|
-
|
Expected in 2016
|
Marshall Islands
|
40
|
Aerik Shipping Company Inc. (Notes 5 and 10)
|
H2549
|
-
|
208,500
|
-
|
Expected in 2016
|
Marshall Islands
|
OTHER SUBSIDIARIES
|
|||||||
41
|
Cerada International SA
|
Dormant
|
|
Panama
|
|||
42
|
Diana Shipping Services SA
|
Manager
|
|
Panama
|
|||
43
|
Bulk Carriers (USA) LLC
|
Company's representative in the US
|
|
Delaware - USA
|
Charterer
|
|
2013
|
|
2012
|
|
2011
|
A
|
|
19%
|
|
10%
|
|
-
|
B
|
|
17%
|
|
18%
|
|
18%
|
C
|
|
11%
|
|
-
|
|
-
|
D
|
|
11%
|
|
-
|
|
-
|
E
|
|
-
|
|
12%
|
|
11%
|
F
|
|
-
|
|
-
|
|
12%
|
2.
|
Significant Accounting Policies
|
(a)
|
Principles of Consolidation
: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, and include the accounts of Diana Shipping Inc. and its wholly-owned subsidiaries referred to in Note 1 above. All intercompany balances a
nd transactions have been eliminated upon consolidation.
|
(b)
|
Use of Estimates
: The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
|
(c)
|
Other Comprehensive Income / (loss):
The Company separately presents certain transactions, which are recorded directly as components of stockholders' equity. Other Comprehensive Income / (Loss) is presented in a separate statement.
|
(d)
|
Foreign Currency Translation:
The functional currency of the Company is the U.S. Dollar because the Company's vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Company's accounting records 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 operations.
|
(e)
|
Cash and Cash Equivalents:
The Company considers highly liquid investments such as time deposits, certificates of deposit and their equivalents with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents may also include compensating cash balances kept against the Company's loan facilities that are not deemed to be sufficiently material to require segregation on the balance sheet. Such balances at December 31, 2013 and 2012 amounted to $18,000 and $15,000 in the aggregate and consisted of minimum cash deposits required to be maintained at all times under the Company's loan facilities (Note 9).
|
(f)
|
Accounts Receivable, Trade:
The amount shown as accounts receivable, trade, at each balance sheet date, includes receivables from charterers for hire, ballast bonus billings, if any, hold cleanings and extra voyage insurance, 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, 2013 and 2012.
|
(g)
|
Loan Receivable from Related Parties:
The amounts shown as Due from related parties, current and non-current, in the consolidated balance sheet as at December 31, 2013, (Note 4(b)) represent amounts receivable from Diana Containerships Inc. with respect to a loan agreement with a wholly owned subsidiary of Diana Containerships Inc., net of any provision for credit losses. Interest income and fees, deriving from the agreement are recorded in the accounts as incurred. Costs incurred for the loan documentation were expensed as incurred. At each balance sheet date, amounts due under the aforementioned loan agreement are assessed for purposes of determining the appropriate provision for credit losses. In order to estimate the allowance for credit losses, the Company assesses at each period end the ability of Diana Containerships to meet its obligations under the loan agreement by taking into consideration existing economic conditions, the current financial condition of Diana Containerships Inc. and historical losses, if any, and any other risks/factors that may affect its future financial condition and its ability to meet its obligations. No provision for credit losses was established as of December 31, 2013, since there was no indication that Diana Containerships Inc. will not be able to meet its obligations under the loan agreement.
|
(h)
|
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 balance sheet date a vessel remains idle. Bunkers are also stated at the lower of cost or market and cost is determined by the first in, first out method.
|
(i)
|
Vessel Cost:
Vessels are stated at cost which consists of the contract price and any material expenses incurred upon acquisition or during construction. 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.
|
(j)
|
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. 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.
|
(k)
|
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, capped to the vessel's fair value on a charter free basis, 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. Such assets/liabilities are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
|
(l)
|
Impairment of Long-Lived Assets:
Long-lived assets (vessels, land, and building) and certain identifiable intangibles held and used by an entity are reviewed for impairment whenever events or changes in circumstances (such as market conditions, obsolesce or damage to the asset, potential sales and other business plans) 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 over its remaining useful life and its eventual disposition 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.
|
(m)
|
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 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.
|
(n)
|
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.
|
(o)
|
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. In 2013, the Company identified that the estimated scrap rate used for the determination of annual depreciation was not in line with the current average historical rate and as such, the estimated scrap rate was revised (Note 6). Management estimates the useful life of the Company's vessels to be 25 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.
|
(p)
|
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.
|
(q)
|
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 relating to drawn loan facilities are amortized to interest and finance costs over the life of the related debt using the effective interest method and fees incurred for loan facilities not used at the balance sheet date are amortized using the straight line method 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, unless they relate to loans obtained to finance vessels under construction, in which case they are capitalized to the vessels' cost.
|
(r)
|
Concentration of Credit Risk:
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash, trade accounts receivable and the loan receivable from a related party. 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. The Company limits its credit risk with the loan receivable by performing ongoing credit evaluations of Diana Containerships' financial condition. The loan agreement is guaranteed by Diana Containerships but does not have any collateral and the Company has not entered into any agreement to mitigate credit risk.
|
(s)
|
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. Income representing ballast bonus payments by the charterer to the vessel owner is recognized in the period earned. 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. Deferred revenue may also include deferred revenue resulting from charter agreements providing for varying annual rates, which are accounted for on a straight line basis, or 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 commissions, port, canal and bunker expenses that are unique to a particular charter, are paid for by the charterer under time 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.
|
(t)
|
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 operations.
|
(u)
|
Earnings / (loss) per Common Share
: Basic earnings / (loss) per common share are computed by dividing net income / (loss) 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.
|
(v)
|
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.
|
(w)
|
Variable Interest Entities:
The Company evaluates financial instruments, service contracts, and other arrangements to determine if any variable interests relating to an entity exist, as the primary beneficiary would be required to include assets, liabilities, and the results of operations of the variable interest entity in its financial statements. As of December 31, 2013 and 2012, no such interests were identified.
|
(x)
|
Fair Value Measurements:
The Company follows the provisions of ASC 820 "Fair Value Measurements and Disclosures", which defines fair value and provides guidance for using fair value to measure assets and liabilities. The guidance creates a fair value hierarchy of measurement and 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. In accordance with the requirements of accounting guidance relating to Fair Value Measurements, the Company classifies and discloses its assets and liabilities carried at the fair value in one of the following categories:
|
Level 1:
|
Quoted market prices in active markets for identical assets or liabilities;
|
|
Level 2:
|
Observable market based inputs or unobservable inputs that are corroborated by market data;
|
|
Level 3:
|
Unobservable inputs that are not corroborated by market data.
|
(z)
|
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, novated in March 2012, to manage its exposure to interest rate changes related to its borrowings. The collar agreement is considered as an economic hedge agreement as it does not meet the criteria of hedge accounting; therefore, the change in its fair value is recognized in earnings (Note 16).
|
(aa)
|
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. The Company also evaluates whether a loss in value of an investment that is other than a temporary decline should be recognized. Evidence of a loss in value might include absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. 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 made advances, incurred obligations and made payments on behalf of the entity.
|
3.
|
Investment in Diana Containerships Inc.
|
(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 2013, 2012, and 2011, amounted to $2,640, $2,957, and $1,799, respectively, and are included in Vessels, Advances for vessels under 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. At December 31, 2013 and 2012, an amount of $196 and $192, respectively, was payable to Altair and is included in Due to related parties in the accompanying consolidated balance sheets.
|
(b)
|
Diana Containerships Inc. ("Diana Containerships"):
Until February 28, 2013, DSS received from Diana Containerships management fees of $15 per month for each vessel in operation and $20 per month for each laid-up vessel, 1% commissions on the gross hire and freight earned by each vessel and $10 per month for administrative fees pursuant to management and administrative services agreements between Diana Containerships, its vessel owning companies and DSS, which were terminated on March 1, 2013. For 2013, 2012, and 2011, revenues derived from the agreements with Diana Containerships amounted to $447, $2,447, and $1,117, respectively, and they are separately presented as Other revenues in the accompanying consolidated statements of operations. As at December 31, 2013 and 2012, there was an amount of $0 and $613, respectively, due from Diana Containerships and its vessels, relating to these management agreements, and is included in Due from related parties in the related accompanying consolidated balance sheet.
|
(c)
|
Diana Enterprises Inc. ("Diana Enterprises"):
Diana Enterprises is a company controlled by the Company's CEO and Chairman, and has entered into an agreement with DSS to provide brokerage services through DSS to DSI for an annual fee of $2,384 up to March 1, 2013 when the agreement was terminated and a monthly fee of $208 effective from March 1, 2013 until March 31, 2014, payable quarterly in advance. For 2013, 2012, and 2011, brokerage fees amounted to $2,481, $2,384 and $1,704, respectively, and are included in General and administrative expenses in the accompanying consolidated statements of operations. At December 31, 2013, there was an amount of $25 due to Diana Enterprises included in Due to related parties, in the accompanying balance sheet, while at December 31, 2012 there was no amount due to or from Diana Enterprises. Until March 1, 2013, DSS had an agreement with Diana Enterprises to provide brokerage services to Diana Containerships, which was terminated when DSS ceased from being the management company of the Diana Containerships' group.
|
|
December 31, 2013
|
December 31, 2012
|
||||||
Pre-delivery installments
|
$ | 37,810 | $ | 8,700 | ||||
Advances for vessel acquisitions
|
- | 2,650 | ||||||
Capitalized interest and finance costs
|
624 | 100 | ||||||
Other related costs
|
428 | 52 | ||||||
Total
|
$ | 38,862 | $ | 11,502 |
|
December 31, 2013
|
December 31, 2012
|
||||||
Beginning balance
|
$ | 11,502 | $ | 63,440 | ||||
- Advances for vessels under construction and other vessel costs
|
30,053 | 68,549 | ||||||
- Advances for vessel acquisitions and other vessel costs
|
23,983 | 31,827 | ||||||
- Transferred to vessel cost (Note 6)
|
(26,676 | ) | (152,314 | ) | ||||
Ending balance
|
$ | 38,862 | $ | 11,502 |
|
Vessel Cost
|
Accumulated Depreciation
|
Net Book Value
|
|||||||||
|
|
|
|
|||||||||
Balance, December 31, 2011
|
$ | 1,292,237 | $ | (245,518 | ) | $ | 1,046,719 | |||||
|
||||||||||||
- Transfer from advances for vessels under construction and acquisition and other vessel costs (Note 5)
|
152,314 | - | 152,314 | |||||||||
- Acquisition, improvements and other vessel costs
|
70,819 | - | 70,819 | |||||||||
- Depreciation for the year
|
- | (58,714 | ) | (58,714 | ) | |||||||
Balance, December 31, 2012
|
$ | 1,515,370 | $ | (304,232 | ) | $ | 1,211,138 | |||||
|
||||||||||||
- Transfer from advances for vessels under construction and acquisition and other vessel costs (Note 5)
|
26,676 | - | 26,676 | |||||||||
- Acquisition, improvements and other vessel costs
|
144,544 | - | 144,544 | |||||||||
- Depreciation for the year
|
- | (61,983 | ) | (61,983 | ) | |||||||
Balance, December 31, 2013
|
$ | 1,686,590 | $ | (366,215 | ) | $ | 1,320,375 |
|
Property and Equipment
|
Accumulated Depreciation
|
Net Book Value
|
|||||||||
|
|
|
|
|||||||||
Balance, December 31, 2011
|
$ | 22,552 | $ | (893 | ) | $ | 21,659 | |||||
|
||||||||||||
- Additions in equipment and building improvements
|
1,553 | - | 1,553 | |||||||||
- Depreciation for the year
|
- | (438 | ) | (438 | ) | |||||||
Balance, December 31, 2012
|
$ | 24,105 | $ | (1,331 | ) | $ | 22,774 | |||||
|
||||||||||||
- Additions in equipment and building improvements
|
575 | - | 575 | |||||||||
- Depreciation for the year
|
- | (523 | ) | (523 | ) | |||||||
Balance, December 31, 2013
|
$ | 24,680 | $ | (1,854 | ) | $ | 22,826 |
|
Amount
|
Accumulated Amortization
|
Net
|
|||||||||
|
|
|
|
|||||||||
Balance, December 31, 2011
|
$ | 15,000 | $ | (6,591 | ) | $ | 8,409 | |||||
Amortization in the year
|
- | (3,056 | ) | (3,056 | ) | |||||||
Balance, December 31, 2012
|
$ | 15,000 | $ | (9,647 | ) | $ | 5,353 | |||||
Amortization for the year
|
- | (5,353 | ) | (5,353 | ) | |||||||
Balance, December 31, 2013
|
$ | 15,000 | $ | (15,000 | ) | $ | - |
|
December 31, 2013
|
December 31, 2012
|
||||||
Royal Bank of Scotland revolving credit facility
|
$ | 240,000 | $ | 270,000 | ||||
Bremer Landesbank loan facility
|
25,600 | 29,200 | ||||||
Deutsche Bank AG loan facilities
|
48,250 | 33,400 | ||||||
Credit Agricole Corporate and Investment Bank
|
13,000 | 14,000 | ||||||
Export-Import Bank of China and DnB Bank ASA loan facility
|
64,219 | 69,054 | ||||||
Nordea Bank Finland Plc loan facilities
|
42,027 | 45,224 | ||||||
Total debt outstanding
|
$ | 433,096 | $ | 460,878 | ||||
Less related deferred financing costs
|
(1,539 | ) | (1,766 | ) | ||||
Total debt, net of deferred financing costs
|
$ | 431,557 | $ | 459,112 | ||||
Current portion of long term debt
|
$ | (46,532 | ) | $ | (45,032 | ) | ||
Long-term debt, non-current portion
|
$ | 385,025 | $ | 414,080 |
Period
|
|
Principal Repayment
|
|||
January 1, 2014
|
to
|
December 31, 2014
|
$
|
46,532
|
|
January 1, 2015
|
to
|
December 31, 2015
|
|
72,732
|
|
January 1, 2016
|
to
|
December 31, 2016
|
|
194,132
|
|
January 1, 2017
|
to
|
December 31, 2017
|
|
43,374
|
|
January 1, 2018
|
to
|
December 31, 2018
|
|
20,686
|
|
January 1, 2019
|
and thereafter
|
|
55,640
|
||
|
|
Total
|
$
|
433,096
|
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. The Company accrues for the cost of environmental and other liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure.
|
b)
|
The Company has entered into shipbuilding contracts for the construction of two ice class Panamax dry bulk carriers for a contract price of $29,000 each and two Newcastlemax dry bulk carriers for a contract price of $48,700 each. As at December 31, 2013, the total obligations under these contracts amounted to $117,590 (Notes 5 and 17).
|
c)
|
As of December 31, 2013, all our vessels had fixed non-cancelable time charter contracts. The minimum contractual gross charter revenues to be generated from the existing as of December 31, 2013, non-cancelable time charter contracts until their expiration are as follows:
|
Period
|
Amount
|
|||
Year 1
|
$ | 122,473 | ||
Year 2
|
41,448 | |||
Year 3
|
3,945 | |||
Total
|
$ | 167,866 |
(a)
|
Preferred stock and common stock:
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 (see also Note 17).
|
(b)
|
Incentive plan:
In February 2005, the Company adopted an equity incentive plan (the "Plan") for 2,800,000 common shares, which was amended and restated on October 21, 2008 and terminated in 2012 as all shares reserved had been issued. In May 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 were reserved for issuance.
|
|
Number of Shares
|
Weighted Average Grant Date Price
|
||||||
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 | ||||
Granted
|
667,614 | 9.13 | ||||||
Vested
|
(600,051 | ) | 13.83 | |||||
Forfeited or expired
|
- | - | ||||||
Outstanding at December 31, 2012
|
$ | 1,451,625 | $ | 11.90 | ||||
Granted
|
607,946 | 9.06 | ||||||
Vested
|
(701,198 | ) | 12.64 | |||||
Forfeited or expired
|
- | - | ||||||
Outstanding at December 31, 2013
|
$ | 1,358,373 | $ | 10.25 |
(c)
|
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. The agreement was terminated on February 29, 2012. On June 14 and August 2, 2012, the Company entered into two similar agreements which were terminated on July 11, and on October 15, 2012, respectively. The Company repurchased and retired 154,091 shares up to December 31, 2011 for an aggregate cost of $1,187, and additional shares of 853,607 in 2012 for an additional cost of $6,044. No such agreement was in effect for 2013.
|
|
2013
|
2012
|
2011
|
|||||||||
Voyage Expenses
|
|
|
|
|||||||||
Bunkers
|
$ | (62 | ) | $ | (2,149 | ) | $ | (1,663 | ) | |||
Commissions charged by third parties
|
7,939 | 10,273 | 11,963 | |||||||||
Miscellaneous
|
242 | 150 | 297 | |||||||||
Total
|
$ | 8,119 | $ | 8,274 | $ | 10,597 | ||||||
|
||||||||||||
Vessel Operating Expenses
|
||||||||||||
Crew wages and related costs
|
$ | 45,451 | $ | 37,351 | $ | 31,497 | ||||||
Insurance
|
6,438 | 4,747 | 4,369 | |||||||||
Spares and consumable stores
|
14,825 | 14,996 | 12,686 | |||||||||
Repairs and maintenance
|
5,548 | 6,609 | 5,903 | |||||||||
Tonnage taxes (Note 15)
|
1,040 | 361 | 318 | |||||||||
Other operating expenses
|
3,909 | 2,229 | 602 | |||||||||
Total
|
$ | 77,211 | $ | 66,293 | $ | 55,375 |
|
2013
|
2012
|
2011
|
|||||||||
Interest expense
|
$ | 7,600 | $ | 7,021 | $ | 4,494 | ||||||
Amortization of financing costs
|
473 | 379 | 278 | |||||||||
Commitment fees and other costs
|
67 | 218 | 152 | |||||||||
Total
|
$ | 8,140 | $ | 7,618 | $ | 4,924 |
2013
|
2012
|
2011
|
||||||||||||||||||||||
|
Basic LPS
|
Diluted LPS
|
Basic EPS
|
Diluted EPS
|
Basic EPS
|
Diluted EPS
|
||||||||||||||||||
Net income / (loss)
|
$ | (21,205 | ) | $ | (21,205 | ) | $ | 54,639 | $ | 54,639 | $ | 107,497 | $ | 107,497 | ||||||||||
Weighted average number of basic shares outstanding
|
81,328,390 | 81,328,390 | 81,083,485 | 81,083,485 | 81,081,774 | 81,081,774 | ||||||||||||||||||
Incremental shares
|
- | - | - | - | - | 42,574 | ||||||||||||||||||
Weighted average number of diluted common shares outstanding
|
- | 81,328,390 | - | 81,083,485 | - | 81,124,348 | ||||||||||||||||||
Earnings / (loss) per share
|
$ | (0.26 | ) | $ | (0.26 | ) | $ | 0.67 | $ | 0.67 | $ | 1.33 | $ | 1.33 |
(a)
|
New vessel construction contract:
On January 8, 2014 the Company, through its new subsidiary Houk Shipping Company Inc., signed a shipbuilding contract with Yangzhou Dayang Shipbuilding Co., Ltd. and Shanghai Sinopacific International Trade Co., Ltd., for the construction of a Kamsarmax dry bulk vessel for a contract price of US$28,825. The Company expects to take delivery of the vessel in 2016.
|
(b)
|
Loan agreement:
On January 9, 2014, Taka and Fayo both entered into a loan agreement with Commonwealth Bank of Australia, London Branch, for which a commitment letter had been signed in 2013 (Note 9) for a loan facility of up to $18,000 for the vessels "Melite" and "Artemis". The loan was drawn on January 13, 2014 and the Company paid a non-refundable arrangement fee of $135 on signing the agreement.
|
(c)
|
Issuance of redeemable preferred stock:
On February 24, 2014, the Company completed a public offering of 2,600,000 shares of Series B Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, at $25.00 per share. The net proceeds from the offering (after the underwriting discount and other offering expenses payable by the Company) are expected to be $62,590.
|
(d)
|
Annual Incentive Bonus:
On February 17, 2014 the Company's Board of Directors approved a cash bonus of $1,082, net of taxes and other withholdings, to all employees and executive management of the Company and 550,000 shares of restricted common stock awards to executive management and non-executive directors, pursuant to the Company's equity incentive plan. The fair value of the restricted shares is estimated at $6,859 and will be recognized in income ratably over three years, which is the restricted shares' vesting period.
|
(e)
|
Vessel delivery:
On February 20, 2014, the Company took delivery of hull H2528, named "Crystalia", which was under construction at the China Shipbuilding Trading Company, Limited and Jiangnan Shipyard (Group) Co., Ltd (Note 5).
|
(f)
|
Diana Enterprises Inc.:
On March 4, 2014, the Brokerage Services Agreement between DSS and Diana Enterprises (Note 4(c)) was terminated and replaced by a new agreement. Diana Enterprises will continue to provide brokerage services for a period of fifteen months starting from January 1, 2014 and for a revised monthly fee of $104 payable quarterly in advance.
|
22
|
Law and Jurisdiction
|
60
|
SCHEDULE 1: Conditions Precedent and Subsequent
|
62
|
|
Part I: Conditions precedent.
|
62
|
|
Part II: Conditions subsequent
|
66
|
|
SCHEDULE 2: Calculation of Mandatory Cost
|
67
|
|
SCHEDULE 3: Form of Drawdown Notice
|
69
|
|
SCHEDULE 4: Form of Compliance Certificate
|
70
|
(1)
|
TUVALU SHIPPING COMPANY INC. and JABAT SHIPPING COMPANY INC.,
each a company incorporated under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, P.O. Box 1405 Majuro, Marshall Islands MH 96960 (together the "
Borrowers
" and each a "
Borrower
") jointly and severally; and
|
(2)
|
DEUTSCHE BANK AKTIENGESELLSCHAFT FILIALE DEUTSCHLANDGESCHÄFT
, Frankfurt am Main, acting through its office at Adolphsplatz 7, 20457 Hamburg, Germany (the "
Lender
").
|
|
WHEREAS:
|
(A)
|
Each Borrower is the registered owner of the relevant Vessel and has registered that Vessel under the flag of the Republic of the Marshall Islands.
|
(B)
|
The Lender has agreed to advance to the Borrowers on a joint and several basis up to eighteen million Dollars ($18,000,000) to assist the Borrowers to refinance part of the aggregate purchase price of the Vessels in the amount of (i) ten million Dollars ($10,000,000) in respect of mv "MYRTO"; and (ii) eight million Dollars ($8,000,000) in respect of mv "MAIA".
|
|
IT IS AGREED
as follows:
|
|
1
Definitions and Interpretation
|
|
1.1
|
In this Agreement:
|
Name of Vessel
|
IMO no.
|
Borrower
|
Approximate dwt
|
Year built
|
|
MYRTO (the "Myrto Vessel")
|
9518086
|
Tuvalu Shipping Company Inc.
|
82,131
|
2013
|
|
MAIA (the "Maia Vessel)
|
9422938
|
Jabat Shipping Company Inc.
|
82,193
|
2009
|
|
(a)
|
moneys borrowed;
|
|
(b)
|
any acceptance credit;
|
|
(c)
|
any bond, note, debenture, loan stock or similar instrument;
|
|
(d)
|
any finance or capital lease;
|
|
(e)
|
receivables sold or discounted (other than on a non-recourse basis);
|
|
(f)
|
deferred payments for assets or services;
|
|
(g)
|
any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);
|
|
(h)
|
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;
|
|
(i)
|
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and
|
|
(j)
|
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.
|
|
(a)
|
the applicable Screen Rate; or
|
|
(b)
|
(if no Screen Rate is available for any Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) quoted to the Lender in the London interbank market,
|
|
(a)
|
an actual, constructive, arranged, agreed or compromised total loss of a Vessel; or
|
|
(b)
|
the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire); or
|
|
(c)
|
the capture, seizure, arrest, detention, confiscation, hijacking, theft or condemnation of a Vessel by any government or by persons acting or purporting to act on behalf of any government or otherwise, unless a Vessel is released and returned to the possession of the Borrower or the Collateral Owner within sixty (60) days after the capture, seizure, arrest, detention, confiscation, hijacking, theft or condemnation in question.
|
|
1.2
|
In this Agreement:
|
|
1.2.1
|
words denoting the plural number include the singular and vice versa;
|
|
1.2.2
|
words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi-governmental bodies or authorities and vice versa;
|
|
1.2.3
|
references to Recitals, Clauses and Schedules are references to recitals, clauses and schedules to or of this Agreement;
|
|
1.2.4
|
references to this Agreement include the Recitals and the Schedules;
|
|
1.2.5
|
the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement;
|
|
1.2.6
|
references to any document (including, without limitation, to all or any of the Relevant Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time;
|
|
1.2.7
|
references to "
indebtedness
"
include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
|
|
1.2.8
|
references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted;
|
|
1.2.9
|
references to the Lender include its successors, transferees and assignees; and
|
|
1.2.10
|
a time of day (unless otherwise specified) is a reference to London time.
|
|
1.3
|
Offer letter
|
2
|
The Loan and its Purpose
|
|
2.1
|
Amount
Subject to the terms of this Agreement, the Lender agrees to make available to the Borrowers a term loan in an aggregate amount not exceeding the Maximum Loan Amount.
|
|
2.2
|
Purpose
The Borrowers shall apply the Loan for the purposes referred to in Recital (B).
|
|
2.3
|
Monitoring
The Lender shall not be bound to monitor or verify the application of any amount borrowed under this Agreement.
|
3
|
Conditions of Utilisation
|
|
3.1
|
Conditions precedent
The Borrowers are not entitled to have the Loan advanced unless the Lender has received all of the documents and other evidence listed in Part I of Schedule 1
(
Conditions precedent
)
.
|
|
3.2
|
Further conditions precedent
The Lender will only be obliged to advance the Loan if on the date of the Drawdown Notice and on the proposed Drawdown Date:
|
|
3.2.1
|
no Default is continuing or would result from the advance of the Loan;
|
|
3.2.2
|
the representations made by the Borrowers under Clause 11
(
Representations
)
are true in all material respects; and
|
|
3.2.3
|
there is no material adverse change on the reputation, business, assets, financial condition or credit worthiness of the Borrower or the Guarantor.
|
|
3.3
|
Conditions subsequent
The Borrowers undertake to deliver or to cause to be delivered to the Lender on, or as soon as practicable after, the Drawdown Date the additional documents and other evidence listed in Part II of Schedule I
(
Conditions subsequent
)
,
save that references in that Part II to "the Vessel" or to any person or document relating to a Vessel shall be deemed to relate solely to any Vessel specified in the relevant Drawdown Notice or to any person or document relating to that Vessel respectively.
|
|
3.4
|
No waiver
If the Lender in its sole discretion agrees to advance the Loan to the Borrowers before all of the documents and evidence required by Clause 3.1
(
Conditions precedent
)
have been delivered to or to the order of the Lender, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Lender no later than thirty (30) days after the Drawdown Date or such other date specified by the Lender.
|
|
3.5
|
Form and content
All documents and evidence delivered to the Lender under this Clause 3 shall:
|
|
3.5.1
|
be in form and substance acceptable to the Lender; and
|
|
3.5.2
|
if required by the Lender, be certified, notarised, legalised or attested in a manner acceptable to the Lender.
|
4
|
Advance
|
|
The Borrowers may request the Loan to be advanced in one amount on any Business Day prior to the Availability Termination Date by delivering to the Lender a duly completed Drawdown Notice not more than ten (10) and not fewer than two (2) Business Days before the proposed Drawdown Date. Any such Drawdown Notice shall be signed by authorised signatories of the Borrowers and, once delivered, is irrevocable.
|
5
|
Repayment
|
|
5.1
|
Repayment of Loan
The Borrowers agree to repay the Loan to the Lender by twenty (20) consecutive quarterly instalments, the first nineteen (19) such repayment instalments each in the sum of three hundred and seventy five thousand Dollars ($375,000) and the twentieth (20
th
) and final such repayment instalment in the amount of ten million eight hundred and seventy five thousand Dollars ($10,875,000) comprising a repayment instalment of three hundred and seventy five thousand Dollars ($375,000) and a balloon amount of ten million five hundred thousand Dollars ($10,500,000), the first instalment falling due on the date which is three calendar months after the Drawdown Date and subsequent instalments falling due at consecutive intervals of three calendar months thereafter
|
|
5.2
|
Reduction of Repayment Instalments
If the aggregate amount advanced to the Borrowers is less than the Maximum Loan Amount, the amount of each Repayment Instalment shall be reduced pro rata to the amount actually advanced.
|
|
5.3
|
Reborrowing
The Borrowers may not reborrow any part of the Loan which is repaid or prepaid.
|
6
|
Prepayment
|
|
6.1
|
Illegality
If it becomes unlawful in any jurisdiction for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Loan:
|
|
6.1.1
|
the Lender shall promptly notify the Borrowers of that event; and
|
|
6.1.2
|
the Borrowers shall repay the Loan (to the extent already advanced) on the last day of the current Interest Period or, if earlier, the date specified by the Lender in the notice delivered to the Borrowers (being no earlier than the last day of any applicable grace period permitted by law).
|
|
6.2
|
Voluntary prepayment of Loan
The Borrowers may prepay or cancel the whole or any part of the Loan (but, if in part, being an amount that reduces the Loan by an amount which is an integral multiple of one million Dollars ($1,000,000) subject as follows, or as otherwise agreed by the Lender in its absolute discretion:
|
|
6.2.1
|
they give the Lender not less than five (5) Business Days' (or such shorter period as the Lender may agree) prior notice;
|
|
6.2.2
|
no prepayment may be made until after the Availability Termination Date;
|
|
6.2.3
|
prepayments may only be made on an Interest Payment Date; and
|
|
6.2.4
|
any prepayment under this Clause 6.2 shall satisfy the obligations under Clause 5.1
(
Repayment of Loan
)
in inverse order of maturity or pro rata, at the Borrower's option, in the absence of which, it shall be at the Lender's option.
|
|
6.3
|
Mandatory prepayment on sale or Total Loss
If there is a Prepayment Event, the Borrowers shall, simultaneously with any such sale or on the earlier of the date falling one hundred and eighty (180) days after any such Total Loss and the date on which the proceeds of any such Total Loss are realised, make a prepayment:
|
|
(a)
|
in the case of the first Borrower's Vessel or the Collateral Vessel to suffer a Prepayment Event, an amount of the Loan which, after giving credit to the prepayment, results in the Fair Market Value of the remaining Vessel(s) and any other security granted in favour of the Lender being the greater of (i) the Security Cover Ratio existing at the time of such Prepayment Event and (ii) 125% of the Loan outstanding, and any such prepayment shall be applied in prepayment of the remaining Repayment Instalments upon a Prepayment Event of (1) the first Borrower's Vessel, pro rata and (2) the Collateral Vessel, in inverse order of maturity; and
|
|
(b)
|
in the case of the last of the Borrower's Vessels to suffer a Prepayment Event, a prepayment equal to the whole of the Indebtedness and in addition, any part of the Loan not drawn down shall be automatically cancelled.
|
|
6.4
|
Restrictions
Any notice of prepayment given under this Clause 6 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment is to be made and the amount of that prepayment.
|
7
|
Interest
|
|
7.1
|
Interest Periods
The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of three or six months' duration, as selected by the Borrowers by written notice to the Lender not later than 11.00 a.m. on the third Business Day before the beginning of the Interest Period in question, or such other duration as may be agreed by the Lender.
|
|
7.2
|
Beginning and end of Interest Periods
Each Interest Period shall start on the Drawdown Date or (if the Loan is already made) on the last day of the preceding Interest Period and end on the date which numerically corresponds to the Drawdown Date or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month and no Interest Period may exceed the Final Maturity Date.
|
|
7.3
|
Interest Periods to meet Repayment Dates
If an Interest Period will expire after the next Repayment Date, there shall be a separate Interest Period for a part of the Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.
|
|
7.4
|
Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
|
|
7.5
|
Interest rate
During each Interest Period interest shall accrue on the Loan at the rate determined by the Lender to be the aggregate of (a) the Margin, (b) LIBOR and (c) the Mandatory Cost, if any.
|
|
7.6
|
Failure to select Interest Period
If the Borrowers at any time fail to select or agree an Interest Period in accordance with Clause 7.1
(
Interest Periods
)
,
the interest rate applicable shall be the rate determined by the Lender in accordance with Clause 7.5
(
Interest rate
)
for an Interest Period of three (3) months or such other duration as the Lender may select.
|
|
7.7
|
Accrual and payment of interest
Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice differs, in accordance with the prevailing market practice) and shall be paid by the Borrowers to the Lender on the last Business Day of each Interest Period and, if the Interest Period is longer than three months, on the dates falling at three monthly intervals after the first day of that Interest Period.
|
|
7.8
|
Default interest
If a Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from
|
|
7.9
|
Alternative interest rate
If either (a) the applicable Screen Rate is not available for any Interest Period and no rates are quoted to the Lender to determine LIBOR for that Interest Period or (b) the Lender determines that the cost to it of obtaining matching deposits for any Interest Period would be in excess of LIBOR and that determination is made no later than close of business in London on the day LIBOR is determined for that Interest Period:
|
|
7.9.1
|
the Lender shall give notice to the Borrowers of the occurrence of such event; and
|
|
7.9.2
|
the rate of interest on the Loan for that Interest Period shall be the rate per annum which is the sum of:
|
|
(a)
|
the Margin; and
|
|
(b)
|
the rate which expresses as a percentage rate per annum the cost to the Lender of funding the Loan from whatever source it may reasonably select; and
|
|
(c)
|
the Mandatory Cost, if any,
|
|
7.9.3
|
the Lender will negotiate with the Borrowers in good faith with a view to modifying this Agreement to provide a substitute basis for determining the rate of interest;
|
|
7.9.4
|
any substitute basis agreed pursuant to Clause 7.9.3 shall be binding on the parties to this Agreement; and
|
|
7.9.5
|
if, within thirty (30) days of the giving of the notice referred to in Clause 7.9.1, the Borrowers and the Lender fail to agree in writing on a
|
|
7.10
|
Determinations conclusive The Lender shall promptly notify the Borrowers of the determination of a rate of interest under this Clause 7 and each such determination shall (save in the case of manifest error) be final and conclusive.
|
8
|
Indemnities
|
|
8.1
|
Transaction expenses The Borrowers will, within fourteen (14) days of the Lender's written demand, pay the Lender the amount of all costs and expenses (including legal fees and Value Added Tax or any similar or replacement tax if applicable) incurred by the Lender in connection with:
|
|
8.1.1
|
the negotiation, preparation, printing, execution and registration of the Finance Documents (whether or not any Finance Document is actually executed or registered and whether or not all or any part of the Loan is advanced);
|
|
8.1.2
|
any amendment, addendum or supplement to any Finance Document (whether or not completed) (except from those pursuant to Clause 14
(Assignment and Sub-participation));
|
|
8.1.3
|
any other document which may at any time be required by the Lender to give effect to any Finance Document or which the Lender is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of the Vessels); and
|
|
8.1.4
|
any discharge, release or reassignment of any of the Security Documents.
|
|
8.2
|
Funding costs
The Borrowers shall indemnify the Lender promptly on the Lender's written demand against all losses and costs incurred or sustained by the Lender if, for any reason, the Loan is not advanced to the Borrowers after the relevant Drawdown Notice has been given to the Lender, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by the Lender).
|
|
8.3
|
Break Costs
The Borrowers shall pay to the Lender promptly on the Lender's written demand the amount of all costs, losses, premiums or penalties incurred or to be incurred by the Lender as a result of its receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 6
(
Prepayment
)
or otherwise) on a day other than the last day of an Interest Period for the Loan or relevant part of the Loan, or any other payment under or in relation to the Finance Documents on a day other than the due date for payment of the sum in question, including (without limitation) any losses or costs incurred in liquidating or re-employing deposits from third parties acquired to effect or maintain all or any part of the Loan.
|
|
8.4
|
Currency indemnity
In the event of the Lender receiving or recovering any amount payable under a Finance Document in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrowers shall, promptly on the Lender's written demand, pay to the Lender such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Lender as a separate debt under this Agreement.
|
|
8.5
|
Increased costs
(subject to Clause 8.6
(
Exceptions to increased costs
))
If, by reason of the introduction of any law, or any change in any law, or any change in the interpretation or administration of any law, or compliance with any request or requirement from any central bank or any fiscal, monetary or other authority occurring after the date of this Agreement (including the implementation or application of or compliance with the Basel II Accord or any other Basel II Regulation or Basel III (whether such implementation, application or compliance is by any central bank or any fiscal, monetary or other authority, the Lender or the holding company of the Lender)):
|
|
8.5.1
|
the Lender (or the holding company of the Lender) shall be subject to any Tax with respect to payment of all or any part of the Indebtedness (other than Tax on overall net income); or
|
|
8.5.2
|
the basis of Taxation of payments to the Lender in respect of all or any part of the Indebtedness shall be changed; or
|
|
8.5.3
|
any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of the Lender; or
|
|
8.5.4
|
the manner in which the Lender allocates capital resources to its obligations under this Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which the Lender is required or requested to maintain shall be affected; or
|
|
8.5.5
|
there is imposed on the Lender (or on the holding company of the Lender) any other condition in relation to the Indebtedness or the Finance Documents;
|
|
8.6
|
Exceptions to increased costs
Clause 8.5
(
Increased costs
)
does not apply to the extent any additional cost or reduced return referred to in that Clause is:
|
|
8.6.1
|
compensated for by a payment made under Clause 8.10
(
Taxes
)
;
or
|
|
8.6.2
|
compensated for by a payment made under Clause 16.3
(
Grossing-up
)
;
or
|
|
8.6.3
|
compensated for by the payment of the Mandatory Cost; or
|
|
8.6.4
|
attributable to the wilful breach by the Lender (or the holding company of the Lender) of any law or regulation.
|
|
8.7
|
Events of Default
The Borrowers shall indemnify the Lender from time to time promptly on the Lender's written demand against all losses, costs and liabilities incurred or sustained by the Lender as a consequence of any Event of Default.
|
|
8.8
|
Enforcement costs
The Borrowers shall pay to the Lender promptly on the Lender's written demand the amount of all costs and expenses (including legal fees) incurred by the Lender in connection with the enforcement of, or the preservation of any rights under, any Finance Document including (without limitation) any losses, costs and expenses which the Lender may from time to time sustain, incur or become liable for by reason of the Lender being mortgagee of a Vessel and/or a lender to the Borrowers, or by reason of the Lender being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of a Vessel.
|
|
8.9
|
Other costs
The Borrowers shall pay to the Lender promptly on the Lender's written demand the amount of all sums which the Lender may pay or become actually or contingently liable for on account of a Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which the Lender may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by the Lender in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which the Lender may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.
|
|
8.10
|
Taxes
The Borrowers shall pay all Taxes to which all or any part of the Indebtedness or any Finance Document may be at any time subject (other than Tax on the Lender's overall net income) and shall indemnify the Lender promptly on the Lender's written demand against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.
|
|
8.11
|
Cancellation
The Borrowers may cancel the Loan and prepay to the Lenders the full amount of the Indebtedness, if a Finance Party makes a claim under Clauses 8.5 or 8.10. Any prepayment under this Clause shall be made together with accrued interest on the amount prepaid and Break Costs.
|
9
|
Fees
|
|
9.1
|
Commitment fee
The Borrowers shall pay to the Lender a fee computed at the rate of zero point fifty per cent (0.50%) per annum on the undrawn amount of the Loan from time to time from the date of this Agreement until the earlier of the
|
|
9.2
|
Arrangement fee
The Borrowers shall pay to the Lender a non-refundable arrangement fee in the amount of two hundred and twenty five thousand Dollars ($225,000) on the date of this Agreement.
|
|
9.3
|
Administration fee
The Borrowers shall pay to the Lender a non-refundable administration fee in the amount of five thousand Dollars ($5,000) on the date of this Agreement and on each anniversary of the date of this Agreement.
|
10
|
Security and Application of Moneys
|
|
10.1
|
Security Documents
As security for the payment of the Indebtedness, the Borrowers shall execute and deliver to the Lender or cause to be executed and delivered to the Lender the following documents in such forms and containing such terms and conditions as the Lender shall require:
|
|
10.1.1
|
first preferred mortgages over the Borrower's Vessels;
|
|
10.1.2
|
first priority deeds of assignment of the Insurances, Earnings, Charters and Requisition Compensation of the Borrowers' Vessels;
|
|
10.1.3
|
a guarantee and indemnity from the Guarantor;
|
|
10.1.4
|
first priority charge of all the issued shares of the Borrowers;
|
|
10.1.5
|
a guarantee and indemnity from the Collateral Owner;
|
|
10.1.6
|
a second preferred mortgage over the Collateral Vessel;
|
|
10.1.7
|
a second priority deed of assignment of the Insurances, Earnings and Requisition Compensation of the Collateral Vessel; and
|
|
10.1.8
|
a letter of undertaking and subordination from the Managers incorporating an assignment of Insurances in respect of each Vessel.
|
|
10.2
|
Earnings Accounts
The Borrowers shall maintain the Earnings Accounts with the Lender for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.
|
|
10.3
|
Earnings
The Borrowers shall procure that all Earnings and any Requisition Compensation are credited to the relevant Earnings Account.
|
|
10.4
|
Additional payments
If for any reason the amount standing to the credit of the Earnings Account is insufficient to make any transfer required by Clause I 0.4
(
Application of Earnings Account
)
,
the Borrowers shall, without demand, procure that there is credited to the Lender, on the date on which the relevant amount would have been transferred from the Earnings Account, an amount equal to the amount of the shortfall.
|
|
10.5
|
Application of Earnings Account
The Borrowers shall procure that there is transferred from the Earnings Account to the Lender:
|
|
10.5.1
|
on each Repayment Date, the amount of the Repayment Instalment then due; and
|
|
10.5.2
|
on each Interest Payment Date, the amount of interest then due,
|
|
10.6
|
Borrowers' obligations not affected
If for any reason the amount standing to the credit of the Retention Account is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrowers' obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.
|
|
10.7
|
Release of surplus
Any amount remaining to the credit of the Earnings Account following the making of any transfer required by Clause 10.5
(
Application of Earnings Account
)
shall (unless a Default shall have occurred and be continuing) be released to or to the order of the Borrowers.
|
|
10.8
|
Relocation of Earnings Accounts
At any time following the occurrence and during the continuation of a Default, the Lender may without the consent of the Borrowers relocate either or both of the Earnings Accounts to any other branch of the Lender, without prejudice to the continued application of this Clause 10 and the rights of the Lender under the Finance Documents. In the event that such
|
|
10.9
|
Application after acceleration
From and after the giving of notice to the Borrowers by the Lender under Clause 13.2
(
Acceleration
)
,
the Borrowers shall procure that all sums from time to time standing to the credit of either of the Earnings Account are immediately transferred to the Lender for application in accordance with Clause 10.10
(
General application of moneys
)
and the Borrowers irrevocably authorise the Lender to make those transfers.
|
|
10.10
|
General application of moneys
The Borrowers irrevocably authorise the Lender to apply all sums which the Lender receives and is entitled to receive:
|
|
10.10.1
|
pursuant to a sale or other disposition of a Vessel or any right, title or interest in a Vessel; or
|
|
10.10.2
|
by way of payment of any sum in respect of the Insurances, Earnings, Charters or Requisition Compensation; or
|
|
10.10.3
|
by way of transfer of any sum from either of the Earnings Account; or
|
|
10.10.4
|
otherwise under or in connection with any Security Document,
|
|
10.11
|
Application of moneys on sale or Total Loss
The Borrower irrevocably authorises the Lender to apply all sums which the Lender may receive pursuant to a sale by the Borrowers or a Total Loss in or towards satisfaction of the prepayment due and payable under Clause 6.3
(
Mandatory prepayment on sale or Total Loss
)
by virtue of that sale or Total Loss, but the Borrower's obligation to make that prepayment shall not be affected if those sums are insufficient to satisfy that obligation.
|
|
10.12
|
Additional security
If at any time during the Facility Period the Security Cover Ratio is less than one hundred and twenty five per cent (125%), the Borrowers shall, within thirty (30) days of the Lender's request, at the Borrowers' option:
|
|
10.12.1
|
pay to the Lender or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Lender as additional security for the payment of the Indebtedness; or
|
|
10.12.2
|
give to the Lender other additional security in amount and form acceptable to the Lender in its discretion; or
|
|
10.12.3
|
prepay the Loan in the amount of the shortfall.
|
|
10.13
|
Fair Market Value determination
The fair market value shall be conclusively determined at any time throughout the Facility Period, by an Approved Broker selected by the Borrowers in their sole discretion appointed by, and reporting to, the Lender on the basis of a charter-free sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer. In the event that such Approved Broker provides a range, then the lowest amount of the range will apply. If the Lender determines in its sole discretion that the valuation referred to above, is not sufficient to accurately determine the Fair Market Value, the Lender shall then have the option to obtain another valuation from an Approved Broker and the Fair Market Value shall be determined as the average of the two valuations.
|
|
10.14
|
Cost of valuations
For the purposes of Clause 10.13, the cost of one set of valuations per annum shall be borne by the Borrowers, unless there is an Event of Default which is continuing, in which case the cost of all valuations obtained from time to time upon the request of the Lender shall be borne by the Borrowers.
|
11
|
Representations
|
|
11.1
|
Representations
The Borrowers make the representations and warranties set out in this Clause 11.1 to the Lender on the date of this Agreement.
|
|
11.1.1
|
Status
Each Security Party (which is not an individual) is a corporation, duly incorporated and validly existing under the law of its jurisdiction of
|
|
11.1.2
|
Binding obligations
The obligations expressed to be assumed by each Security Party in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations.
|
|
11.1.3
|
Non-conflict with other obligations
The entry into and performance by each Security Party of, and the transactions contemplated by, the Finance Documents do not conflict with:
|
|
(a)
|
any law or regulation applicable to that Security Party;
|
|
(b)
|
the constitutional documents of that Security Party; or
|
|
(c)
|
any document binding on that Security Party or any of its assets,
|
|
11.1.4
|
No established place of business in the UK or US
No Security Party has an established place of business in the United Kingdom or the United States of America.
|
|
11.1.5
|
Power and authority
Each Security Party has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
|
|
11.1.6
|
Validity and admissibility in evidence
All consents, licences, approvals, authorisations, filings and registrations required or desirable:
|
|
(a)
|
to enable each Security Party lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party or to enable the Lender to enforce and exercise all its rights under the Finance Documents; and
|
|
(b)
|
to make the Finance Documents to which any Security Party is a party admissible in evidence in its jurisdiction of incorporation,
|
|
11.1.7
|
Governing law and enforcement
The choice of a particular law as the governing law of any Finance Document expressed to be governed by that law will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party, and any judgment obtained in the jurisdiction submitted to in any Finance Document will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party.
|
|
11.1.8
|
Deduction of Tax
No Security Party is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document.
|
|
11.1.9
|
No filing or stamp taxes
Under the law of jurisdiction of incorporation of each relevant Security Party it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents.
|
|
11.1.10
|
No default
No Event of Default is continuing or might reasonably be expected to result from the advance of the Loan.
|
|
11.1.11
|
No misleading information
Any factual information provided by any Security Party to the Lender was true and accurate in all material respects as at the date it was provided.
|
|
11.1.12
|
Pari passu ranking
The payment obligations of each Security Party under the Finance Documents to which it is a party rank at least pari passu with any present or future claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
|
|
11.1.13
|
N
o proceedings pending or threatened
No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have been started or (to the best of the Borrowers' knowledge threatened)
|
|
11.1.14
|
Disclosure of material facts
The Borrowers are not aware of any material facts or circumstances which have not been disclosed to the Lender and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrowers.
|
|
11.1.15
|
Completeness of Relevant Documents
The copies of any Relevant Documents provided or to be provided by the Borrowers to the Lender in accordance with Clause 3
(
Conditions of Utilisation
)
are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Lender.
|
|
11.1.16
|
No money laundering
In relation to the borrowing by the Borrowers of the Loan, the performance and discharge of its obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which it is a party, the Borrowers confirm to the Lender that it is acting for its own account and 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).
|
|
11.1.17
|
Financial statements
The financial statements provided pursuant to Clause 12.1
(
Information undertakings
)
are accurate and reveal the true financial position of the relevant Security Parties.
|
|
11.2
|
Repetition
Each representation and warranty in Clause 11.1
(
Representations
)
is deemed to be repeated by the Borrowers by reference to the facts and circumstances
|
12
|
Undertakings and Covenants
|
|
The undertakings and covenants in this Clause 12 remain in force for the duration of the Facility Period.
|
|
12.1
|
Information undertakings
|
|
12.1.1
|
Financial statements
The Borrowers shall procure that the Guarantor shall supply to the Lender as soon as the same become available, but in any event within 120 days after the end of each of its financial years, the Guarantor's annual audited consolidated financial statements for that financial year, together with a Compliance Certificate, signed by two directors of the Guarantor, setting out (in reasonable detail) computations as to compliance with Clause 12.2
(
Financial covenants
)
as at the date as at which those financial statements were drawn up.
|
|
12.1.2
|
Requirements as to financial statements
Each set of financial statements delivered by the Borrowers or the Guarantor under Clause 12.1.1
(
Financial statements
)
:
|
|
(a)
|
shall be certified by a director of the Guarantor as fairly representing its financial condition as at the date as at which those financial statements were drawn up; and
|
|
(b)
|
shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the relevant Borrower notifies the Lender that there has been a change in GAAP, the accounting practices or reference periods and the Guarantor's auditors deliver to the Lender:
|
|
(i)
|
a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and
|
|
(ii)
|
sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to make an accurate comparison between the financial position indicated in those financial statements and that indicated in the Original Financial Statements.
|
|
12.1.3
|
Interim financial statements
The Borrowers shall procure that the Guarantor shall supply to the Lender as soon as the same become available, but in any event within 90 days after the end of each quarter during each of its financial years, the Guarantor's unaudited quarterly financial statements for that quarter.
|
|
12.1.4
|
Information: miscellaneous
The Borrowers shall supply to the Lender:
|
|
(a)
|
all documents dispatched by any Borrower to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;
|
|
(b)
|
promptly upon becoming aware of them, details of any litigation, arbitrationor administrative proceedings which are current, threatened or pending against any Security Party, and which might, if adversely determined, have a materially adverse effect on the business, assets, financial condition or credit worthiness of that Security Party; and
|
|
(c)
|
promptly, such further information regarding the financial condition, business and operations of any Security Party as the Lender may reasonably request including, without limitation, cash flow analyses and details of the operating costs of any Vessel.
|
|
12.1.5
|
Notification of default
|
|
(a)
|
The Borrowers shall notify the Lender of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.
|
|
(b)
|
Promptly upon a request by the Lender, each Borrower shall supply to the Lender a certificate signed by two of its directors or senior
|
|
12.1.6
|
"
Know your customer" checks
If
:
|
|
(a)
|
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
|
|
(b)
|
any change in the status of a Borrower after the date of this Agreement; or
|
|
(c)
|
a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement,
|
|
12.2
|
Financial covenants
|
|
12.2.1
|
Each Borrower shall maintain from the Drawdown Date throughout the Facility Period Cash of not less than $500,000 for each Borrower's Vessel.
|
|
12.2.2
|
The Borrower shall procure that the Guarantor shall maintain the following financial ratios on a consolidated basis throughout the Facility Period:
|
|
(a)
|
Adjusted Net Worth shall not be less than $150,000,000;
|
|
(b)
|
Adjusted Net Worth shall not be less than 25% of the Total Assets;
|
|
and
|
|
(c)
|
Liquid Funds shall not be less than $500,000 for each Fleet Vessel.
|
|
12.2.3
|
In the event that after the date of this Agreement, the Guarantor enters into any financial agreement in which it agrees to any further financial covenants or any different covenant ratios in relation to those contained in Clauses 12.2.1 and 12.2.2, the Lender reserves the right to demand that these financial covenants shall become part of this Agreement.
|
|
(a)
|
any amounts payable by the Group under leases or similar arrangements over their respective periods;
|
|
(b)
|
any credit to the Group from a supplier of goods or under any instalment purchase or other similar arrangement;
|
|
(c)
|
the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Group;
|
|
(d)
|
any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or, under GAAP, should be recorded in the notes to the Group's financial statements; and
|
|
(e)
|
any deferred tax liabilities.
|
|
12.3
|
General undertakings
|
|
12.3.1
|
Authorisations
The Borrowers shall promptly:
|
|
(a)
|
obtain, comply with and do all that is necessary to maintain in full force and effect; and
|
|
(b)
|
supply certified copies to the Lender of,
|
|
12.3.2
|
Compliance with laws
Each Borrower shall and shall procure that the Guarantor and the Collateral Owner shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.
|
|
12.3.3
|
Conduct of business
Each Borrower shall and shall procure that the Guarantor and the Collateral Owner shall carry on and conduct its business in a proper and efficient manner, file all requisite tax returns and pay all tax which becomes due and payable (except where contested in good faith).
|
|
12.3.4
|
Evidence of good standing
The Borrowers will from time to time if requested by the Lender provide the Lender with evidence in form and substance satisfactory to the Lender that the Security Parties (other than the Guarantor for as long as it remains listed) and all corporate shareholders of any Security Party (other than the Guarantor for as long as it remains listed) remain in good standing.
|
|
12.3.5
|
Negative pledge and no disposals
Neither Borrower shall without the prior written consent of the Lender create nor permit to subsist any Encumbrance or other third party rights (other than a Permitted
|
|
12.3.6
|
Merger
Neither Borrower shall and shall procure that the Guarantor and the Collateral Owner shall not enter into any amalgamation, demerger, merger or corporate reconstruction, reorganisation or consolidation.
|
|
12.3.7
|
Change of business
Neither Borrower shall and shall procure that the Guarantor and the Collateral Owner shall not make any substantial change to the general nature of its business from that carried on at the date of this Agreement.
|
|
12.3.8
|
No other business
Neither Borrower shall without the pnor written consent of the Lender engage in any business other than the ownership, operation, chartering and management of its Vessel.
|
|
12.3.9
|
No place of business in UK or
US
Neither Borrower shall and shall procure that the Guarantor and the Collateral Owner shall not have an established place of business in the United Kingdom or the United States of America at any time during the Facility Period.
|
|
12.3.10
|
No borrowings
Neither Borrower shall borrow any money (except for the Loan and unsecured Financial Indebtedness subordinated to the Loan) nor incur any obligations under leases.
|
|
12.3.11
|
No substantial liabilities
Except in the ordinary course of business and/or as may be required for the operation of the Vessels, neither Borrower incur any liability to any third party which is in the Lender's opinion of a substantial nature.
|
|
12.3.12
|
No loans or other financial commitments
Neither Borrower shall (a) make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person nor provide any other form of credit or financial assistance to (i) a person who is directly or indirectly interested in each Borrower's share or loan capital, or (ii) any company in or with which such a person is directly or indirectly interested or connected, or (b) enter into any transaction with or
|
|
12.3.13
|
No dividends
Neither Borrower shall without the prior written consent of the Lender pay any dividends or make any other distributions or effect any form of redemption, purchase or return of share capital which would result in a breach of the financial covenants set out in Clause 12.2 or if an Event of Default has occurred and is continuing, unremedied and unwaived.
|
|
12.3.14
|
Inspection of records
Each Borrower will and shall procure that the Guarantor and the Collateral Owner will permit the inspection of its financial records and accounts from time to time by the Lender or its nominee.
|
|
12.3.15
|
No change in Relevant Documents
The Borrowers shall procure that, without the prior written consent of the Lender such consent not to be unreasonably withheld or unduly delayed, there shall be no termination of, alteration to any (in the Lender's opinion) material term of, or waiver of any (in the Lender's opinion) material term of, any of the Relevant Documents which are not Finance Documents.
|
|
12.3.16
|
No change in capital
Neither Borrower shall reduce its issued share capital or issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital other than pursuant to an IPO.
|
|
12.3.17
|
No securities
Neither Borrower shall acquire any shares or other securities other than US or UK Treasury bills, certificates of deposit issued by major North American or European banks and shares in newly established companies, or enter into any transaction in a derivative.
|
|
12.3.18
|
Directors
Neither Borrower shall, without the prior written consent of the Lender, permit a majority of the seats (other than vacant seats) on the board of directors of a Borrower to be held by persons other than persons who are either (a) nominated by each Borrower's then current board of directors or (b) appointed by persons as so nominated in accordance with (a) above.
|
|
12.3.19
|
Shareholders
Each Borrower shall procure that the Guarantor remains 100% shareholder of the Borrowers and the Collateral Owner.
|
|
12.3.20
|
Subordination
The Borrowers shall subordinate in priority of payment to the Indebtedness any loans made to them by their shareholders or affiliated companies of the Borrowers or the Guarantor and any other present or future indebtedness of the Borrowers.
|
|
12.3.21
|
No sharing agreement
The Borrowers shall not without the prior written consent of the Lender enter into any agreement or arrangement for sharing or pooling their Earnings.
|
|
12.4
|
Vessel undertakings
|
|
12.4.1
|
No sale of Vessel
Neither Borrower shall and shall procure that the Collateral Owner shall not sell or otherwise dispose of its Vessel or any shares in its Vessel nor agree to do so without the prior written consent of the Lender.
|
|
12.4.2
|
No chartering after Event of Default
Following the occurrence and during the continuation of an Event of Default neither Borrower shall and shall procure that the Collateral Owner shall not without the prior written consent of the Lender let its Vessel on charter or renew or extend any charter or other contract of employment of its Vessel (nor agree to do so).
|
|
12.4.3
|
No change in management
Each Borrower shall, and shall procure that the Collateral Owner shall, procure that, without the prior written consent of the Lender, there shall be no termination of, alteration to any (in the Lender's opinion) material term, or waiver of any term of, the Management Agreement in respect of its Vessel and neither Borrower shall and shall procure that the Collateral Owner shall not without the prior written consent of the Lender permit the Managers to sub-contract or delegate the commercial or technical management of its Vessel to any third party.
|
|
12.4.4
|
Registration of Vessel
Each Borrower undertakes and shall procure that the Collateral Owner undertakes to maintain the registration of its Vessel under the Marshall Islands flag for the duration of the Facility Period unless the Lender agrees otherwise in writing.
|
|
12.4.5
|
Evidence of current COFR
Each Borrower will and shall procure that the Collateral Owner will, if and for so long as its Vessel trades in the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990), obtain and retain a valid Certificate of Financial Responsibility for its Vessel under that Act, will provide the Lender with evidence of that Certificate, and will comply strictly with the requirements of that Act.
|
|
12.4.6
|
ISM Code compliance
Each Borrower will and shall procure that the Collateral Owner will:
|
|
(a)
|
procure that its Vessel remains for the duration of the Facility Period subject to a SMS;
|
|
(b)
|
maintain a valid and current SMC for its Vessel throughout the Facility Period and provide a copy to the Lender;
|
|
(c)
|
procure that the ISM Company maintains a valid and current DOC throughout the Facility Period and provide a copy to the Lender; and
|
|
(d)
|
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the SMC of its Vessel or of the DOC of the ISM Company.
|
|
12.4.7
|
ISPS Code compliance
Each Borrower will and shall procure that the Collateral Owner will:
|
|
(a)
|
for the duration of the Facility Period comply with the ISPS Code in relation to its Vessel and procure that its Vessel and the ISPS Company comply with the ISPS Code;
|
|
(b)
|
maintain a valid and current ISSC for its Vessel throughout the Facility Period and provide a copy to the Lender; and
|
|
(c)
|
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC of its Vessel.
|
|
12.4.8
|
Annex VI compliance
Each Borrower will and shall procure that the Collateral Owner will:
|
|
(a)
|
for the duration of the Facility Period comply with Annex VI in relation to its Vessel and procure that its Vessel's master and crew are familiar with, and that its Vessel complies with, Annex VI;
|
|
(b)
|
maintain a valid and current IAPPC for its Vessel throughout the Facility Period and provide a copy to the Lender; and
|
|
(c)
|
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the IAPPC of its Vessel.
|
|
12.4.9
|
No bareboat charter
Neither Borrower shall, and shall procure that the Collateral Owner shall not, without the prior written consent of the Lender, let its Vessel on any bareboat or demise charter.
|
|
12.4.10
|
Physical inspection
The Lender shall be entitled to physically inspect each Vessel, and the Borrowers shall bear the cost of such inspection not more than once every calendar year, provided that the Vessels are found to be in satisfactory condition, according to the reasonable opinion of the Lender. If the Vessels are not found to be in satisfactory condition, according to the reasonable opinion of the Lender, or there is an Event of Default which is continuing, then the Borrowers shall bear the cost of all inspections of the Vessels at any time.
|
|
12.4.11
|
International laws
The Borrowers shall and shall procure that the Collateral Owner shall at all times comply with all national and international applicable laws and conventions relating to them or to their Vessels, including without limitation the International Convention for the Safety of Life at Sea 1974 (SOLAS) and the International Convention for the Prevention of Pollution from Ships 1973, as modified by the Protocol of 1978 relating thereto and as further amended (MARPOL), and shall procure that there are on board the Vessel valid certificates showing compliance therewith.
|
|
12.4.12
|
Class
The Vessels shall be classed according to the rules of NK, to class notation NS (CSR, Bulk Carrier-Type A, BC-XII, GRAB 20, Performance Standard for Protective Coatings for Dedicated Seawater Ballast tanks in All Types of Ships and Double-side Skin Spaces of Bulk Carriers) (ESP) (IWS), MNS (M0) with a classification society acceptable to the Lender withoutany overdue recommendations and/or qualifications and/or requirements and the Borrowers shall not without the prior written consent of the Lender change the class of their Vessels.
|
|
12.4.13
|
Trading
The Borrowers shall and shall procure that the Collateral Owner shall use their respective Vessels only for civil merchant trading, for the duration of the Facility Period and for as long as any part of the Indebtedness remains outstanding.
|
|
12.4.14
|
No charter
Neither Borrower shall without the prior written consent of the Lender, such consent not to be unreasonably withheld, let its Vessel on any time charter, consecutive voyage charter or other contract of employment which (inclusive of any extension option) is capable of exceeding twelve months (12) nor employ its Vessel in any way which might impair the security created by the Finance Documents.
|
|
12.5
|
Insurances
|
|
12.5.1
|
the Borrower's Vessels remain insured against marine risks and war risks on an agreed value basis for an amount which is the greater from time to time of (a) their full market value and (b) an amount which equals one hundred and twenty per cent (120%) of the amount of the Loan then outstanding; and
|
|
12.5.2
|
the Borrower's Vessels remain entered in a protection and indemnity association which is a member of the International Group of Protection and Indemnity Association in both protection and indemnity classes, or remain otherwise insured against protection and indemnity risks and liabilities (including, without limitation, protection and indemnity war risks) at the highest limit afforded by such protection and indemnity association; and
|
|
12.5.3
|
the Borrower's Vessels remain insured against oil pollution caused by the Borrower's Vessels for such amounts as the Lender may from time to time approve unless that risk is covered to the satisfaction of the Lender by the Borrower's Vessels' protection and indemnity entry or insurance.
|
|
12.5.4
|
The Lender agrees that, if and for so long as a Borrower's Vessel may be laid up with the approval of the Lender, the relevant Borrower may at its own expense take out port risk insurance on that Borrower's Vessel in place of hull and machinery insurance.
|
|
12.5.5
|
The Borrowers undertake to place the Obligatory Insurances in such markets, in such currency, on such terms and conditions, and with such brokers, underwriters and associations as the Lender shall have previously approved in writing. The Borrowers shall not alter the terms of any of the Obligatory Insurances without the prior written consent of the Lender, and will supply the Lender from time to time on request with such information as the Lender may in its discretion require with regard to the Obligatory Insurances and the brokers, underwriters or associations through or with which the Obligatory Insurances are placed. The Borrowers shall reimburse the Lender on demand for all costs and expenses incurred by the Lender in obtaining from time to time a report on the adequacy of the Obligatory Insurances from an insurance adviser instructed by the Lender.
|
|
12.5.6
|
The Borrowers undertake duly and punctually to pay all premiums, calls and contributions, and all other sums at any time payable in connection with the Obligatory Insurances, and, at its own expense, to arrange and provide any guarantees from time to time required by any protection and indemnity or war risks association. From time to time at the Lender's request, the Borrowers will provide the Lender with evidence satisfactory to the Lender that such premiums, calls, contributions and other sums have been duly and punctually paid; that any such guarantees have been duly given; and that all declarations and notices required by the terms of any of the Obligatory Insurances to be made or given by or on behalf of the Borrowers to brokers, underwriters or associations have been duly and punctually made or given.
|
|
12.5.7
|
The Borrowers will comply in all respects with all terms and conditions of the Obligatory Insurances and will make all such declarations to brokers, underwriters and associations as may be required to enable the Borrower's Vessels to operate in accordance with the terms and conditions of the Obligatory Insurances. The Borrowers will not do, nor permit to be done, any act, nor make, nor permit to be made, any omission, as a result of which any of the Obligatory Insurances may become liable to be suspended, cancelled or avoided, or may become unenforceable, or as a result of which any sums payable under or in connection with any of the Obligatory Insurances may be reduced or become liable to be repaid or rescinded in whole or in part. In particular, but without limitation, the Borrowers will not permit the Borrower's Vessels to be employed other than in conformity with the Obligatory Insurances without first taking out additional insurance cover in respect of that employment in all respects to the satisfaction of the Lender, and the Borrowers will promptly notify the Lender of any new requirement imposed by any broker, underwriter or association in relation to any of the Obligatory Insurances.
|
|
12.5.8
|
The Borrowers will, no later than fourteen days (or, in the case of war risks, no later than seven days), before the expiry of any of the Obligatory Insurances renew them and shall immediately give the Lender such details of those renewals as the Lender may require.
|
|
12.5.9
|
The Lender shall be at liberty to take out Mortgagees Insurances in relation to the Borrower's Vessels for such amounts (but not more than 110% of the Loan) and on such terms and conditions as the Lender may from time to time decide, and the Borrowers shall from time to time on demand reimburse the Lender for all costs, premiums and expenses paid or incurred by the Borrowers in connection with any Mortgagees Insurances.
|
|
12.5.10
|
The Borrowers shall deliver to the Lender certified copies (and, if required by the Lender, the originals) of all policies, certificates of entry and other documents relating to the Insurances (including, without limitation, receipts for premiums, calls or contributions) and shall procure that letters of undertaking in such form as the Lender may approve shall be issued to the Lender by the brokers through which the Insurances are placed (or, in the
|
|
12.5.11
|
The Borrowers shall promptly provide the Lender with full information regarding any casualty or other accident or damage to the Borrower's Vessels exceeding the Threshold Amount.
|
|
12.5.12
|
The Borrowers agree that, at any time after the occurrence and during the continuation of an Event of Default, the Lender shall be entitled to collect, sue for, recover and give a good discharge for all claims in respect of any of the Insurances; to pay collecting brokers the customary commission on all sums collected in respect of those claims; to compromise all such claims or refer them to arbitration or any other form of judicial or non-judicial determination; and otherwise to deal with such claims in such manner as the Lender shall in its discretion think fit.
|
|
12.5.13
|
Whether or not an Event of Default shall have occurred or be continuing, the proceeds of any claim under any of the Insurances in respect of a Total Loss shall be paid to the Lender and applied by the Lender in accordance with Clause 10.
|
|
12.5.14
|
The Borrowers agree that, at any time after the occurrence and during the continuation of an Event of Default, the Lender shall be entitled to require payment to itself, if the Borrowers shall fail to reach agreement with any of the brokers, underwriters or associations with regard to any claim in respect of any of the Insurances (other than in respect of a Total Loss), or the
|
|
12.5.15
|
The Lender agrees that any amounts which may become due under any protection and indemnity entry or insurance shall be paid to the Borrowers to reimburse the Borrowers for, and in discharge of, the loss, damage or expense in respect of which they shall have become due, unless, at the time the amount in question becomes due, an Event of Default shall have occurred and be continuing, in which event the Lender shall be entitled to receive the amounts in question and to apply them either in reduction of the Indebtedness or, at the option of the Lender, to the discharge of the liability in respect of which they were paid.
|
|
12.5.16
|
The Borrowers shall not settle, compromise or abandon any claim under or in connection with any of the Insurances (other than a claim of less than the Threshold Amount arising other than from a Total Loss) without the prior written consent of the Lender.
|
12.5.17
|
If the Borrowers fail to effect or keep in force the Obligatory Insurances, the Lender may (but shall not be obliged to) effect and/or keep in force such insurances on the Borrower's Vessels and such entries in protection and indemnity or war risks associations as the Lender in its discretion considers desirable, and the Lender may (but shall not be obliged to) pay any unpaid premiums, calls or contributions. The Borrowers will reimburse the Lender from time to time on demand for all such premiums, calls or contributions paid by the Lender, together with interest at the default rate from the date of payment by the Lender until the date of reimbursement.
|
|
12.5.18
|
The Borrowers shall comply strictly with the requirements of any legislation relating to pollution or protection of the environment which may from time to time be applicable to the Borrower's Vessels in any jurisdiction in which the Borrower's Vessels shall trade and in particular (if the Borrower's Vessels is to trade in the United States of America and Exclusive Economic Zone (as defined in the Act)) the Borrowers shall comply strictly with the requirements of the United States Oil Pollution Act 1990 (the "
Act
"
).
Before any such trade is commenced and during the entire period during which such trade is carried on, the Borrowers shall:
|
|
(a)
|
pay any additional premiums required to maintain protection and indemnity cover for oil pollution up to the limit available to the Borrowers for the Borrower's Vessels in the market; and
|
|
(b)
|
make all such quarterly or other voyage declarations as may from time to time be required by the Borrower's Vessels' protection and indemnity association in order to maintain such cover; and
|
|
(c)
|
submit the Borrower's Vessels to such additional periodic, classification, structural or other surveys which may be required by the Borrower's Vessels' protection and indemnity insurers to maintain cover for such trade and at the Lender's request deliver to the Lender copies of reports made in respect of such surveys; and
|
|
(d)
|
implement any recommendations contained in the reports issued following the surveys referred to in Clause 12.5.18(c) within the relevant time limits, and provide evidence satisfactory to the Lender that the protection and indemnity insurers are satisfied that this has been done; and
|
|
(e)
|
in addition to the foregoing (if such trade is in the United States of America and Exclusive Economic Zone):
|
13
|
Events of Default
|
|
13.1
|
Events of Default
Each of the events or circumstances set out in this Clause 13.1 is an Event of Default.
|
|
13.1.1
|
Non-payment
The Borrowers do not pay on the due date any amount payable by them under a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
|
|
(a)
|
its failure to pay is caused by manifest administrative or technical error; and
|
|
(b)
|
payment is made within two (2) Business Days of its due date.
|
|
13.1.2
|
Other obligations
A Security Party or any other person (except the Lender) does not comply with any (in the Lender's opinion) material provision of any of the Relevant Documents to which that Security Party or person is a party (other than as referred to in Clause 13.1.1
(
Non-payment
))
.
|
|
13.1.3
|
Misrepresentation
Any representation, warranty or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be repeated.
|
|
13.1.4
|
Cross default
Any Financial Indebtedness of a Borrower in excess of an aggregate amount of $500,000 or any Financial Indebtedness of any other Security Party, or the Group in excess of an aggregate amount of $10,000,000:
|
|
(a)
|
is not paid when due or within any originally applicable grace period; or
|
|
(b)
|
is declared to be, or otherwise becomes, due and payable before its specified maturity as a result of an event of default (however described); or
|
|
(c)
|
is capable of being declared by a creditor to be due and payable before its specified maturity as a result of such an event.
|
|
13.1.5
|
Insolvency
|
|
(a)
|
A Security Party or a member of the Group is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Financial Indebtedness.
|
|
(b)
|
The value of the assets of a Security Party or the Group on a consolidated basis is less than its liabilities (taking into account contingent and prospective liabilities).
|
|
(c)
|
A moratorium is declared in respect of any Financial Indebtedness of a Security Party or a member of the Group.
|
|
13.1.6
|
Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is taken for:
|
|
(a)
|
the suspension of payments, a moratorium of any Financial Indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Security Party or a member of the Group;
|
|
(b)
|
a composition, compromise, assignment or arrangement with any creditor of a Security Party or a member of the Group;
|
|
(c)
|
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of any Security Party or a member of the Group or any of its (in the Lender's opinion) material assets; or
|
|
(d)
|
enforcement of any Encumbrance over any (in the Lender's opinion) material assets of a Security Party or a member of the Group,
|
|
13.1.7
|
Creditors' process
Any expropriation, attachment, sequestration, distress or execution affects any (in the Lender's opinion) material asset or assets of a Security Party.
|
|
13.1.8
|
Change in ownership or control of a Borrower
The Guarantor ceases to be the sole shareholder of all the issued shares in the Borrowers or the Collateral Owner.
|
|
13.1.9
|
Repudiation etc
A Security Party or any other person (except the Lender) repudiates any of the Relevant Documents to which that Security Party or person is a party or evidences an intention to do so.
|
|
13.1.10
|
Impossibility or illegality
Any event occurs which would, or would with the passage of time, render performance of any of the Relevant Documents by a Security Party or any other party to any such document impossible, unlawful or unenforceable by the Lender or a Security Party.
|
|
13.1.11
|
Conditions subsequent
Any of the conditions referred to in Clause 3.3
(
Conditions subsequent
)
is not satisfied within the time reasonably required by the Lender.
|
|
13.1.12
|
Revocation or modification of authorisation
Any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable a Security Party or any other person (except the Lender) to comply with any of its obligations under any of the Relevant Documents is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Lender considers is, or may be, prejudicial to the interests of the Lender, or ceases to remain in full force and effect.
|
|
13.1.13
|
Curtailment of business
A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business or, as a result of intervention by or under the authority of any government, the business of a Security Party is wholly or partially curtailed or suspended, or all or a substantial part of the assets or undertaking of a Security Party is seized, nationalised, expropriated or compulsorily acquired.
|
|
13.1.14
|
Reduction of capital
A Security Party reduces its authorised or issued or subscribed capital.
|
|
13.1.15
|
Loss of Vessel
A Vessel suffers a Total Loss or is otherwise destroyed or abandoned, confiscated, forfeited or condemned as a prize, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Lender as security for the payment of all or any part of the Indebtedness, except that a Total Loss (which term shall for the purposes of the remainder of this Clause 13.1.15 include an event similar to a Total Loss in relation to any other vessel), shall not be an Event of Default if:
|
|
(a)
|
that Vessel or other vessel is insured in accordance with the Security Documents; and
|
|
(b)
|
no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Lender in its discretion that any such refusal or dispute is likely to occur; and
|
|
(c)
|
payment of all insurance proceeds in respect of the Total Loss is made in full to the Lender within one hundred and twenty (120) days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Lender may in its discretion agree.
|
|
13.1.16
|
Challenge to registration
The registration of a Vessel or a Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of a Mortgage is contested.
|
|
13.1.17
|
War
The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and
|
|
13.1.18
|
Notice of termination
The Guarantor or the Collateral Owner give notice to the Lender to determine their obligations under the Guarantee or the Collateral Guarantee.
|
|
13.1.19
|
Material adverse change
Any event or series of events occurs which, in the reasonable opinion of the Lender, is likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness of a Security Party or a member of the Group.
|
|
13.1.20
|
Invalidity
At any time, any (in the Lender's opinion) material provision of a Relevant Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction.
|
|
13.1.21
|
Cross-Default with Bikini Loan Agreement
An Event of Default (as defined in the Bikini Loan Agreement) has occurred under the Bikini Loan Agreement.
|
|
13.1.22
|
Shareholding
Without the Lender's consent, any one person (or associated (in the sole opinion of the Lender) persons) - other than members of the Palios and Margaronis family and one or more underwriters temporarily holding shares of the Guarantor pursuant to an offering of such shares - acquires more than 20% of the Guarantor's issued share capital at any one time.
|
|
13.2
|
Acceleration
If an Event of Default is continuing the Lender may by notice to the Borrowers cancel any part of the Maximum Loan Amount not then advanced and:
|
|
13.2.1
|
declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, whereupon they shall become immediately due and payable; and/or
|
|
13.2.2
|
declare that the Loan is payable on demand, whereupon it shall immediately become payable on demand by the Lender.
|
14
|
Assignment and Sub-Participation
|
|
14.1
|
Lender's rights
The Lender may assign any of its rights under this Agreement or transfer by novation, without the prior consent of the Borrowers, any of its rights and obligations under this Agreement to any branch or consolidated subsidiary of Deutsche Bank Aktiengesellschaft or to any other bank or financial institution or (for the purpose of a securitisation of the Lender's rights or obligations under the Finance Documents or a similar transaction of broadly equivalent economic effect) to any special purpose vehicle, and may grant sub-participations in all or any part of the Loan.
|
|
14.2
|
Borrowers' co-operation
The Borrowers will co-operate fully with the Lender in connection with any assignment, transfer or sub-participation; will execute and procure the execution of such documents as the Lender may require in that connection; and irrevocably authorise the Lender to disclose to any proposed assignee, transferee or sub-participant (whether before or after any assignment, transfer or sub-participation and whether or not any assignment, transfer or sub-participation shall take place) all information relating to the Security Parties, the Loan, the Relevant Documents and the Vessels which the Lender may in its discretion consider necessary or desirable.
|
|
14.3
|
Rights of assignee or transferee
Any assignee or transferee of the Lender shall (unless limited by the express terms of the assignment or novation) take the full benefit of every provision of the Finance Documents benefitting the Lender.
|
|
14.4
|
No assignment or transfer by the Borrowers
Neither Borrower may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
|
|
14.5
|
Securitisation
The Lender may disclose the size and term of the Loan and the name of each of the Security Parties to any investor or potential investor in a securitisation (or similar transaction of broadly equivalent economic effect) of the Lender's rights or obligations under the Finance Documents.
|
15
|
Set-Off
|
|
15.1
|
Set-off
The Lender may set off any matured obligation due from the Borrowers under any Finance Document against any matured obligation owed by the Lender to any Borrower, regardless of the place of payment, booking branch or currency of
|
16
|
Payments
|
|
16.1
|
Payments
Each amount payable by a Borrower under a Finance Document shall be paid to such account at such bank as the Lender may from time to time direct to the Borrowers in the Currency of Account and in such funds as are customary at the time for settlement of transactions in the relevant currency in the place of payment. Payment shall be deemed to have been received by the Lender on the date on which the Lender receives authenticated advice of receipt, unless that advice is received by the Lender on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Lender in its discretion considers that it is impossible or impracticable for the Lender to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Lender on the Business Day next following the date of receipt of advice by the Lender.
|
|
16.2
|
No deductions or withholdings
Each payment (whether of principal or interest or otherwise) to be made by a Borrower under a Finance Document shall, subject only to Clause 16.3
(
Grossing-up
)
,
be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.
|
|
16.3
|
Grossing-up
If at any time any law requires (or is interpreted to require) a Borrower to make any deduction or withholding from any payment, or to change the rate or manner in which any required deduction or withholding is made, under a Finance Document, the Borrowers will promptly notify the Lender and, simultaneously with that payment, will pay to the Lender whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after the deduction or withholding, the Lender receives a net sum equal to the sum which the Lender would have received had no deduction or withholding been made.
|
|
16.4
|
Evidence of deductions
If at any time a Borrower is required by law to make any deduction or withholding from any payment to be made by it under a Finance
|
|
16.5
|
Adjustment of due dates
If any payment or transfer of funds to be made under a Finance Document, other than a payment of interest on the Loan, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment.
|
|
16.6
|
Control account
The Lender shall open and maintain on its books a control account in the names of the Borrowers showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrowers' obligations to repay the Loan and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 16.6 and those entries will, in the absence of manifest error, be conclusive and binding.
|
17
|
Notices
|
|
17.1
|
Communications in writing
Any communication to be made under or in connection with this Agreement shall be made in writing and, unless otherwise stated, may be made by fax or letter.
|
|
17.2
|
Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party to this Agreement for any communication or document to be made or delivered under or in connection with this Agreement are:
|
|
17.2.1
|
in the case of the Borrowers, at c/o Diana Shipping Services S.A., Pendelis 16, 175 64 Palaio Faliro, Athens, Greece (fax no: +30 210 9470101) marked for the attention of Mr Andreas Michalopoulos; and
|
|
17.2.2
|
in the case of the Lender, Adolphsplatz 7, 20457 Hamburg, Germany (fax no: + 49 (40) 3701 4550) marked for the attention of Dr. Dirk Niedereichholz;
|
|
17.3
|
Delivery
Any communication or document made or delivered by one party to this Agreement to the other under or in connection with this Agreement will only be effective:
|
|
17.3.1
|
if by way of fax, when received in legible form; or
|
|
17.3.2
|
if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;
|
|
17.4
|
English language
Any notice given under or in connection with this Agreement must be in English. All other documents provided under or in connection with this Agreement must be:
|
|
17.4.1
|
in English; or
|
|
17.4.2
|
if not in English, and if so required by the Lender, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
|
18
|
Partial Invalidity
|
19
|
Remedies and Waivers
|
20
|
Joint and several liability
|
|
20.1
|
Nature of liability
The representations, warranties, covenants, obligations and undertakings of the Borrowers contained in this Agreement shall be joint and several so that each Borrower shall be jointly and severally liable with all the Borrowers for all of the same and such liability shall not in any way be discharged, impaired or otherwise affected by:
|
|
20.1.1
|
any forbearance (whether as to payment or otherwise) or any time or other indulgence granted to any other Borrower or any other Security Party under or in connection with any Finance Document;
|
|
20.1.2
|
any amendment, variation, novation or replacement of any other Finance Document;
|
|
20.1.3
|
any failure of any Finance Document to be legal valid binding and enforceable in relation to any other Borrower or any other Security Party for any reason;
|
|
20.1.4
|
the winding-up or dissolution of any other Borrower or any other Security Party;
|
|
20.1.5
|
the release (whether in whole or in part) of, or the entering into of any compromise or composition with, any other Borrower or any other Security Party; or
|
|
20.1.6
|
any other act, omission, thing or circumstance which would or might, but for this provision, operate to discharge, impair or otherwise affect such liability.
|
|
20.2
|
No rights as surety
Until the Indebtedness has been unconditionally and irrevocably paid and discharged in full, each Borrower agrees that it shall not, by virtue of any payment made under this Agreement on account of the Indebtedness or by virtue of any enforcement by the Lender of its rights under this Agreement or by virtue of any relationship between, or transaction involving, the relevant Borrower and any other Borrower or any other Security Party:
|
|
20.2.1
|
exercise any rights of subrogation in relation to any rights, security or moneys held or received or receivable by the Lender or any other person; or
|
|
20.2.2
|
exercise any right of contribution from any other Borrower or any other Security Party under any Finance Document; or
|
|
20.2.3
|
exercise any right of set-off or counterclaim against any other Borrower or any other Security Party; or
|
|
20.2.4
|
receive, claim or have the benefit of any payment, distribution, security or indemnity from any other Borrower or any other Security Party; or
|
|
20.2.5
|
unless so directed by the Lender (when the relevant Borrower will prove in accordance with such directions), claim as a creditor of any other Borrower or any other Security Party in competition with the Lender
|
21
|
Miscellaneous
|
|
21.1
|
No oral variations
No variation or amendment of a Finance Document shall be valid unless in writing and signed on behalf of the Lender.
|
|
21.2
|
Further assurance
If any provision of a Finance Document shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by or on behalf of the Lender are considered by the Lender for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrowers will promptly, on demand by the Lender, execute or procure the execution of such further documents as in the opinion of the Lender are necessary to provide adequate security for the repayment of the Indebtedness.
|
|
21.3
|
Rescission of payments etc.
Any discharge, release or reassignment by the Lender of any of the security constituted by, or any of the obligations of a Security Party contained in, a Finance Document shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.
|
|
21.4
|
Certificates
Any certificate or statement signed by an authorised signatory of the Lender purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any Finance Document shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrowers of that amount.
|
|
21.5
|
Counterparts
This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.
|
|
21.6
|
Contracts (Rights of Third Parties) Act 1999
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
|
|
21.7
|
Disclosure
Each Borrower irrevocably authorises, and shall procure that each of the other Security Parties authorises, the Lender to disclose from time to time any information relating to the Security Parties, the Loan, the Earnings Accounts, the Relevant Documents and the Vessels to (a) any private, public or internationally
|
22
|
Law and Jurisdiction
|
|
22.1
|
Governing law
This Agreement and any non-contractual obligations arising from or in connection with it shall in all respects be governed by and interpreted in accordance with English law.
|
|
22.2
|
J
urisdiction
For the exclusive benefit of the Lender, the parties to this Agreement irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute (a) arising from or in connection with this Agreement or (b) relating to any non-contractual obligations arising from or in connection with this Agreement and that any proceedings may be brought in those courts.
|
|
22.3
|
Alternative jurisdictions
Nothing contained in this Clause 22 shall limit the right of the Lender to commence any proceedings against the Borrowers in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Borrowers in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.
|
|
22.4
|
Waiver of objections
Each Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause 22, and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.
|
|
22.5
|
Service of process
Without prejudice to any other mode of service allowed under any relevant law, each Borrower:
|
|
22.5.1
|
irrevocably appoints Nicolaou & Co., Chartered Accountants, 25 Heath Drive, Potters Bar, Herts, EN6 lEN, England (tel +44 17 0765 2193, Fax +44 17 0766 4340) (for the attention of: Mr. Antonis Nicolaou) as its agent
|
|
22.5.2
|
agrees that failure by a process agent to notify any Borrower of the process will not invalidate the proceedings concerned.
|
1
|
Security Parties
|
|
(a)
|
Constitutional Documents
Copies of the constitutional documents of each Security Party together with such other evidence as the Lender may reasonably require that each Security Party is duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.
|
|
(b)
|
Certificates of good standing
A certificate of good standing in respect of each Security Party (if such a certificate can be obtained).
|
|
(c)
|
Board resolutions
A copy of a resolution of the board of directors of each Security Party:
|
|
(i)
|
approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute those Relevant Documents; and
|
|
(ii)
|
authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or despatched under those documents) on its behalf.
|
|
(d)
|
Specimen signatures or copy passports
A specimen of the signature or copy of the passport of each person authorised by the resolutions referred to in paragraph (c) above.
|
|
(e)
|
Shareholder resolutions
A copy of a resolution signed by all the holders of the issued shares in each Security Party (other than the Guarantor), approving the terms of, and the transactions contemplated by, the Relevant Documents (other than the Charters) to which that Security Party is a party.
|
|
(f)
|
Officer's certificates
A certificate of a duly authorised officer of each Security Party certifying that each copy document relating to it specified in this Part I of Schedule
1
is correct, complete and in full force and effect and setting out the names of the directors, officers and shareholders of that Security Party and the
|
|
(g)
|
Evidence of registration
Where such registration is required or permitted under the laws of the relevant jurisdiction, evidence that the names of the directors, officers and shareholders of each Security Party are duly registered in the companies registry or other registry in the country of incorporation of that Security Party.
|
|
(h)
|
Powers of attorney
The notarially attested and legalised power of attorney of each Security Party under which any documents are to be executed or transactions undertaken by that Security Party.
|
2
|
Security and related documents
|
|
(a)
|
Vessel documents
Photocopies, certified as true, accurate and complete by a director or the secretary or the legal advisers of the Borrower, of:
|
|
(i)
|
any charterparty or other contract of employment of each Vessel which will be in force on the Drawdown Date including, without limitation, any Charters;
|
|
(ii)
|
the Management Agreements;
|
|
(iii)
|
evidence of the Vessels' current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990 (if applicable);
|
|
in each case together with all addenda, amendments or supplements.
|
|
(b)
|
Evidence of Borrower's title and Collateral Owner's title
Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the Vessels' current flag confirming that on the Drawdown Date (i) each Vessel is registered under the Marshall Islands flag in the ownership of the relevant Borrower and the Collateral Owner (as applicable) and (ii) the Mortgage is registered against each Borrower's Vessel with first priority or (as applicable) and the Collateral Mortgage is registered against the Collateral Owner with second priority.
|
|
(c)
|
Evidence of insurance
Evidence that the Vessels are insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Lender) the written approval of the Insurances by an insurance adviser appointed by the Lender at the cost of the Borrowers.
|
|
(d)
|
Confirmation of class
A Certificate of Confirmation of Class for hull and machinery confirming that the Vessels are classed with the highest class applicable to vessels of her type with Lloyd's Register or such other classification society as may be acceptable to the Lender free of recommendations affecting class.
|
|
(e)
|
Security Documents
The Security Documents, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.
|
|
(f)
|
Mandates
Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Account, as the Lender may require.
|
|
(g)
|
No disputes
The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.
|
|
(h)
|
Other Relevant Documents
Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule 1.
|
3
|
Legal opinions
|
|
(a)
|
If a Security Party is incorporated in a jurisdiction other than England and Wales or if any Finance Document is governed by the laws of a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Lender in each relevant jurisdiction, substantially in the form or forms provided to the Lender prior to signing this Agreement or confirmation satisfactory to the Lender that such an opinion will be given.
|
4
|
Other documents and evidence
|
|
(a)
|
Drawdown Notice
A duly completed Drawdown Notice.
|
|
(b)
|
Process agent
Evidence that any process agent referred to in Clause 22.5
(
Service of process
)
and any process agent appointed under any other Finance Document has accepted its appointment.
|
|
(c)
|
Other authorisations
A copy of any other consent, licence, approval, authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by any of the Relevant Documents or for the validity and enforceability of any of the Relevant Documents.
|
|
(d)
|
Financial statements
Copies of the Original Financial Statements of the Guarantor.
|
|
(e)
|
Fees
Evidence that the fees, costs and expenses then due from the Borrowers under Clause 8
(
Indemnities
)
and Clause 9
(
Fees
)
have been paid or will be paid by the Drawdown Date.
|
|
(f)
|
"Know your customer" documents
Such documentation and other evidence as is reasonably requested by the Lender in order for the Lender to comply with all necessary "know your customer" or similar identification procedures in relation to the transactions contemplated in the Finance Documents.
|
1
|
Evidence of Borrower's title
Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the flag stated in Recital (A) confirming that (a) the Vessels are permanently registered under that flag in the ownership of the Borrower, (b) the Mortgage has been registered with first priority against the Vessel and (c) there are no further Encumbrances registered against the Vessel.
|
2
|
Letters of undertaking
Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Lender.
|
3
|
Acknowledgements of notices
Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Lender pursuant to Part I of this Schedule
1.
|
4
|
Legal opinions
Such of the legal opinions specified in Part I of this Schedule
1
as have not already been provided to the Lender.
|
5
|
Master's receipt
The master's receipt for the Mortgage.
|
1.
|
The Mandatory Cost is an addition to the interest rate to compensate the Lender for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.
|
2
|
On the first day of each Interest Period (or as soon as possible thereafter) the Lender shall calculate, as a percentage rate, a rate (the "
Additional Cost Rate
") in accordance with the paragraphs set out below.
|
3
|
The Additional Cost Rate for the Lender if lending from an office in the euro-zone will be the percentage notified by the Lender to the Borrowers to be its reasonable determination of the cost (expressed as a percentage of the Loan) of complying with the minimum reserve requirements of the European Central Bank as a result of making the Loan from that office.
|
4
|
The Additional Cost Rate for the Lender if lending from an office in the United Kingdom will be calculated by the Lender as follows:
|
|
(a)
|
where the Loan is denominated in sterling:
|
BY + (Y- Z) + F x 0.01
|
per cent per annum
|
|
100 - (B + S)
|
|
(b)
|
where the Loan is denominated in any currency other than sterling:
|
F x 0.01
|
per cent per annum
|
|
300
|
|
where:
|
|
B
|
is the percentage of eligible liabilities (assuming these to be in excess of any stated minimum) which the Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements;
|
|
Y
|
is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an overdue amount, the additional rate of interest specified in Clause 7.8
(
Default interest
)
)
payable for the relevant Interest Period on the Loan;
|
|
S
|
is the percentage (if any) of eligible liabilities which the Lender is required from time to time to maintain as interest bearing special deposits with the Bank of England;
|
|
Z
|
is the interest rate per annum payable by the Bank of England to the Lender on special deposits; and
|
|
F
|
is the charge payable by the Lender to the Financial Services Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent provisions in any replacement regulations (with, for this purpose, the figure for the minimum amount in paragraph 2.02b or such equivalent provision deemed to be zero), expressed in pounds per £1 million of the fee base of the Lender.
|
5
|
For the purpose of this Schedule:
|
|
(a)
|
"
eligible liabilities
" and "
special depo
sits
" have the meanings given to them at the time of application of the formula by the Bank of England;
|
|
(b)
|
"
fee base
" has the meaning given to it in the Fees Regulations;
|
|
(c)
|
"
Fees Regulations
" means the regulations governing periodic fees contained in the Financial Services Authority Fees Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits.
|
6
|
In the application of the formula B, Y, S and Z are included in the formula as figures and not as percentages, e.g. if B = 0.5% and Y= 15%, BY is calculated as 0.5. x 15. Each rate calculated in accordance with the formula is, if necessary, rounded upward to four decimal places.
|
7
|
If a change in circumstances has rendered, or will render, the formula inappropriate, the Lender shall notify the Borrowers of the manner in which the Mandatory Cost will subsequently be calculated. The manner of calculation so notified by the Lender shall, in the absence of manifest error, be binding on the Borrowers.
|
To:
|
DEUTSCHE BANK AKTIENGESELLSCHAFT FILIALE
|
DEUTSCHLANDGESCHÄFT
|
|
From:
|
TUVALU SHIPPING COMPANY INC.
|
JABAT SHIPPING COMPANY INC.
|
|
[Date]
|
TUVALU SHIPPING COMPANY INC.
|
JABAT SHIPPING COMPANY INC.
|
To:
|
DEUTSCHE BANK AKTIENGESELLSCHAFT FILIALE
|
DEUTSCHLANDGESCHÄFT
|
|
From:
|
DIANA SHIPPING INC.
|
Signed:
|
|||
Director
|
Director
|
||
of
|
of
|
||
Diana Shipping Inc.
|
Diana Shipping Inc.
|
||
*
|
If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.]
|
SIGNED
by Pamagiotis Spathis
|
)
|
|
as duly authorized attorney-in-fact
|
)
|
/s/ Pamagiotis Spathis
|
for and on behalf of
|
)
|
|
TUVALU SHIPPING COMPANY INC.
|
)
|
|
in the presence of
|
)
|
|
Witness: /s/ Nigel Bowen-Morris
|
||
Name: Nigel Bowen-Morris
|
||
Address:
|
||
STEPHENSON HARDWOOD LLP
|
||
ARTISON BUILDING
|
||
2 FILELLINON STR., & AKTI MIAOULI
|
||
PIRAEUS 185 36
|
||
VAT. NO. 9 9 8 7 1 1 1 5 6
|
||
TEL. 210 42 95 160
|
||
SIGNED
by Margarita Veniou
|
)
|
|
as duly authorized attorney-in-fact
|
)
|
/s/ Margarita Veniou
|
for and on behalf of
|
)
|
|
JABAT SHIPPING COMPANY INC.
|
)
|
|
in the presence of
|
)
|
|
Witness: /s/ Nigel Bowen-Morris
|
||
Name: Nigel Bowen-Morris
|
||
Address:
|
||
STEPHENSON HARDWOOD LLP
|
||
ARTISON BUILDING
|
||
2 FILELLINON STR., & AKTI MIAOULI
|
||
PIRAEUS 185 36
|
||
VAT. NO. 9 9 8 7 1 1 1 5 6
|
||
TEL. 210 42 95 160
|
||
SIGNED
by Pinelopi Karamadouki
|
)
|
|
as duly authorized attorney-in-fact
|
)
|
/s/ Pinelopi Karamadouki
|
for and on behalf of
|
)
|
|
DEUTSCHE BANK
|
)
|
|
AKTIENGESELLSCHAFT FILIALE
|
) | |
DEUTSCHLANDGESCHÄFT
|
) | |
in the presence of
|
)
|
|
Witness: /s/ Nigel Bowen-Morris
|
||
Name: Nigel Bowen-Morris
|
||
Address:
|
||
STEPHENSON HARDWOOD LLP
|
||
ARTISON BUILDING
|
||
2 FILELLINON STR., & AKTI MIAOULI
|
||
PIRAEUS 185 36
|
||
VAT. NO. 9 9 8 7 1 1 1 5 6
|
||
TEL. 210 42 95 160
|
US$30,000,000 SECURED
LOAN AGREEMENT
Hull nos. H2528 & H2529
|
Page
|
||
1
|
Definitions and Interpretation
|
2
|
2
|
The Loan and its Purpose
|
15
|
3
|
Conditions of Utilisation
|
15
|
4
|
Advance
|
17
|
5
|
Repayment
|
17
|
6
|
Prepayment
|
18
|
7
|
Interest
|
19
|
8
|
Indemnities
|
22
|
9
|
Fees
|
27
|
10
|
Security and Application of Moneys
|
27
|
11
|
Representations
|
32
|
12
|
Undertakings and Covenants
|
35
|
13
|
Events of Default
|
45
|
14
|
Assignment and Sub-Participation
|
51
|
15
|
The Agent, the Security Agent and the Lenders
|
53
|
16
|
Set-Off
|
63
|
17
|
Payments
|
63
|
18
|
Notices
|
65
|
19
|
Partial Invalidity
|
67
|
20
|
Remedies and Waivers
|
67
|
21
|
Joint and several liability
|
67
|
22
|
Miscellaneous
|
69
|
23
|
Law and Jurisdiction
|
70
|
SCHEDULE 1: The Lenders and the Arrangers
|
72
|
|
Part I: The Lenders and the Commitments
|
72
|
|
Part II: The Arrangers
|
73
|
|
SCHEDULE 2: Conditions Precedent and Subsequent
|
74
|
|
Part I: Conditions precedent
|
74
|
|
Part II: Conditions subsequent
|
79
|
|
SCHEDULE 3: Calculation of Mandatory Cost
|
80
|
|
SCHEDULE 4: Form of Drawdown Notice
|
83
|
|
SCHEDULE 5: Form of Transfer Certificate
|
84
|
|
SCHEDULE 6: Form of Compliance Certificate
|
87
|
(1)
|
ERIKUB SHIPPING COMPANY INC. (
"
Erikub
"
)
and
WOTHO SHIPPING COMPANY INC. (
"
Wotho
"
),
each a company incorporated under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (together the "
Borrowers
"
and each a "
Borrower
"
)
jointly and severally; and
|
(2)
|
the banks listed in Schedule 1, Part I
(The Lenders and the Commitments),
each acting as lender through its office at the address indicated against its name in Schedule 1, Part I (together the "
Lenders
"
and each a "
Lender
"
);
and
|
(3)
|
the banks listed in Schedule 1, Part
II
(The Arrangers),
each acting as arranger through its office at the address indicated against its name in Schedule 1, Part II (together the "
Arrangers
"
and each an "
Arranger
"
);
and
|
(4)
|
DNB BANK ASA,
acting as bookrunner and agent through its office at 20 St. Dunstan's Hill, London EC3R 8HY, England (in that capacity the "
Agent
"
);
and
|
(5)
|
DNB BANK ASA,
acting as swap provider through its office at 20 St. Dunstan's Hill, London EC3R 8HY, England (in that capacity the "
Swap Provider
"
);
and
|
(6)
|
DNB BANK ASA,
acting as security agent through its office at 20 St. Dunstan's Hill, London EC3R 8HY, England (in that capacity the "
Security Agent
"
).
|
(A)
|
Each Borrower has agreed to purchase the relevant Vessel from the Builder on the terms of the relevant Building Contract and intends to register that Vessel under an Approved Flag.
|
(B)
|
Each of the Lenders has agreed to advance to the Borrowers on a joint and several basis its Commitment (aggregating, with all the other Commitments) up to the Maximum Loan Amount in two (2) Tranches to assist the Borrowers to finance part of the acquisition cost of the Vessels.
|
|
1.1
|
In this Agreement:
|
|
(a)
|
moneys borrowed or raised and debit balances at banks;
|
|
(c)
|
any bond, note, debenture, loan stock or similar debt instrument;
|
|
(d)
|
any finance leases and hire purchase contracts;
|
|
(e)
|
receivables sold or discounted (other than on a non-recourse basis);
|
|
(f)
|
swaps, forward exchange contracts, futures and other derivatives;
|
|
(g)
|
any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (b) to (g) above; and
|
|
(h)
|
guarantees in respect of indebtedness of any person falling within any of (a) to (h) above.
|
|
(a)
|
the applicable Screen Rate; or
|
|
(b)
|
(if no Screen Rate is available for any Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks (or by two of them if one is unable to quote) to leading banks in the London interbank market,
|
|
(a)
|
in respect of Tranche A, an amount not exceeding the lesser of (i) fifteen million Dollars ($15,000,000) and (ii) sixty per cent (60%) of the Fair Market Value of the Erikub Vessel on the basis of the valuations to be obtained by the Agent pursuant to Clause 3.1
(Conditions precedent);
and
|
|
(b)
|
in respect of Tranche B, an amount not exceeding the lesser of (i) fifteen million Dollars ($15,000,000) and (ii) sixty per cent (60%) of the Fair Market Value of the Wotho Vessel on the basis of the valuations to be obtained by the Agent pursuant to Clause 3.1
(Conditions precedent);.
|
|
(a)
|
an actual, constructive, arranged, agreed or compromised total loss of a Vessel; or
|
|
(b)
|
the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire); or
|
|
(c)
|
the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture of a Vessel (not falling within (b) above), unless that Vessel is released and returned to the possession of the relevant Borrower within thirty (30) days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question.
|
|
(a)
|
the proposed Transfer Date specified in the Transfer Certificate; and
|
|
(b)
|
the date on which the Agent executes the Transfer Certificate.
|
|
(a)
|
all benefits derived by the Security Agent from Clause 10
(Security and Application of Moneys);
and
|
|
(b)
|
all benefits arising under (including, without limitation, all proceeds of the enforcement of) each of the Security Documents,
|
Hull Number
|
Borrower
|
Scheduled delivery date
|
H2528
(the "Erikub
Vessel")
|
Erikub
|
31 October 2013
|
H2529(the
|
Wotho
|
31 December 2013
|
"Wotho Vessel")
|
|
1.2
|
In this Agreement:
|
|
1.2.1
|
words denoting the plural number include the singular and vice versa;
|
|
1.2.2
|
words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi-governmental bodies or authorities and vice versa;
|
|
1.2.3
|
references to Recitals, Clauses and Schedules are references to recitals, clauses and schedules to or of this Agreement;
|
|
1.2.4
|
references to this Agreement include the Recitals and the Schedules;
|
|
1.2.5
|
the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement;
|
|
1.2.6
|
references to any document (including, without limitation, to all or any of the Relevant Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time;
|
|
1.2.7
|
references to "
indebtedness
"
include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
|
|
1.2.8
|
references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted;
|
|
1.2.9
|
references to any Finance Party include its successors, transferees and assignees;
|
|
1.2.10
|
a time of day (unless otherwise specified) is a reference to London time.; and
|
|
1.2.11
|
words and expressions defined in the Master Agreement, unless the context otherwise requires, have the same meaning.
|
|
1.3
|
Offer letter
|
|
2.1
|
Amount
Subject to the terms of this Agreement, the Lenders agree to make available to the Borrowers a term loan not exceeding the Maximum Loan Amount.
|
|
2.2
|
Finance Parties' obligations
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other party to the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
|
|
2.3
|
Purpose
The Borrowers shall apply the Loan for the purposes referred to in Recital
(B).
|
|
2.4
|
Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed under this Agreement.
|
|
3.1
|
Conditions precedent
The Borrowers are not entitled to have a Tranche advanced unless the Agent has received all of the documents and other evidence listed in Part I of Schedule 2
(Conditions precedent),
save that references in Section 2 of that Part
I
to "the Vessel" or to any person or document relating to a Vessel shall be deemed to relate solely to any Vessel specified in the relevant Drawdown Notice or to any person or document relating to that Vessel respectively.
|
|
3.2
|
Further conditions precedent
The Lenders will only be obliged to advance a Tranche if on the date of the Drawdown Notice and on the proposed Drawdown Date:
|
|
3.2.1
|
no Default has occurred or would result from the advance of that Tranche;
|
|
3.2.2
|
the representations made by the Borrowers under Clause 11
(Representations)
are true in all material respects; and
|
|
3.2.3
|
no event or series of events has occurred which, in the opinion of the Agent, is likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness of a Security Party.
|
|
3.3
|
Tranche limit
The Lenders will only be obliged to advance a Tranche if that Tranche will not be in excess of the relevant Maximum Tranche Amount nor increase the Loan to a sum in excess of the Maximum Loan Amount.
|
|
3.4
|
Conditions subsequent
The Borrowers undertake to deliver or to cause to be delivered to the Agent on the relevant Drawdown Date or, on such other later date as the Agent may agree in its discretion, the additional documents and other evidence listed in Part II of Schedule 2
(Conditions subsequent),
save that references in that Part
II
to "the Vessel" or to any person or document relating to a Vessel shall be deemed to relate solely to any Vessel specified in the relevant Drawdown Notice or to any person or document relating to that Vessel respectively.
|
|
3.5
|
No waiver
If the Lenders in their sole discretion agree to advance a Tranche to the Borrowers before all of the documents and evidence required by Clause 3.1
(Conditions precedent)
have been delivered to or to the order of the Agent, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Agent no later than the date specified by the Agent (acting on the instructions of all the Lenders).
|
|
3.6
|
Form and content
All documents and evidence delivered to the Agent under this Clause 3 shall:
|
|
3.6.1
|
be in form and substance acceptable to the Agent; and
|
|
3.6.2
|
if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent.
|
|
4.1
|
Drawdown Request
The Borrowers may request a Tranche to be advanced in one amount on any Business Day prior to the relevant Availability Termination Date by delivering to the Agent a duly completed Drawdown Notice not fewer than six (6) Business Days before the proposed Drawdown Date and any undrawn part of a Tranche shall be cancelled and shall not be available for borrowing by the Borrowers on the earlier of (a) the relevant Drawdown Date, once the Tranche has been advanced and (b) the relevant Availability Termination Date. Any such Drawdown Notice shall be signed by authorised signatories of the Borrowers and, once delivered, is irrevocable.
|
|
4.2
|
Lenders' participation
Subject to Clauses 2
(The Loan and its Purpose)
and 3
(Conditions of Utilisation),
the Agent shall promptly notify each Lender of the receipt of a Drawdown Notice (and, in the case of The Export-Import Bank of China only, such notification shall be sent by the Agent via authenticated swift message), following which each Lender shall advance its Proportionate Share of the relevant Tranche to the Borrowers through the Agent on the relevant Drawdown Date.
|
|
5.1
|
Repayment of Tranches
The Borrowers agree to repay each Tranche to the Agent for the account of the Lenders by twenty (20) consecutive quarterly instalments, the first nineteen (19) such instalments each in the sum of two hundred and fifty thousand Dollars ($250,000) and the twentieth (20
th
) and final instalment in the sum of ten million two hundred and fifty thousand Dollars ($10,250,000) (comprising an instalment in the sum of two hundred and fifty thousand Dollars ($250,000) and a balloon payment of ten million Dollars ($10,000,000) (the "
Balloon
"
)),
the first instalment falling due on the date which is three (3) calendar months after the relevant Drawdown Date and subsequent instalments falling due at consecutive intervals of three (3) calendar months thereafter with the final instalment in respect of each Tranche, together with any other amounts then outstanding under the Indebtedness, falling due not later than the relevant Final Maturity Date.
|
|
5.2
|
Reduction of Repayment Instalments
If the aggregate amount advanced to the Borrowers under a Tranche is less than fifteen million Dollars ($15,000,000), the amount of each Repayment Instalment (including the Balloon) in respect of that Tranche shall be reduced pro rata to the amount actually advanced.
|
|
5.3
|
Reborrowing
The Borrowers may not reborrow any part of the Loan which is repaid or prepaid.
|
|
6.1
|
Illegality
If it becomes unlawful in any jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its Commitment:
|
|
6.1.1
|
that Lender shall promptly notify the Agent of that event;
|
|
6.1.2
|
upon the Agent notifying the Borrowers, such Lender's Commitment (to the extent not already advanced) will be immediately cancelled; and
|
|
6.1.3
|
the Borrowers shall repay a sum equal to such Lender's Commitment (to the extent already advanced) on the last day of the current Interest Period or, if earlier, the date specified by that Lender in the notice delivered to the Agent and notified by the Agent to the Borrowers (being no earlier than the last day of any applicable grace period permitted by law) and the remaining Repayment Instalments shall be reduced pro rata.
|
|
6.2
|
Voluntary prepayment of Tranches
The Borrowers may prepay the whole or any part of a Tranche (but, if in part, being an amount that reduces that Tranche by a minimum amount of five hundred thousand Dollars ($500,000) or an integral multiple thereof) subject as follows:
|
|
6.2.1
|
they give the Agent not less than ten (10) Business Days' prior written notice;
|
|
6.2.2
|
no prepayment may be made until after the relevant Availability Termination Date; and
|
|
6.2.3
|
any prepayment under this Clause 6.2 shall satisfy the obligations under Clause 5.1
(Repayment of Tranches)
pro rata, including the relevant Balloon.
|
|
6.3
|
Mandatory prepayment on sale or Total Loss
If a Vessel is sold by a Borrower or becomes a Total Loss, the Borrowers shall, simultaneously with any such sale or on the earlier of the date falling one hundred and twenty (120) days after any such Total Loss and the date on which the proceeds of any such Total Loss are realised, prepay the whole of the outstanding Indebtedness in respect of the Tranche for the Vessel in question.
|
|
6.4
|
Restrictions
Any notice of prepayment given under this Clause 6 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment is to be made and the amount of that prepayment.
|
|
7.1
|
Interest Periods
The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of three (3) months' duration or such other duration as may be agreed between the Borrowers and the Lenders not later than 11.00 a.m. on the third Business Day before the beginning of the Interest Period in question.
|
|
7.2
|
Beginning and end of Interest Periods
Each Interest Period shall start on the first Drawdown Date or (if a Tranche is already made) on the last day of the preceding Interest Period and end on the date which numerically corresponds to the first Drawdown Date or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month.
|
|
7.3
|
Interest Periods to meet Repayment Dates
If an Interest Period will expire after the next Repayment Date, there shall be a separate Interest Period for a part of the Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.
|
|
7.4
|
Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
|
|
7.5
|
Interest rate
During each Interest Period interest shall accrue on the Loan at the rate determined by the Agent to be the aggregate of (a) the Margin (b) LIBOR and (c) the Mandatory Cost, if any.
|
|
7.6
|
Accrual and payment of interest
Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice differs, in accordance with the prevailing market practice) and shall be paid by the Borrowers to the Agent for the account of the Lenders on the last day of each Interest Period and, if the Interest Period is longer than three (3) months, on the dates falling at three (3) monthly intervals after the first day of that Interest Period.
|
|
7.7
|
Default interest
If (a) a Borrower fails to pay any amount payable by it under a Finance Document on its due date or (b) an Event of Default has occurred and is continuing and notice has been given to the Borrowers, interest shall accrue on the overdue amount or on the amount of the Loan respectively from the due date or the date of the notice respectively up to the date of actual payment (both before and after judgment) or the date of remedy of the Event of Default to the Agent's full satisfaction at a rate which is two per cent (2%) higher than the rate which would have been payable if the overdue amount had, during the period of non-payment or Event of Default, constituted the Loan in the currency of the overdue amount for successive Interest Periods, each selected by the Agent (acting reasonably). Any interest accruing under this Clause 7.7 shall be immediately payable by that Borrower on demand by the Agent. If unpaid, any such interest will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
|
|
7.8
|
Alternative interest rate
If either (a) the applicable Screen Rate is not available for any Interest Period and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for that Interest Period or (b) a Lender or Lenders inform the Agent by written notice that the cost to it or them of obtaining matching deposits from whatever source it or they may reasonably select for any Interest Period would be in excess of LIBOR and that notice is received by the Agent no later than close of business in London on the day LIBOR is determined for that Interest Period:
|
|
7.8.1
|
the Agent shall give notice to the Lenders and the Borrowers of the occurrence of such event; and
|
|
7.8.2
|
the rate of interest on the relevant Lender's Commitment for that Interest Period shall be the rate per annum which is the sum of:
|
|
(a)
|
the Margin; and
|
|
(b)
|
the rate notified to the Agent by that Lender as soon as practicable, and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its Commitment from whatever source it may reasonably select; and
|
|
(c)
|
the Mandatory Cost, if any, applicable to that Lender's Commitment.
|
|
7.9
|
Determinations conclusive
The Agent shall promptly notify the Borrowers of the determination of a rate of interest under this Clause 7 and each such determination shall (save in the case of manifest error) be final and conclusive.
|
|
7.10
|
Interest rate hedging
Subject to the Master Agreement having been entered into between the Borrowers and the Swap Provider, the Borrowers may enter into one or more interest rate swaps, as approved by the Swap Provider, in order to fix the interest rate of the Loan for a period longer than twelve (12) months, PROVIDED THAT interest shall accrue and be due and payable on a quarterly basis and FURTHER PROVIDED THAT payment of the accrued interest for the last Interest Period does not exceed the Final Maturity Date.
|
|
8.1
|
Transaction expenses
The Borrowers will, promptly on the Agent's written demand, pay the Agent (for the account of the Finance Parties) the amount of all costs and expenses (including legal fees and Value Added Tax or any similar or replacement tax if applicable) incurred by the Finance Parties or any of them in connection with:
|
|
8.1.1
|
the negotiation, preparation, printing, execution, syndication and distribution of information under this Agreement and registration of the Finance Documents (whether or not any Finance Document is actually executed or registered and whether or not all or any part of the Loan is advanced);
|
|
8.1.2
|
any amendment, addendum or supplement to any Finance Document (whether or not completed) (other than any amendment, addendum or supplement to any Finance Document made pursuant to Clause 14
(Assignment and Sub-Participation));
|
|
8.1.3
|
any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of the Vessels obtained in accordance with Clauses 10.12.1); and
|
|
8.1.4
|
any discharge, release or reassignment of any of the Security Documents.
|
|
8.2
|
Funding costs
The Borrowers shall indemnify each Finance Party, by payment to the Agent (for the account of that Finance Party) promptly on the Agent's written demand, against all losses and costs incurred or sustained by that Finance Party if, for any reason, a Tranche is not advanced to the Borrowers after the relevant Drawdown Notice has been given to the Agent, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by a Finance Party).
|
|
8.3
|
Break Costs
The Borrowers shall pay to the Agent (for the account of each Lender) promptly on the Agent's written demand the amount of all costs, losses, premiums or penalties incurred or to be incurred by that Lender as a result of its receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 6
|
|
8.4
|
Currency indemnity
In the event of a Finance Party receiving or recovering any amount payable under a Finance Document in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrowers shall, promptly on the Agent's written demand, pay to the Agent for the account of the relevant Finance Party such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Agent on behalf of the relevant Finance Party as a separate debt under this Agreement.
|
|
8.5
|
Increased costs (subject to Clause 8.6
(Exceptions to increased costs))
If, by reason of the introduction of any law, or any change in any law, or any change in the interpretation or administration of any law, or compliance with any request or requirement from any central bank or any fiscal, monetary or other authority occurring after the date of this Agreement (including the implementation or application of or compliance with the Basel II Accord or any other Basel II Regulation or Basel III (whether such implementation, application or compliance is by any central bank or any fiscal, monetary or other authority, a Finance Party or the holding company of a Finance Party)):
|
|
8.5.1
|
a Finance Party (or the holding company of a Finance Party) shall be subject to any Tax with respect to payment of all or any part of the Indebtedness (other than Tax on overall net income); or
|
|
8.5.2
|
the basis of Taxation of payments to a Finance Party in respect of all or any part of the Indebtedness shall be changed; or
|
|
8.5.3
|
any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of a Finance Party; or
|
|
8.5.4
|
the manner in which a Finance Party allocates capital resources to its obligations under this Agreement and/or the Master Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which a Finance Party is required or requested to maintain shall be affected; or
|
|
8.5.5
|
there is imposed on a Finance Party (or on the holding company of a Finance Party) any other condition in relation to the Indebtedness or the Finance Documents;
|
|
8.6
|
Exceptions to increased costs
Clause 8.5
(Increased costs)
does not apply to the extent any additional cost or reduced return referred to in that Clause is:
|
|
8.6.1
|
compensated for by a payment made under Clause 8.10
(Taxes);
or
|
|
8.6.2
|
compensated for by a payment made under Clause 17.3
(Grossing-up);
or
|
|
8.6.3
|
compensated for by the payment of the Mandatory Cost; or
|
|
8.6.4
|
attributable to the wilful breach by the relevant Finance Party (or the holding company of that Finance Party) of any law or regulation.
|
|
8.7
|
Events of Default
The Borrowers shall indemnify each Finance Party from time to time, by payment to the Agent (for the account of that Finance Party) promptly on the Agent's written demand, against all losses, costs, expenses and liabilities incurred or sustained by that Finance Party as a consequence of any Event of Default.
|
|
8.8
|
Enforcement costs
The Borrowers shall pay to the Agent (for the account of each Finance Party) promptly on the Agent's written demand the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the
|
|
8.9
|
Other costs
The Borrowers shall pay to the Agent (for the account of each Finance Party) promptly on the Agent's written demand the amount of all sums which that Finance Party may pay or become actually or contingently liable for on account of a Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which that Finance Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by that Finance Party in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which that Finance Party may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.
|
|
8.10
|
Taxes
The Borrowers shall pay all Taxes to which all or any part of the Indebtedness or any Finance Document may be at any time subject (other than Tax on a Finance Party's overall net income) and shall indemnify the Finance Parties, by payment to the Agent (for the account of the Finance Parties) promptly on the Agent's written demand, against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.
|
|
8.11
|
Mitigation
If circumstances arise which would, or would upon the giving of notice, result in an increased payment required to be made by the Borrowers under Clause 8.5
(Increased costs (subject to Clause 8.6 (Exceptions to increased costs))
or Clause 17.3
(Grossing-up)
then, without in any way limiting the obligations of the Borrowers under either of these clauses, the relevant Finance Party shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the other Finance Documents to another of its offices not affected by the circumstances which gave rise to such increased payment
|
|
9.1
|
Commitment fee
The Borrowers shall pay to the Agent (for the account of the Lenders in proportion to their Commitments) a non-refundable fee computed at the rate of zero point twenty per cent (0.20%) per annum on the undrawn Commitment from time to time from the date of this Agreement until the earlier of the Drawdown Date in respect of the last Tranche to be advanced and the last Availability Termination Date. The accrued commitment fee is payable on the last day of each successive period of three (3) months from the date of this Agreement and on the last Availability Termination Date.
|
|
9.2
|
Flat fee
The Borrowers shall pay to the Agent for further distribution between the Lenders a non-refundable flat fee computed at the rate of zero point thirty per cent (0.30%) on the Maximum Loan Amount payable on the date of this Agreement and regardless of whether or not the Loan is advanced or cancelled.
|
|
9.3
|
Agency fee
The Borrowers shall pay to the Agent (for its own account) a non
-
refundable agency fee in the amount of ten thousand Dollars ($10,000) payable on the first Drawdown Date and on each anniversary thereafter until expiry of the Facility Period.
|
|
10.1
|
Security Documents
As security for the payment of the Indebtedness, the Borrowers shall execute and deliver to the Security Agent or cause to be executed and delivered to the Security Agent the following documents in such forms and containing such terms and conditions as the Security Agent shall require:
|
|
10.1.1
|
first preferred or statutory (as the case may be) cross collaterized mortgages over the Vessels together with collateral deeds of covenants (if applicable);
|
|
10.1.2
|
first priority deeds of assignment of the Insurances, Earnings and Requisition Compensation of the Vessels;
|
|
10.1.3
|
a guarantee and indemnity from the Guarantor;
|
|
10.1.4
|
first priority deeds of charge over the Earnings Accounts and all amounts from time to time standing to the credit of the Earnings Accounts;
|
|
10.1.5
|
first priority negative pledges of all the issued shares of the Borrowers from the Pledgor;
|
|
10.1.6
|
a first priority deed of charge over the Master Agreement Benefits; and
|
|
10.1.7
|
letters of undertaking and subordination (including an assignment of Insurances) in respect of the Vessels from the Managers.
|
|
10.2
|
Earnings Accounts
The Borrowers shall maintain the Earnings Accounts with the Security Agent for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.
|
|
10.3
|
Earnings
The Borrowers shall procure that all Earnings and any Requisition Compensation are credited to the relevant Earnings Account.
|
|
10.4
|
Application of Earnings Accounts
The Borrowers shall procure that there is transferred from the relevant Earnings Account to the Agent:
|
|
10.4.1
|
on each Repayment Date in respect of a Tranche, the amount of the Repayment Instalment then due; and
|
|
10.4.2
|
on each Interest Payment Date, the amount of interest then due,
|
|
10.5
|
Borrowers' obligations not affected
If for any reason the amount standing to the credit of the relevant Earnings Account is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrowers' obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.
|
|
10.6
|
Withdrawals
Unless and until a Default occurs and the Agent shall direct to the contrary, the Borrowers may withdraw sums from their respective Earnings Account provided however that Clause 12.2.1 is complied with at any relevant time during the Facility Period.
|
|
10.7
|
Relocation of Earnings Accounts
At any time following the occurrence and during the continuation of a Default, the Security Agent may without the consent of the Borrowers relocate either of the Earnings Accounts to any other branch of the
|
|
10.8
|
Application after acceleration
From and after the giving of notice to the Borrowers by the Agent under Clause 13.2
(Acceleration),
the Borrowers shall procure that all sums from time to time standing to the credit of either of the Earnings Accounts are immediately transferred to the Security Agent for application in accordance with Clause 10.9
(Application of moneys by Security Agent)
and the Borrowers irrevocably authorise the Security Agent to make those transfers.
|
|
10.9
|
Application of moneys by Security Agent
The Borrowers and the Finance Parties irrevocably authorise the Security Agent to apply all moneys which it receives and is entitled to receive:
|
|
10.9.1
|
pursuant to a sale or other disposition of a Vessel or any right, title or interest in a Vessel; or
|
|
10.9.2
|
by way of payment of any sum in respect of the Insurances, Earnings or Requisition Compensation; or
|
|
10.9.3
|
by way of transfer of any sum from either of the Earnings Accounts; or
|
|
10.9.4
|
otherwise under or in connection with any Security Document,
|
|
10.9.5
|
first, any unpaid fees, costs, expenses and default interest due to the Agent and the Security Agent under all or any of the Finance Documents, such application to be apportioned between the Agent and the Security Agent pro rata to the aggregate amount of such items due to each of them;
|
|
10.9.6
|
second, any unpaid fees, costs, expenses (including any sums paid by the Lenders under Clause 15.12
(Indemnity))
of the Lenders due under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate
amount
of such items due to each of them;
|
|
10.9.7
|
third, any accrued but unpaid default interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such default interest due to each of them;
|
|
10.9.8
|
fourth, any other accrued but unpaid interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such interest due to each of them;
|
|
10.9.9
|
fifth, any principal of the Loan due and payable but unpaid under this Agreement, such application to be apportioned between the Lenders pro rata to each Lender's Proportionate Share; and
|
|
10.9.10
|
sixth, any other sum due and payable to any Finance Party but unpaid under all or any of the Finance Documents, such application to be apportioned between the Finance Parties pro rata to the aggregate amount of any such sum due to each of them;
|
|
10.10
|
Retention on account
Moneys to be applied by the Security Agent under Clause 10.9
(Application of moneys by Security Agent)
shall be applied as soon as practicable after the relevant moneys are received by it, or otherwise become available to it, save that (without prejudice to any other provisions contained in any of the Security Documents) the Security Agent or any receiver or administrator may retain any such moneys by crediting them to a suspense account for so long and in such manner as the Security Agent or such receiver or administrator may from time to time determine with a view to preserving the rights of the Finance Parties or any of them to prove for the whole of the Indebtedness (or any relevant part) against the Borrowers or any of them or any other person liable.
|
|
10.11
|
Additional security
If at any time during the Facility Period the aggregate of the Fair Market Value of the Vessels and the aggregate minimum credit balances maintained by the Borrowers in the Earnings Accounts in accordance with Clause 12.2.1 and the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers
|
|
10.11.1
|
pay to the Security Agent or to its nominee a cash deposit in the amount of the shortfall to be held in the Earnings Accounts and secured in favour of the Security Agent as additional security for the payment of the Indebtedness; or
|
|
10.11.2
|
give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its discretion; or
|
|
10.11.3
|
prepay the Loan in the amount of the shortfall.
|
|
10.12
|
Fair Market Value determination
|
|
10.12.1
|
For the purposes of Clause
10.11
(Additional Security),
the aggregate fair market value of the Vessels shall be determined by a valuation, or if so required by the Agent at its discretion by the average of two (2) valuations (together the "
Initial Valuations
"
),
each such valuation to be obtained by one (1) or, two (2) (as the case may be) Approved Brokers nominated by the Borrowers approved by the Lenders and appointed by, and reporting to the Agent, each such valuation to be addressed to the Agent and made on the basis of a charter-free sale for prompt delivery for cash at arm's length, on normal commercial terms as between a willing buyer and a willing seller. In the event, however, that the Agent obtains two (2) Initial Valuations and the difference between the Initial Valuations if in range, in respect to the lowest value of the Vessels, determined by each of them is more than ten per cent (10%), the Agent shall obtain a third valuation from another independent and reputable shipbroker appointed by, and reporting to the Agent (the "
Third
|
|
10.12.2
|
For the purposes of Clause 3.1
(Conditions precedent),
the Fair Market Value of a Vessel shall be determined in accordance with the valuation method and on the terms and conditions as set out in Clause 10.12.1.
|
|
11.1
|
Representations
The Borrowers make the representations and warranties set out in this Clause 11.1 to each Finance Party on the date of this Agreement.
|
|
11.1.1
|
Status
Each Security Party (which is not an individual) is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation and has the power to own its assets and carry on its business as it is being conducted.
|
|
11.1.2
|
Binding obligations
The obligations expressed to be assumed by each Security Party in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations.
|
|
11.1.3
|
Non-conflict with other obligations
The entry into and performance by each Security Party of, and the transactions contemplated by, the Finance Documents do not conflict with:
|
|
(a)
|
any law or regulation applicable to that Security Party;
|
|
(b)
|
the constitutional documents of that Security Party; or
|
|
(c)
|
any document binding on that Security Party or any of its assets,
|
|
11.1.4
|
Power and authority
Each Security Party has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.
|
|
11.1.5
|
Validity and admissibility in evidence
All consents, licences, approvals, authorisations, filings and registrations required or desirable:
|
|
(a)
|
to enable each Security Party lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party or to enable each Finance Party to enforce and exercise all its rights under the Finance Documents; and
|
|
(b)
|
to make the Finance Documents to which any Security Party is a party admissible in evidence in its jurisdiction of incorporation,
|
|
11.1.6
|
Governing law and enforcement
The choice of a particular law as the governing law of any Finance Document expressed to be governed by that law will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party, and any judgment obtained in the jurisdiction submitted to in any Finance Document will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party.
|
|
11.1.7
|
Deduction of Tax
No Security Party is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document.
|
|
11.1.8
|
No filing or stamp taxes
Under the law of jurisdiction of incorporation of each relevant Security Party it is not necessary that the Finance Documents
|
|
11.1.9
|
No default
No Event of Default is continuing or might be expected to result from the advance of a Tranche.
|
|
11.1.10
|
No misleading information
Any factual information provided by any Security Party to any Finance Party was true and accurate in all material respects as at the date it was provided.
|
|
11.1.11
|
Pari passu ranking
The payment obligations of each Security Party under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
|
|
11.1.12
|
No proceedings pending or threatened
No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have been started or (to the best of the Borrowers' knowledge threatened) which, if adversely determined, might reasonably be expected to have a materially adverse effect on the business, assets, financial condition or credit worthiness of any Security Party.
|
|
11.1.13
|
Disclosure of material facts
The Borrowers are not aware of any material facts or circumstances which have not been disclosed to the Agent and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrowers.
|
|
11.1.14
|
Completeness of Relevant Documents
The copies of any Relevant Documents provided or to be provided by the Borrowers to the Agent in accordance with Clause 3
(Conditions of Utilisation)
are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions,
|
|
11.1.15
|
Environmental compliance
The Borrowers comply with all applicable Environmental Laws, all required governmental approvals and all requirements relating to the establishment of financial responsibility.
|
|
11.2
|
Repetition
Each representation and warranty in Clause 11.1
(Representations)
is deemed to be repeated by the Borrowers by reference to the facts and circumstances then existing on the date of each Drawdown Notice and the first day of each Interest Period.
|
|
12.1
|
Information and Undertakings
|
|
12.1.1
|
Financial statements
The Borrowers procure that the Guarantor shall supply to the Agent as soon as the same become available, but in any event within one hundred and eighty (180) days after the end of each of the Guarantor's financial years, the Group's annual audited consolidated financial statements for that financial year, in each case together with a Compliance Certificate, signed by the Chief Finance Officer of the Guarantor, setting out (in reasonable detail) computations as to compliance with Clause 12.2
(Financial covenants)
and Clause 10.11
(Additional Security)
as at the date as at which those financial statements were drawn up.
|
|
12.1.2
|
Requirements as to financial statements
Each set of financial statements delivered by the Guarantor under Clause 12.1.1
(Financial statements):
|
|
(a)
|
shall be certified by a director of the Guarantor as fairly representing its financial condition as at the date as at which those financial statements were drawn up; and
|
|
(b)
|
shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Guarantor notifies the Agent that there has been a change in GAAP, the accounting practices or reference periods and the Guarantor's auditors deliver to the Agent:
|
|
(i)
|
a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and
|
|
(ii)
|
sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to make an accurate comparison between the financial position indicated in those financial statements and that indicated in the Original Financial Statements.
|
|
12.1.3
|
Interim financial statements
The Borrowers shall procure that the Guarantor shall supply to the Agent as soon as the same become available, but in any event within ninety (90) days after the end of each quarter during each of the Guarantor's financial years, the Group's consolidated unaudited quarterly financial statements for that quarter, in each case together with a Compliance Certificate, signed by the Chief Finance Officer of the Guarantor, setting out (in reasonable detail) computations as to compliance with Clause 12.2
(Financial covenants)
and Clause 10.11
(Additional Security)
as at the date as at which those financial statements were drawn up.
|
|
12.1.4
|
Information: miscellaneous
The Borrowers shall, and shall procure that the Guarantor shall supply to the Agent:
|
|
(a)
|
all documents dispatched by a Borrower or the Guarantor to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;
|
|
(b)
|
promptly upon becoming aware of them, details of any material litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which might, if adversely determined, have a materially adverse effect on the business, assets, financial condition or credit worthiness of that Security Party; and
|
|
(c)
|
promptly, such further information regarding the financial condition, business and operations of any Security Party as the Agent may reasonably request and which can be provided to the Agent without breaching any rules of confidentiality including, without limitation, cash flow analyses and details of the operating costs of any Vessel.
|
|
12.1.5
|
Notification of default
|
|
(a)
|
The Borrowers shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.
|
|
(b)
|
Promptly upon a request by the Agent, each Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
|
|
12.1.6
|
"
Know your customer
"
checks
If:
|
|
(a)
|
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
|
|
(b)
|
any change in the status of a Borrower after the date of this Agreement; or
|
|
(c)
|
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
|
|
12.2
|
Financial covenants
|
|
12.2.1
|
Each Borrower shall, from the relevant Drawdown Date and throughout the Facility Period, maintain in the relevant Earnings Account a credit balance of not less than two hundred thousand Dollars ($200,000) for its Vessel.
|
|
12.2.2
|
The Borrowers shall procure that the Guarantor shall (A) maintain from the first Drawdown Date and throughout the Facility Period Cash of not less than five hundred thousand Dollars ($500,000) for each Fleet Vessel and
(B)
maintain the following financial ratios on a consolidated basis throughout the Facility Period:
|
|
12.2.2.1
|
Adjusted Net Worth shall not be less than one hundred and fifty million Dollars ($150,000,000); and
|
|
12.2.2.1
|
Adjusted Net Worth shall exceed twenty five per cent (25%) of the Total Assets.
|
|
(a)
|
any Financial Indebtedness of the debtor;
|
|
(b)
|
liability of any credit to the debtor from a supplier of goods or services or under any instalment purchase or payment plan or other similar arrangement;
|
|
(c)
|
contingent liabilities of the debtor (including without limitation any taxes or other payments under dispute) which have been or, under GAAP, should be recorded in the notes to the Accounting Information;
|
|
(d)
|
any deferred tax of the debtor; and
|
|
(e)
|
liability under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person who is not a member of the Group which would fall within (a) to (d) above if the references to the debtor referred to the other person.
|
|
12.2.3
|
General undertakings
|
|
12.2.4
|
Authorisations
The Borrowers shall promptly:
|
|
(a)
|
obtain, comply with and do all that is necessary to maintain in full force and effect; and
|
|
(b)
|
supply certified copies to the Agent of,
|
|
12.2.5
|
Compliance
with laws
Each Borrower shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.
|
|
12.2.6
|
Conduct of business
Each Borrower shall carry on and conduct its business in a proper and efficient manner, file all requisite tax returns and pay all tax which becomes due and payable (except where contested in good faith).
|
|
12.2.7
|
Evidence of good standing
The Borrowers will from time to time if requested by the Agent provide the Agent with evidence in form and substance satisfactory to the Agent that the Security Parties and all corporate shareholders of any Security Party (other than the Guarantor) remain in good standing.
|
|
12.2.8
|
Negative pledge and no disposals
Neither Borrower shall without the prior written consent of the Agent create nor permit to subsist any Encumbrance or other third party rights (other than a Permitted Encumbrance) over any of its present or future assets or undertaking nor dispose of any of those assets or of all or part of that undertaking.
|
|
12.2.9
|
Merger
Neither Borrower nor the Guarantor shall without the prior written consent of the Agent enter into any amalgamation, demerger, merger or corporate reconstruction.
|
|
12.2.10
|
Change of business or corporate structure
Neither Borrower nor the Guarantor shall without the prior written consent of the Lenders make any substantial change to (a) the general nature of its business from that carried on at the date of this Agreement or (b) the corporate structure of the Borrowers as at the date of this Agreement.
|
|
12.2.11
|
No other business
Neither Borrower shall without the prior written consent of the Agent engage in any business other than the ownership, operation, chartering and management of its Vessel.
|
|
12.2.12
|
No borrowings
Neither Borrower shall without the prior written consent of the Agent borrow any money (except for the Loan and normal trade credit in the ordinary course of business) nor incur any obligations under leases.
|
|
12.2.13
|
Subordination of shareholder loans
The Borrowers shall procure that any shareholder loans and/or inter company borrowings or other indebtedness permitted by the terms of this Agreement are fully subordinated to the
|
|
12.2.14
|
No substantial liabilities
Except in the ordinary course of business, no Borrower shall without the prior written consent of the Agent incur any liability to any third party which is in the Agent's opinion of a substantial ature.
|
|
12.2.15
|
No loans or other financial commitments
Neither Borrower shall without the prior written consent of the Agent make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person except for loans made or guarantees or indemnities from time to time required by any protection and indemnity or war risks association in the ordinary course of business in connection with the chartering, operation or repair of its Vessel.
|
|
12.2.16
|
No dividends or reduction of share capital
Neither Borrower shall without the prior written consent of the Agent (A) pay or declare any dividends or make any other distributions to shareholders provided however that a Borrower may pay or declare dividends or make distributions to the Guarantor if no Event of Default has occurred and is continuing at the time of such payment or declaration or distribution or would occur as a result thereof or
(B)
issue any new shares or (C) reduce its share capital as at the date of this Agreement.
|
|
12.2.17
|
Inspection of records
Each Borrower will permit the inspection of its financial records and accounts from time to time by the Agent or its nominee.
|
|
12.2.18
|
Transactions with affiliated companies
Neither Borrower shall without the prior written consent of the Agent, enter into any transactions (except on arm's length terms) with any affiliated companies.
|
|
12.2.19
|
No change in Relevant Documents
The Borrowers shall procure that, without the prior written consent of the Agent, there shall be no termination
|
|
12.2.20
|
No change in ownership and control
Each Borrower undertakes that its ownership shall remain unchanged at all times throughout the Facility Period and shall not permit any change thereof without the prior written consent of the Agent.
|
|
12.2.21
|
Ownership of the Guarantor
The Borrowers shall procure that, at all times during the Facility Period, the Shareholder shall (a) remain the major legal owner or ultimate beneficial owner of the Guarantor (excluding any financial institution acting as a passive investor) and (b) hold an executive position within the management structure of the Guarantor.
|
|
12.2.22
|
No Subsidiaries
Neither Borrower shall without the prior written consent of the Agent form or acquire any Subsidiaries.
|
|
12.2.23
|
No dealings with Master Agreement
N
either Borrower shall assign, novate or encumber or in any other way transfer any of its rights or obligations under the Master Agreement, nor enter into any interest rate exchange or hedging agreement with anyone other than the Swap Provider.
|
|
12.3
|
Vessel undertakings
|
|
12.3.1
|
No sale of Vessel
Neither Borrower shall sell or otherwise dispose of its Vessel or any shares in its Vessel nor agree to do so without the prior written consent of the Agent.
|
|
12.3.2
|
No chartering after Event of Default
Following the occurrence and during the continuation of an Event of Default neither Borrower shall without the prior written consent of the Agent let its Vessel on charter or renew or extend any charter or other contract of employment of its Vessel (nor agree to do so).
|
|
12.3.3
|
No change in management
Each Borrower shall procure that, without the prior written consent of the Lenders, there shall be no termination of, alteration to, or waiver of any material, in the Agent's opinion, term of, the Management Agreement in respect of its Vessel and neither Borrower shall without the prior written consent of the Agent permit the Managers to sub
-
|
|
12.3.4
|
Registration of Vessel
Each Borrower undertakes to maintain the registration of its Vessel under an Approved Flag for the duration of the Facility Period and shall not change its Vessel's flag unless with the Lenders' prior written consent (such consent not to be unreasonably withheld).
|
|
12.3.5
|
Evidence of current COFR
Each Borrower will, if and for so long as its Vessel trades in the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990), obtain and retain a valid Certificate of Financial Responsibility for its Vessel under that Act, will provide the Agent with evidence of that Certificate, and will comply strictly with the requirements of that Act.
|
|
12.3.6
|
ISM Code compliance
Each Borrower will:
|
|
(a)
|
procure that its Vessel remains for the duration of the Facility Period subject to a SMS;
|
|
(b)
|
maintain a valid and current SMC for its Vessel throughout the Facility Period and provide a copy to the Agent;
|
|
(c)
|
procure that the ISM Company maintains a valid and current DOC throughout the Facility Period and provide a copy to the Agent; and
|
|
(d)
|
immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the SMC of its Vessel or of the DOC of the ISM Company.
|
|
12.3.7
|
ISPS Code compliance
Each Borrower will:
|
|
(a)
|
for the duration of the Facility Period comply with the ISPS Code in relation to its Vessel and procure that its Vessel and the ISPS Company comply with the ISPS Code;
|
|
(b)
|
maintain a valid and current ISSC for its Vessel throughout the Facility Period and provide a copy to the Agent; and
|
|
(c)
|
immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC of its Vessel.
|
|
12.3.8
|
Annex VI compliance
Each Borrower will:
|
|
(a)
|
for the duration of the Facility Period comply with Annex VI in relation to its Vessel and procure that its Vessel's master and crew are familiar with, and that its Vessel complies with, Annex VI;
|
|
(b)
|
maintain a valid and current IAPPC
for
its Vessel throughout the Facility Period and provide a copy to the Agent; and
|
|
(c)
|
immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the IAPPC of its Vessel.
|
|
12.3.9
|
Class
Each Vessel shall be classed with a classification society acceptable to the Lenders and, commencing from the relevant Delivery Date shall be classed with China Classification Society (CCS) on a dual basis with the highest class without any material overdue recommendations or adverse notations and neither Borrower shall without the prior written consent of the Lenders change the class of its Vessel.
|
|
12.3.10
|
Environmental Laws
All Environmental Laws applicable to a Vessel shall be complied with in all material respects and all material consents, licenses and approvals required under such Environmental Laws shall be obtained and complied with in all material respects.
|
|
13.1
|
Events of Default
Each of the events or circumstances set out in this Clause 13.1 is an Event of Default.
|
|
13.1.1
|
Non-payment
The Borrowers do not pay on the due date any amount payable by them under a Finance Document at the place at and in the currency in which it is expressed to be payable.
|
|
13.1.2
|
Other obligations
A Security Party or any other person (except a Finance Party) does not comply with any provision of any of the Relevant Documents to which that Security Party or person is a party (other than as referred to in Clause 13.1.1
(Non-payment)).
|
|
(a)
|
the failure to comply is capable of remedy and does not relate either to the Insurances or to compliance with Clause 10.11
(Additional security)
and is remedied within ten (10) Business Days of the Agent giving notice to the Borrowers or the Borrowers becoming aware of the failure to comply; or
|
|
(b)
|
the failure to comply relates to a Charter and, if it is capable of remedy is remedied within seven (7) Business Days of the Borrowers becoming aware of such failure to comply.
|
|
13.1.3
|
Misrepresentation
Any representation, warranty or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be repeated.
|
|
13.1.4
|
Cross default
Any Financial Indebtedness of any Security Party or any other member of the Group is not paid when due or any Financial Indebtedness of any Security Party or any other member of the Group becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party or any other member of the Group of a voluntary right of prepayment), or any creditor of any Security Party or any other member of the Group becomes entitled to declare any such Financial Indebtedness due and payable or any facility or commitment available to any Security Party or other member of the Group relating to Financial Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party or any other member of the Group shall have
|
|
13.1.5
|
Insolvency
|
|
(a)
|
A Security Party is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.
|
|
(b)
|
The value of the assets of a Security Party is less than its liabilities (taking into account contingent and prospective liabilities).
|
|
(c)
|
A moratorium is declared in respect of any indebtedness of a Security Party.
|
|
13.1.6
|
Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is taken for:
|
|
(a)
|
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Security Party;
|
|
(b)
|
a composition, compromise, assignment or arrangement with any creditor of a Security Party;
|
|
(c)
|
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of any Security Party or any of its assets; or
|
|
(d)
|
enforcement of any Encumbrance over any assets of a Security Party,
|
|
13.1.7
|
Creditors' process
Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Security Party and is not discharged within seven (7) days.
|
|
13.1.8
|
Change in ownership of a Borrower or the Guarantor
(a) There is any change in the ownership of a Borrower or (b) the Shareholder ceases to be the major legal owner or ultimate beneficial owner of the Guarantor (excluding any financial institution acting as a passive investor), from that advised to the Agent by the Borrowers at the date of this Agreement.
|
|
13.1.9
|
Repudiation etc
A Security Party or any other person (except a Finance Party) repudiates any of the Relevant Documents to which that Security Party or person is a party or evidences an intention to do so.
|
|
13.1.10
|
Impossibility or illegality
Any event occurs which would, or would with the passage of time, render performance of any of the Relevant Documents by a Security Party or any other party to any such document impossible, unlawful or unenforceable by a Finance Party or a Security Party.
|
|
13.1.11
|
Conditions subsequent
Any of the conditions referred to in Clause 3.4
(Conditions subsequent)
is not satisfied within the time reasonably required by the Agent.
|
|
13.1.12
|
Revocation or modification of authorization
Any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable a Security Party or any other person (except a Finance Party) to comply with any of its obligations under any of the Relevant Documents is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be, prejudicial to the interests of a Finance Party, or ceases to remain in full force and effect.
|
|
13.1.13
|
Curtailment
of business
A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business or, as a result of intervention by or under the authority of any government, the business of a Security Party is wholly or partially curtailed or suspended, or all or a substantial part of the assets or undertaking of a Security Party is seized, nationalised, expropriated or compulsorily acquired.
|
|
13.1.14
|
Reduction
of capital
A Security Party reduces its authorised or issued or subscribed capital.
|
|
13.1.15
|
Loss of Vessel
A Vessel suffers a Total Loss or is otherwise destroyed or abandoned, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Security Agent as security for the
|
|
(a)
|
that Vessel or other vessel is insured in accordance with the Security Documents and a claim for Total Loss is available under the terms of the relevant insurances; and
|
|
(b)
|
no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Agent in its discretion that any such refusal or dispute is likely to occur; and
|
|
(c)
|
payment of all insurance proceeds in respect of the Total Loss is made in full to the Security Agent within one hundred and twenty (120) days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Agent may in its discretion agree.
|
|
13.1.16
|
Challenge to registration
The registration of a Vessel or a Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of a Mortgage is contested.
|
|
13.1.17
|
War
The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Agent in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced.
|
|
13.1.18
|
Master Agreement termination
A notice is given by the Swap Provider under section 6(a) of the Master Agreement, or by any person under section 6(b)(iv) of the Master Agreement, in either case designating an Early Termination Date for the purpose of the Master Agreement, or the Master Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect.
|
|
13.1.19
|
Notice of termination
The Guarantor gives notice to the Security Agent to determine its obligations under the Guarantee.
|
|
13.1.20
|
Material adverse change
Any event or series of events occurs which, in the opinion of the Agent, is likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness of a Security Party.
|
|
13.1.21
|
Arrest
A Vessel is arrested or detained or seized by any person other than any government or persons acting on behalf of any government and not released and returned to the possession of the relevant Borrower within fifteen (15) Business Days after the arrest or detention or seizure in question.
|
|
13.2
|
Acceleration
If an Event of Default is continuing the Agent may by notice to the Borrowers cancel any part of the Maximum Loan Amount not then advanced and:
|
|
13.2.1
|
declare that the Loan, together with accrued interest,
and
all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, whereupon they shall become immediately due and payable; and/or
|
|
13.2.2
|
declare that the Loan is payable on demand, whereupon it shall immediately become payable on demand by the Agent.
|
|
14.1
|
Lenders' rights
A Lender may (A) without the Borrowers' prior written consent and so long as such assignment does not result in any additional cost to the Borrowers, assign any of its rights under this Agreement to any of its branches, wholly owned subsidiaries and affiliates or
(B)
subject to the Borrowers' prior written consent (such consent not to be unreasonably withheld or delayed), assign any of its rights under this Agreement or transfer by novation any of its rights and obligations under this Agreement to any other bank or financial institution or, in each case (for the purpose of a securitisation of that Lender's rights or obligations under the Finance Documents or a similar transaction of broadly equivalent economic effect) to any special purpose vehicle, and may grant sub-participations in all or any part of its Commitment.
|
|
14.2
|
Borrowers' co-operation
The Borrowers will co-operate fully with a Lender in connection with any assignment, transfer or sub-participation by that Lender; will execute and procure the execution of such documents as that Lender may require in
|
|
14.3
|
Rights of assignee
Any assignee of a Lender shall (unless limited by the express terms of the assignment) take the full benefit of every provision of the Finance Documents benefitting that Lender PROVIDED THAT an assignment will only be effective on notification by the Agent to that Lender and the assignee that the Agent is satisfied it has complied with all necessary "Know your customer" or other similar checks under all applicable laws and regulations in relation to the assignment to the assignee.
|
|
14.4
|
Transfer Certificates
If a Lender wishes to transfer any of its rights and obligations under or pursuant to this Agreement, it may do so by delivering to the Agent a duly completed Transfer Certificate, in which event on the Transfer Date:
|
|
14.4.1
|
to the extent that that Lender seeks to transfer its rights and obligations, the Borrowers (on the one hand) and that Lender (on the other) shall be released from further obligations towards the other;
|
|
14.4.2
|
the Borrowers (on the one hand) and the transferee (on the other) shall assume obligations towards the other identical to those released pursuant to Clause 14.4.1 ; and
|
|
14.4.3
|
the Agent, each of the Lenders and the transferee shall have the same rights and obligations between themselves as they would have had if the transferee had been an original party to this Agreement as a Lender with the rights and obligations transferred to it as a result of the transfer
|
|
(a)
|
it is satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the transfer to the transferee; and
|
|
(b)
|
the transferee has paid to the Agent for its own account a transfer fee of two thousand Dollars ($2,000).
|
|
14.5
|
Finance Documents
Unless otherwise expressly provided in any Finance Document or otherwise expressly agreed between a Lender and any proposed transferee and notified by that Lender to the Agent on or before the relevant Transfer Date, there shall automatically be assigned to the transferee with any transfer of a Lender's rights and obligations under or pursuant to this Agreement the rights of that Lender under or pursuant to the Finance Documents (other than this Agreement) which relate to the portion of that Lender's rights and obligations transferred by the relevant Transfer Certificate.
|
|
14.6
|
No assignment or transfer by the Borrowers
No Borrower may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.
|
|
14.7
|
Securitisation
A Lender may disclose the size and term of the Loan and the name of each of the Security Parties to any investor or potential investor in a securitisation (or similar transaction of broadly equivalent economic effect) of that Lender's rights or obligations under the Finance Documents.
|
|
15.1
|
Appointment
|
|
15.1.1
|
Each Lender appoints the Agent to act as its agent under and in connection with the Finance Documents and each Lender and the Agent appoints the Security Agent to act as its security agent for the purpose of the Security Documents.
|
|
15.1.2
|
Each Lender authorises the Agent and each Lender and the Agent authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent or the Security Agent (as the case may be) under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
|
|
15.1.3
|
The Swap Provider appoints the Security Agent to act as its security agent for the purpose of the Security Documents and authorises the Security Agent to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under or in connection with the Security Documents together with any other incidental rights, powers, authorities and discretions.
|
|
15.1.4
|
Except where the context otherwise requires or where expressly provided to the contrary, references in this Clause 15 to the "
Agent
"
shall mean the Agent and the Security Agent individually and collectively and references in this Clause 15 to the "
Finance Documents
"
or to any "
Finance Document
"
shall not include the Master Agreement.
|
|
15.2
|
Authority
Each of the other Finance Parties irrevocably authorises the Agent (subject to Clauses 15.4
(Limitations on authority)
and 15.18
(Instructions)):
|
|
15.2.1
|
to execute on its behalf any Finance Document (other than this Agreement) and any variation or amendment of any Finance Document (including this Agreement);
|
|
15.2.2
|
to collect, receive, release or pay any money on its behalf;
|
|
15.2.3
|
acting on the instructions from time to time of the Majority Lenders to give or
withhold any waivers, consents or approvals under or pursuant to any Finance Document; and
|
|
15.2.4
|
acting on the unanimous instructions from time to time of the Lenders to exercise, or refrain from exercising, any rights, powers, authorities or discretions (including, without limitation, determining matters to be acceptable to or agreed by the Agent) under or pursuant to any Finance Document.
|
|
The Agent shall have no duties or responsibilities as agent or as security agent other than those expressly conferred on it by the Finance Documents and shall not be obliged to act on any instructions from the Lenders or the Majority Lenders if to do so would, in the opinion of the Agent, be contrary to any provision of the Finance Documents or to any law, or would expose the Agent to any actual or potential liability to any third party.
|
|
15.3
|
Trust
The Security Agent agrees and declares, and each of the other Finance Parties acknowledges, that, subject to the terms and conditions of this Clause 15.3, the Security Agent holds the Trust Property on trust for the Finance Parties absolutely. Each of the other Finance Parties agrees that the obligations, rights and benefits vested in the Security Agent shall be performed and exercised in accordance with this Clause 15.3. The Security Agent shall have the benefit of all of the provisions of this Agreement benefiting it in its capacity as security agent for the Finance Parties, and all the powers and discretions conferred on trustees by the Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:
|
|
15.3.1
|
the Security Agent and any attorney, agent or delegate of the Security Agent may indemnify itself or himself out of the Trust Property against all liabilities, costs, fees, damages, charges, losses and expenses sustained or incurred by it or him in relation to the taking or holding of any of the Trust Property or in connection with the exercise or purported exercise of the rights, trusts, powers and discretions vested in the Security Agent or any other such person by or pursuant to the Security Documents or in respect of anything else done or omitted to be done in any way relating to the Security Documents;
|
|
15.3.2
|
the other Finance Parties acknowledge that the Security Agent shall be under no obligation to insure any property nor to require any other person to insure any property and shall not be responsible for any loss which may be suffered by any person as a result of the lack or insufficiency of any insurance; and
|
|
15.3.3
|
the Finance Parties agree that the perpetuity period applicable to the trusts declared by this Agreement shall be the period of 125 years from the date of this Agreement.
|
|
15.4
|
Limitations on authority
Except with the prior written consent of all the Lenders, the Agent shall not be entitled to:
|
|
15.4.1
|
release or vary any security given for the Borrowers' obligations under this Agreement; nor
|
|
15.4.2
|
waive the payment of any sum of money payable by any Security Party under the Finance Documents; nor
|
|
15.4.3
|
reduce the Margin; nor
|
|
15.4.4
|
change the meaning of the expression "
Majority Lenders
"
;
nor
|
|
15.4.5
|
change the order of application of any moneys set out in this Agreement; nor
|
|
15.4.6
|
exercise, or refrain from exercising, any right, power, authority or discretion, or give or withhold any consent, the exercise or giving of which is, by the terms of this Agreement, expressly reserved to the Lenders or dependent on the instructions of all the Lenders; nor
|
|
15.4.7
|
extend the due date for the payment of any sum of money payable by any Security Party under any Finance Document; nor
|
|
15.4.8
|
take or refrain from taking any step if the effect of such action or inaction may lead to the increase of the obligations of a Lender under any Finance Document; nor
|
|
15.4.9
|
agree to change the currency in which any sum is payable under any Finance Document (other than in accordance with the terms of the relevant Finance Document); nor
|
|
15.4.10
|
agree to change this Clause 15.4;
|
|
15.5
|
Liability
Neither the Agent nor any of its directors, officers, employees or agents shall be liable to the Lenders for anything done or omitted to be done by the Agent under or in connection with any of the Relevant Documents unless as a result of the Agent's gross negligence or wilful misconduct.
|
|
15.6
|
Acknowledgement
Each Lender acknowledges that:
|
|
15.6.1
|
it has not relied on any representation made by the Agent or any of the Agent's directors, officers, employees or agents or by any other person acting or purporting to act on behalf of the Agent to induce it to enter into any Finance Document;
|
|
15.6.2
|
it has made and will continue to make without reliance on the Agent, and based on such documents and other evidence as it considers appropriate, its own independent investigation of the financial condition and affairs of the Security Parties in connection with the making and continuation of the Loan;
|
|
15.6.3
|
it has made its own appraisal of the creditworthiness of the Security Parties; and
|
|
15.6.4
|
the Agent shall not have any duty or responsibility at any time to provide it with any credit or other information relating to any Security Party unless that information is received by the Agent pursuant to the express terms of a Finance Document.
|
|
15.7
|
Limitations on responsibility
The Agent shall have no responsibility to any Security Party or to any Lender on account of:
|
|
15.7.1
|
the failure of a Lender or of any Security Party to perform any of its obligations under a Finance Document; nor
|
|
15.7.2
|
the financial condition of any Security Party; nor
|
|
15.7.3
|
the completeness or accuracy of any statements, representations or warranties made in or pursuant to any Finance Document, or in or pursuant to any document delivered pursuant to or in connection with any Finance Document; nor
|
|
15.7.4
|
the negotiation, execution, effectiveness, genuineness, validity, enforceability, admissibility in evidence or sufficiency of any Finance Document or of any document executed or delivered pursuant to or in connection with any Finance Document.
|
|
15.8
|
The Agent's rights
The Agent may:
|
|
15.8.1
|
assume that all representations or warranties made or deemed repeated by any Security Party in or pursuant to any Finance Document are true and complete, unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary;
|
|
15.8.2
|
assume that no Default has occurred unless, in its capacity as the Agent, it has acquired actual knowledge to the contrary;
|
|
15.8.3
|
rely on any document or notice believed by it to be genuine;
|
|
15.8.4
|
rely as to legal or other professional matters on opinions and statements of any legal or other professional advisers selected or approved by it;
|
|
15.8.5
|
rely as to any factual matters which might reasonably be expected to be within the knowledge of any Security Party on a certificate signed by or on behalf of that Security Party; and
|
|
15.8.6
|
refrain from exercising any right, power, discretion or remedy unless and until instructed to exercise that right, power, discretion or remedy and as to the manner of its exercise by the Lenders or the Majority Lenders (as the case may be) and unless and until the Agent has received from the Lenders any payment which the Agent may require on account of, or any security which the Agent may require for, any costs, claims, expenses (including legal and other professional fees) and liabilities which it considers it may incur or sustain in complying with those instructions.
|
|
15.9
|
The Agent's duties
The Agent shall:
|
|
15.9.1
|
if requested in writing to do so by a Lender, make enquiry and advise the Lenders as to the performance or observance of any of the provisions of any Finance Document by any Security Party or as to the existence of an Event of Default; and
|
|
15.9.2
|
inform the Lenders promptly of any Event of Default of which the Agent has actual knowledge.
|
|
15.10
|
No deemed knowledge
The Agent shall not be deemed to have actual knowledge of the falsehood or incompleteness of any representation or warranty made or deemed repeated by any Security Party or actual knowledge of the occurrence of any Default unless a Lender or a Security Party shall have given written notice thereof to the Agent in its capacity as the Agent. Any information acquired by the Agent other than specifically in its capacity as the Agent shall not be deemed to be information acquired by the Agent in its capacity as the Agent.
|
|
15.11
|
Other business
The Agent may, without any liability to account to the Lenders, generally engage in any kind of banking or trust business with a Security Party or with a Security Party's subsidiaries or associated companies or with a Lender as if it were not the Agent.
|
|
15.12
|
Indemnity
The Lenders shall, promptly on the Agent's request, reimburse the Agent in their respective Proportionate Shares, for, and keep the Agent fully indemnified in respect of all liabilities, damages, costs and claims sustained or incurred by the Agent in connection with the Finance Documents, or the performance of its duties and obligations, or the exercise of its rights, powers, discretions or remedies under or pursuant to any Finance Document, to the extent not paid by the Security Parties and not arising solely from the Agent's gross negligence or wilful misconduct.
|
|
15.13
|
Employment of agents
In
performing its duties and exercising its rights, powers, discretions and remedies under or pursuant to the Finance Documents, the Agent shall be entitled to employ and pay agents to do anything which the Agent is empowered to do under or pursuant to the Finance Documents (including the receipt of money and documents and the payment of money) and to act or refrain from taking action in reliance on the opinion of, or advice or information obtained from, any lawyer, banker, broker, accountant, valuer or any other person believed by the Agent in good faith to be competent to give such opinion, advice or information.
|
|
15.14
|
Distribution of payments
The Agent (which term shall not for the purposes of this Clause 15.14 include the Security Agent) shall pay promptly to the order of each Finance Party every sum of money received by the Agent pursuant to the Finance Documents for that Finance Party and until so paid such amount shall be held by the
|
|
15.15
|
Reimbursement
The Agent shall have no liability to pay any sum to a Lender until it has itself received payment of that sum. If, however, the Agent does pay any sum to a Lender on account of any amount prospectively due to that Lender pursuant to Clause 15.14
(Distribution of payments)
before it has itself received payment of that amount, that Lender will, on demand by the Agent, refund to the Agent an amount equal to the sum so paid, together with an amount sufficient to reimburse the Agent for any interest which the Agent may certify that it has been required to pay on money borrowed to fund the sum in question during the period beginning on the date of payment and ending on the date on which the Agent receives reimbursement.
|
|
15.16
|
Redistribution of payments
Unless otherwise agreed between the Lenders and the Agent, if at any time a Lender receives or recovers by way of set-off, the exercise of any lien or otherwise from any Security Party, an amount greater than that Lender's
Proportionate Share of any sum due from that Security Party to the Lenders under the Finance Documents (the amount of the excess being referred to in this Clause 15.16 and in Clause 15.17
(Rescission of Excess Amount)
as the "
Excess Amount
"
)
then:
|
|
15.16.1
|
that Lender shall promptly notify the Agent (which shall promptly notify each other Lender);
|
|
15.16.2
|
that Lender shall pay to the Agent an amount equal to the Excess Amount within ten (10) days of its receipt or recovery of the Excess Amount; and
|
|
15.16.3
|
the Agent shall treat that payment as if it were a payment by the Security Party in question on account of the sum due from that Security Party to the Lenders and shall account to the Lenders in respect of the Excess Amount in accordance with the provisions of Clause 15.14
(Distribution of payments).
|
|
15.17
|
Rescission of Excess Amount
If all or any part of any Excess Amount is rescinded or must otherwise be restored to any Security Party or to any other third party, the Lenders which have received any part of that Excess Amount by way of distribution from the Agent pursuant to Clause 15.16
(Redistribution of payments)
shall repay to the Agent for the account of the Lender which originally received or recovered the Excess Amount, the amount which shall be necessary to ensure that the Lenders share rateably in accordance with their Proportionate Shares in the amount of the receipt or payment retained, together with interest on that amount at a rate equivalent to that (if any) paid by the Lender receiving or recovering the Excess Amount to the person to whom that Lender is liable to make payment in respect of such amount, and Clause 15.16.3
(Redistribution of payments)
shall apply only to the retained amount.
|
|
15.18
|
Instructions
Where the Agent is authorised or directed to act or refrain from acting in accordance with the instructions of the Lenders or of the Majority Lenders (as the case may be) each of the Lenders shall provide the Agent with instructions within three (3) Business Days of the Agent's request (which request may be made orally or in writing). If a Lender does not provide the Agent with instructions within that period, that Lender shall be bound by the decision of the Agent. Nothing in this Clause 15.18 shall limit the right of the Agent to take, or refrain from taking, any action without obtaining the instructions of the Lenders or the Majority Lenders (as the case may be) if the Agent in its discretion considers it necessary or appropriate to take, or refrain from taking, such action in order to preserve the rights of the Lenders under or in connection with the Finance Documents. In that event, the Agent will notify the Lenders of the action taken by it as soon as reasonably practicable, and the Lenders agree to ratify any action taken by the Agent pursuant to this Clause 15.18.
|
|
15.19
|
Payments
All amounts payable to a Lender under this Clause 15 shall be paid to such account at such bank as that Lender may from time to time direct in writing to the Agent.
|
|
15.20
|
"
Know your customer
"
checks
Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
|
|
15.21
|
Resignation
Subject to a successor being appointed in accordance with this Clause 15.21, the Agent may resign as agent and/or security agent at any time without assigning any reason by giving to the Borrowers and the Lenders notice of its intention to do so, in which event the following shall apply:
|
|
15.21.1
|
the Lenders may within thirty (30) days after the date of the Agent's notice
appoint a successor to act as agent and/or security agent or, if they fail to do so, the Agent may appoint any other bank or financial institution as its successor;
|
|
15.21.2
|
the resignation of the Agent shall take effect simultaneously with the
appointment of its successor on written notice of that appointment being given to the Borrowers and the Lenders;
|
|
15.21.3
|
the Agent shall thereupon be discharged from all further obligations as agent and/or security agent but shall remain entitled to the benefit of the provisions of this Clause 15; and
|
|
15.21.4
|
the Agent's successor and each of the other parties to this Agreement shall have the same rights and obligations amongst themselves as they would have had if that successor had been a party to this Agreement.
|
|
15.22
|
No fiduciary relationship
Except as provided in Clauses 15.3
(Trust)
and 15.14
(Distribution of payments),
the Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or for any other person and nothing contained in any Finance Document shall constitute a partnership between any two or more Lenders or between the Agent and any other person.
|
|
16.1
|
Set-off
A Finance Party may set off any matured obligation due from the Borrowers under any Finance Document (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to any Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, that Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
|
|
16.2
|
Master Agreement rights
The rights conferred on the Swap Provider by this Clause 16 shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Swap Provider by the Master Agreement.
|
|
17.1
|
Payments
Each amount payable by a Borrower under a Finance Document (other than the Master Agreement) shall be paid to such account at such bank as the Agent may from time to time direct to the Borrowers in the Currency of Account and in such funds as are customary at the time for settlement of transactions in the relevant currency in the place of payment. Payment shall be deemed to have been received by the Agent on the date on which the Agent receives authenticated advice of receipt, unless that advice is received by the Agent on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Agent in its discretion considers that it is impossible or impracticable for the Agent to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Agent on the Business Day next following the date of receipt of advice by the Agent.
|
|
17.2
|
No deductions or withholdings
Each payment (whether of principal or interest or otherwise) to be made by a Borrower under a Finance Document (other than the Master Agreement) shall, subject only to Clause 17.3
(Grossing-up),
be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.
|
|
17.3
|
Grossing-up
If at any time any law requires (or is interpreted to require) a Borrower to make any deduction or withholding from any payment, or to change the rate or
|
|
17.4
|
Evidence of deductions
If at any time a Borrower is required by law to make any deduction or withholding from any payment to be made by it under a Finance Document (other than the Master Agreement), that Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty (30) days after making that payment, deliver to the Agent an original receipt issued by the relevant authority, or other evidence acceptable to the Agent, evidencing the payment to that authority of all amounts required to be deducted or withheld.
|
|
17.5
|
Adjustment of due dates
If any payment or transfer of funds to be made under a Finance Document, other than a payment of interest on the Loan or a payment under the Master Agreement, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment.
|
|
17.6
|
Control account
The Agent shall open and maintain on its books a control account in the names of the Borrowers showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrowers' obligations to repay the Loan and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 17.6 and those entries will, in the absence of manifest error, be conclusive and binding.
|
|
17.7
|
Clawback
The Agent shall have no liability to pay any sum to the Borrowers until it has itself received payment of that sum. If, however, the Agent does pay any sum to the Borrowers on account of any amount prospectively due to the Borrowers pursuant
|
|
18.1
|
Communications in writing
Any communication to be made under or in connection with this Agreement shall be made in writing and, unless otherwise stated, may be made by fax or letter (except for any notification given by the Agent to The Export-Import Bank of China under Clause 4.2 which shall be given by authenticated swift message).
|
|
18.2
|
Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party to this Agreement for any communication or document to be made or delivered under or in connection with this Agreement are:
|
|
18.2.1
|
in the case of the Borrowers, at do Diana Shipping Services S.A., Pendelis 16, 175 64 Palaio Faliro, Athens, Greece (fax no: +30 210 9470101) marked for the attention of Mr Andreas Michalopoulos;
|
|
18.2.2
|
in the case of each Lender, those appearing opposite its name in Schedule 1, Part I
(The Lenders and the Commitments);
|
|
18.2.3
|
in the case of each Arranger, those appearing opposite its name in Schedule 1, Part II
(the Arrangers);
|
|
18.2.4
|
in the case of the Agent, 20 St. Dunstan's Hill, London EC3R 8HY, England (fax no: +44 207 283 5935) marked for the attention of Credit Middle Office & Agency;
|
|
18.2.5
|
in the case of the Swap Provider, 20 St. Dunstan's Hill, London EC3R 8HY, England (fax no: +44 207 283 5935) marked for the attention of Shipping, Offshore & Logistics; and
|
|
18.2.6
|
in the case of the Security Agent, 20 St. Dunstan's Hill, London EC3R 8HY, England (fax no: +44 207 283 5935) marked for the attention of Credit Middle Office & Agency;
|
|
18.3
|
Delivery
Any communication or document made or delivered by one party to this Agreement to another under or in connection with this Agreement will only be effective:
|
|
18.3.1
|
if by way of fax, when received in legible form; or
|
|
18.3.2
|
if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;
|
|
18.4
|
Notification of address and fax number
Promptly upon receipt of notification of an address, fax number or change of address, pursuant to Clause 18.2
(Addresses)
or changing its own address or fax number, the Agent shall notify the other parties to this Agreement.
|
|
18.5
|
English language
Any notice given under or in connection with this Agreement must be in English. All other documents provided under or in connection with this Agreement must be:
|
|
18.5.1
|
in English; or
|
|
18.5.2
|
if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
|
|
21.1
|
Nature of liability
The representations, warranties, covenants, obligations and undertakings of the Borrowers contained in this Agreement shall be joint and several so that each Borrower shall be jointly and severally liable with all the Borrowers for all of the same and such liability shall not in any way be discharged, impaired or otherwise affected by:
|
|
21.1.1
|
any forbearance (whether as to payment or otherwise) or any time or other indulgence granted to any other Borrower or any other Security Party under or in connection with any Finance Document;
|
|
21.1.2
|
any amendment, variation, novation or replacement of any other Finance Document;
|
|
21.1.3
|
any failure of any Finance Document to be legal valid binding and enforceable in relation to any other Borrower or any other Security Party for any reason;
|
|
21.1.4
|
the winding-up or dissolution of any other Borrower or any other Security Party;
|
|
21.1.5
|
the release (whether in whole or in part) of, or the entering into of any compromise or composition with, any other Borrower or any other Security Party; or
|
|
21.1.6
|
any other act, omission, thing or circumstance which would or might, but for this provision, operate to discharge, impair or otherwise affect such liability.
|
|
21.2
|
No rights as surety
Until the Indebtedness has been unconditionally and irrevocably paid and discharged in full, each Borrower agrees that it shall not, by virtue of any payment made under this Agreement on account of the Indebtedness or by virtue of any enforcement by a Finance Party of its rights under this Agreement or by virtue of any relationship between, or transaction involving, the relevant Borrower and any other Borrower or any other Security Party:
|
|
21.2.1
|
exercise any rights of subrogation in relation to any rights, security or moneys held or received or receivable by a Finance Party or any other person; or
|
|
21.2.2
|
exercise any right of contribution from any other Borrower or any other Security Party under any Finance Document; or
|
|
21.2.3
|
exercise any right of set-off or counterclaim against any other Borrower or any other Security Party; or
|
|
21.2.4
|
receive, claim or have the benefit of any payment, distribution, security or indemnity from any other Borrower or any other Security Party; or
|
|
21.2.5
|
unless so directed by the Agent (when the relevant Borrower will prove in accordance with such directions), claim as a creditor of any other Borrower or any other Security Party in competition with any Finance Party
|
|
22.1
|
No oral variations
No variation or amendment of a Finance Document shall be valid unless in writing and signed on behalf of all the Finance Parties.
|
|
22.2
|
Further assurance
If any provision of a Finance Document shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by or on behalf of the Finance Parties or any of them are considered by the Lenders for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrowers will promptly, on demand by the Agent, execute or procure the execution of such further documents as in the opinion of the Lenders are necessary to provide adequate security for the repayment of the Indebtedness.
|
|
22.3
|
Rescission of payments etc.
Any discharge, release or reassignment by a Finance Party of any of the security constituted by, or any of the obligations of a Security Party contained in, a Finance Document shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.
|
|
22.4
|
Certificates
Any certificate or statement signed by an authorised signatory of the Agent purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any Finance Document shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrowers of that amount.
|
|
22.5
|
Counterparts
This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.
|
|
22.6
|
Contracts (Rights of Third Parties) Act 1999
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
|
|
22.7
|
Disclosure
Each Borrower irrevocably authorises, and shall procure that each of the other Security Parties authorises, each Finance Party to disclose from time to time any information relating to the Security Parties, the Loan, the Commitments, the Earnings Accounts, the Relevant Documents and the Vessels to (a) any private, public or internationally recognised authorities, (b) any Finance Party's head office, branches, affiliates and professional advisors, (c) any other parties to the Finance Documents, (d) rating agencies or their professional advisors, (e) any person with whom any Finance Party proposes entering into, or has entered into, contractual relations in connection with the Loan or any Commitment.
|
|
23.1
|
Governing law
This Agreement and any non-contractual obligations arising from or in connection with it shall in all respects be governed by and interpreted in accordance with English law.
|
|
23.2
|
Jurisdiction
For the exclusive benefit of the Finance Parties, the parties to this Agreement irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute (a) arising from or in connection with this Agreement or (b) relating to any non-contractual obligations arising from or in connection with this Agreement and that any proceedings may be brought in those courts.
|
|
23.3
|
Alternative jurisdictions
Nothing contained in this Clause 23 shall limit the right of the Finance Parties to commence any proceedings against the Borrowers in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Borrowers in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.
|
|
23.4
|
Waiver of objections
Each Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause 23, and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a
|
|
23.5
|
Service of process
Without prejudice to any other mode of service allowed under any relevant law, each Borrower:
|
|
23.5.1
|
irrevocably appoints Nicolaou & Co. Chartered Accounts, 25 Heath Drive Potters Bar. Herts, EN6 1 EN, London, England for the attention of Mr Antonis Nicolaou as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement; and
|
|
23.5.2
|
agrees that failure by a process agent to notify any Borrower of the process will not invalidate the proceedings concerned.
|
The Lenders
|
The Commitments
|
The Export-Import Bank ofChina
|
$24,000,000
|
No.30, FuXingMenNei Street, XiCheng District
Beijing100031, The People's Republic ofChina
(fax no: +86 10 8357 8428/29)
marked for the attention of: Transport Finance Department
|
|
DNB BANK ASA
|
$6,000,000
|
20 St. Dunstan's Hill,London EC3R 8HY, England
(fax no: +44 207 283 5935)
marked for the attention of: Shipping, Offshore & Logistics
|
|
(a)
|
Constitutional Documents
Copies of the constitutional documents of each Security Party together with such other evidence as the Agent may reasonably require that each Security Party is duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.
|
|
(b)
|
Certificates of good standing
A certificate of good standing in respect of each Security Party (if such a certificate can be obtained).
|
|
(c)
|
Board resolutions
A copy of a resolution of the board of directors of each Security Party:
|
|
(i)
|
approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute those Relevant Documents; and
|
|
(ii)
|
authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or despatched under those documents) on its behalf.
|
|
(d)
|
Specimen signatures
A specimen of the signature of each person authorised by the resolutions referred to in paragraph (c) above.
|
|
(e)
|
Shareholder resolutions
A copy of a resolution signed by all the holders of the issued shares in each Security Party (other than the Guarantor), approving the terms of, and the transactions contemplated by, the Relevant Documents to which that Security Party is a party.
|
|
(f)
|
Officer's certificates
A certificate of a duly authorised officer of each Security Party certifying that each copy document relating to it specified in this Part I of Schedule 2 is correct, complete and in full force and effect and setting out the names of the directors, officers and shareholders of that Security Party and the proportion of shares held by each shareholder.
|
|
(g)
|
Evidence of registration
Where such registration is required or permitted under the laws of the relevant jurisdiction, evidence that the names of the directors, officers and shareholders of each Security Party are duly registered in the companies registry or other registry in the country of incorporation of that Security Party.
|
|
(h)
|
Powers of attorney
The notarially attested and legalised power of attorney of each Security Party under which any documents are to be executed or transactions undertaken by that Security Party.
|
|
(a)
|
Vessel documents
|
|
(A)
|
Photocopies, certified as true, accurate and complete by a director or the secretary of the Borrower, of:
|
|
(i)
|
the Building Contract;
|
|
(ii)
|
such documents as the Agent may reasonably require to evidence the nomination of or novation in favour of (as the case may be) the Borrower as purchaser of the Vessel pursuant to the Building Contract;
|
|
(iii)
|
the builder's certificate and/or bill of sale transferring title in the Vessel to the relevant Borrower free of all encumbrances, maritime liens or other debts;
|
|
(iv)
|
the protocol of delivery and acceptance evidencing the unconditional physical delivery of the Vessel by the Builder to the Borrower pursuant to the Building Contract;
|
|
(v)
|
the commercial invoice issued by the Builder in respect of the final contract price of the Vessel;
|
|
(vi)
|
the declaration of warranty issued by the Builder to the Borrower pursuant to the Building Contract;
|
|
(vii)
|
any charterparty or other contract of employment of the Vessel which will be in force on the Drawdown Date including, without limitation, the Charter;
|
|
(viii)
|
the Management Agreement;
|
|
|
(ix))
|
the Vessel's current Safety Construction, Safety Equipment, Safety Radio, Oil Pollution Prevention and Load Line Certificates;
|
|
(x)
|
evidence of the Vessel's current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;
|
|
(xi)
|
the Vessel's current SMC;
|
|
(xii)
|
the ISM Company's current DOC;
|
|
(xiii)
|
the Vessel's current ISSC;
|
|
(xiv)
|
the Vessel's current IAPPC;
|
|
(xv)
|
the Vessel's current Tonnage Certificate;
|
|
(b)
|
Evidence of Borrower's title
Evidence that any prior registration of the Vessel in the ownership of the Builder and any Encumbrance registered against that ownership have been cancelled (or confirmation from the Builder that there was no such prior registration) and evidence that on the Delivery Date (i) the Vessel will be at least provisionally registered under an Approved Flag in the ownership of the Borrower and (ii) the Mortgage will be capable of being registered against the Vessel with first priority.
|
|
(c)
|
Evidence of insurance
Evidence that the Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Agent) the written approval of the Insurances by an insurance adviser appointed by the Agent.
|
|
(d)
|
Confirmation of class
A Certificate of Confirmation of Class for hull and machinery confirming that the Vessel is classed with the highest class applicable to vessels of her type with Lloyd's Register and on a dual basis with China Classification Society or such other classification society as may be acceptable to the Agent free of material overdue recommendations or adverse notations, in case case affecting class.
|
|
(e)
|
Valuations
Two valuations of the Vessel from Approved Brokers acceptable to the Agent addressed to the Agent to be issued in accordance with the requirements of Clause 10.12.2
(Fair Market Value determination)
certifying the Fair Market Value of the Vessel in order for the Lenders to assess compliance with Clause 10.11
(Additional Security)
and determine the Maximum Tranche Amount.
|
|
(h)
|
Security Documents
The Mortgage,
the Assignment and the Managers' Undertaking in respect of the Vessel, the Guarantee, the Account Charges, the Negative Share Pledges and any other Credit Support Documents, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.
|
|
(h)
|
Mandates
Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Accounts, as the Security Agent may require.
|
|
(i)
|
No disputes
The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.
|
|
(j)
|
Equity contribution
Evidence of full payment to the Builder of any part of the Contract Price of the Vessel under the relevant Building Contract which is payable on or before the relevant Drawdown Date and which is not being financed by the Loan.
|
|
(k)
|
Cash balance
Evidence satisfactory to the Agent that the Borrowers are in compliance with the financial covenant of Clause 12.2.1.
|
|
(l)
|
Other Relevant Documents
Copies of each of the Relevant Documents, including the Shareholder Letter, not otherwise comprised in the documents listed in this Part I of Schedule 2.
|
|
(k)
|
Evidence of Permitted Encumbrance
Evidence, in form and substance acceptable to the Agent in its discretion, of any Permitted Encumbrance which is outstanding on the Drawdown Date.
|
|
(a)
|
If a Security Party is incorporated in a jurisdiction other than England and Wales or if any Finance Document is governed by the laws of a jurisdiction other than
|
|
(a)
|
Drawdown Notice
A duly completed Drawdown Notice.
|
|
(b)
|
Process agent
Evidence that any process agent referred to in Clause 23.5 (
Service of process
) and any process agent appointed under any other Finance Document has accepted its appointment.
|
|
(c)
|
Other authorizations
A copy of any other consent, licence, approval, authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by
any of the Relevant Documents or for the validity and enforceability of any of the
Relevant Documents.
|
|
(d)
|
Financial statements
Copies of the Original Financial Statements of each Borrower and the Guarantor.
|
|
(e)
|
Fees
Evidence that the fees, costs and expenses then due from the Borrowers under Clause 8
(Indemnities)
and Clause 9
(Fees)
have been paid or will be paid by the relevant Drawdown Date.
|
|
(f)
|
"
Know your customer
"
documents
Such documentation and other evidence as is reasonably requested by the Agent in order for the Lenders to comply with all necessary "know your customer" or similar identification procedures in relation to the transactions contemplated in the Finance Documents, including (without limitation) documentation in relation to the Borrowers, the Guarantor's signatories to the Finance Documents, directors and the Shareholder.
|
|
(g)
|
Tax assurance
Evidence satisfactory to the Agent that any withholding tax will be paid or that any required application to the tax authorities has been sent or will be sent by the Borrowers.
|
1.
|
Evidence of Borrower's title
Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the Approved Flag confirming that (a) the Vessel is permanently registered under that flag in the ownership of the Borrower, (b) the Mortgage has been registered with first priority against the Vessel and (c) there are no further Encumbrances registered against the Vessel.
|
2.
|
Letters of undertaking
Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Finance Parties.
|
3.
|
Acknowledgements of notices
Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Agent pursuant to Part I of this Schedule 2.
|
4.
|
Legal opinions
Such of the legal opinions specified in Part I of this Schedule 2 as have not already been provided to the Agent.
|
5.
|
Master's receipt
If applicable, the master's receipt for the Mortgage.
|
1
|
The Mandatory Cost is an addition to the interest rate to compensate the Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Conduct Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.
|
2
|
On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the "
Additional Cost Rate
"
)
for each Lender in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the Loan) and will be expressed as a percentage rate per annum.
|
3.
|
The Additional Cost Rate for any Lender lending from an office in the euro-zone will be the percentage notified by that Lender to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in the Loan) of complying with the minimum reserve requirements of the European Central Bank as a result of participating in the Loan from that office.
|
4.
|
The Additional Cost Rate for any Lender lending from an office in theUnited Kingdom will be calculated by the Agent as follows:
|
0
|
|
B
|
is the percentage of eligible liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements;
|
|
Y
|
is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an overdue amount, the additional rate of interest specified in Clause 7.7 (Default interest)) payable for the relevant Interest Period on the Loan;
|
|
S
|
is the percentage (if any) of eligible liabilities which that Lender is required from time to time to maintain as interest bearing special deposits with the Bank of England;
|
|
Z
|
is the interest rate per annum payable by the Bank of England to that Lender on special deposits; and
|
|
F
|
is the charge payable by that Lender to the Financial Services Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent provisions in any replacement regulations (with, for this purpose, the figure for the minimum amount in paragraph 2.02b or such equivalent provision deemed to be zero), expressed in pounds per £1 million of the fee base of that Lender.
|
5
|
For the purpose of this Schedule:
|
|
(a)
|
"
eligible liabilities
"
and "
special deposits
"
have the meanings given to them at the time of application of the formula by the Bank of England;
|
|
(b)
|
"
fee base
"
has the meaning given to it in the Fees Regulations;
|
|
(c)
|
"
Fees Regulations
"
means the regulations governing periodic fees contained in the Financial Services Authority Fees Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits.
|
6
|
In the application of the formula B, Y, S and Z are included in the formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY is calculated as 0.5. x 15. Each rate calculated in accordance with the formula is, if necessary, rounded upward to four decimal places.
|
7
|
If a Lender does not supply the information required by the Agent to determine its Additional Cost Rate when requested to do so, the applicable Mandatory Cost shall be determined on the basis of the information supplied by the remaining Lenders.
|
8
|
If a change in circumstances has rendered, or will render, the formula inappropriate, the Agent shall notify the Borrowers of the manner in which the Mandatory Cost will subsequently be calculated. The manner of calculation so notified by the Agent shall, in the absence of manifest error, be binding on the Borrowers.
|
|
SCHEDULE 4: Form of Drawdown Notice
|
To:
|
DNB BANK ASA
|
From
:
|
Erikub Shipping Company Inc.
|
Wotho Shipping Company Inc.
|
|
SCHEDULE 5: Form of Transfer Certificate
|
1
|
Terms defined in the Loan Agreement shall, unless otherwise expressly indicated, have the same meaning when used in this certificate. The terms "
Transferor
"
and "
Transferee
"
are defined in the schedule to this certificate.
|
|
2.1
|
confirms that the details in the Schedule under the heading "
Transferor's Commitment
"
accurately summarise its Commitment; and
|
|
2.2
|
requests the Transferee to accept by way of novation the transfer to the Transferee of the amount of the Transferor's Commitment specified in the Schedule by counter-signing and delivering this certificate to the Agent at its address for communications specified in the Loan Agreement.
|
3
|
The Transferee requests the Agent to accept this certificate as being delivered to the Agent pursuant to and for the purposes of clause 14.4 of the Loan Agreement so as to take effect in accordance with the terms of that clause on the Transfer Date specified in the Schedule.
|
4
|
The Agent confirms its acceptance of this certificate for the purposes of clause 14.4 of the Loan Agreement.
|
5.
|
The Transferee confirms that:
|
|
5.1
|
it has received a copy of the Loan Agreement together with all other information which it has required in connection with this transaction;
|
|
5.2
|
it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information; and
|
|
5.3
|
it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any Security Party.
|
6
|
Execution of this certificate by the Transferee constitutes its representation and warranty to the Transferor and to all other parties to the Loan Agreement that it has the power to become a party to the Loan Agreement as a Lender on the terms of the Loan Agreement and has taken all steps to authorise execution and delivery of this certificate.
|
7
|
The Transferee undertakes with the Transferor and each of the other parties to the Loan Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Loan Agreement will be assumed by it after delivery of this certificate to the Agent and the satisfaction of any conditions subject to which this certificate is expressed to take effect.
|
8
|
The Transferor makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any document relating to any Finance Document, and assumes no responsibility for the financial condition of any Finance Party or for the performance and observance by any Security Party of any of its obligations under any Finance Document or any document relating to any Finance Document and any conditions and warranties implied by law are expressly excluded.
|
9
|
The Transferee acknowledges that nothing in this certificate or in the Loan Agreement shall oblige the Transferor to:
|
|
9.1
|
accept a re-transfer from the Transferee of the whole or any part of the rights, benefits and/or obligations transferred pursuant to this certificate; or
|
|
9.2
|
support any losses directly or indirectly sustained or incurred by the Transferee for any reason including, without limitation, the non-performance by any party to any Finance Document of any obligations under any Finance Document.
|
10
|
The address and fax number of the Transferee for the purposes of clause 18 of the Loan Agreement are set out in the Schedule.
|
11
|
This certificate may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.
|
12
|
This certificate and any non-contractual obligations arising out of or in connection with it shall be governed by and interpreted in accordance with English law.
|
1
|
Transferor:
|
2
|
Transferee:
|
3
|
Transfer Date
(not earlier than the fifth Business Day after the date of delivery of the Transfer Certificate to the Agent):
|
4
|
Transferor's Commitment:
.
|
5
|
Amount transferred:
|
6
|
Transferee's address and fax number for the purposes of clause 18 of the Loan Agreement:
|
[name of Transferor]
|
[name of Transferee]
|
By:
|
By:
|
Date: Date:
|
To:
|
DNB BANK ASA
|
From
:
|
DIANA SHIPPING INC.
|
Signed:
|
………………………………
|
|
Chief Financial Officer
Of
DIANA SHIPPING INC.
|
SIGNED
by ANDREAS MICHALOPOULOS
|
)
|
|||
as duly authorized attorney-in-fact
|
)
|
|||
for and on behalf of
|
)
|
/s/ ANDREAS MICHALOPOULOS
|
||
ERIKUB SHIPPING COMPANY INC.
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by ANDREAS MICHALOPOULOS
|
)
|
|||
as duly authorized attorney-in-fact
|
)
|
|||
for and on behalf of
|
)
|
/s/ ANDREAS MICHALOPOULOS
|
||
WOTHO SHIPPING COMPANY INC.
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by DAVID CHRISTOPHER ROLLS
|
)
|
|||
as duly authorized attorney-in-fact
|
)
|
|||
for and on behalf of
|
)
|
/s/ DAVID CHRISTOPHER ROLLS
|
||
DNB BANK ASA
(as Lender)
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by Li Zhongyuan
|
)
|
|||
as duly authorized signatory
|
)
|
|||
for and on behalf of
|
)
|
/s/ LI ZHONGYUAN
|
||
THE EXPORT-IMPORT BANK OF CHINA
(as Lender)
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by DAVID CHRISTOPHER ROLLS
|
)
|
|||
as duly authorized attorney-in-fact
|
)
|
|||
for and on behalf of
|
)
|
/s/ DAVID CHRISTOPHER ROLLS
|
||
DNB BANK ASA
(as an Arranger)
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by Li Zhongyuan
|
)
|
|||
as duly authorized signatory
|
)
|
|||
for and on behalf of
|
)
|
/s/ LI ZHONGYUAN
|
||
THE EXPORT-IMPORT BANK OF CHINA
(as an Arranger)
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by DAVID CHRISTOPHER ROLLS
|
)
|
|||
as duly authorized attorney-in-fact
|
)
|
|||
for and on behalf of
|
)
|
/s/ DAVID CHRISTOPHER ROLLS
|
||
DNB BANK ASA
(as the Agent)
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by DAVID CHRISTOPHER ROLLS
|
)
|
|||
as duly authorized attorney-in-fact
|
)
|
|||
for and on behalf of
|
)
|
/s/ DAVID CHRISTOPHER ROLLS
|
||
DNB BANK ASA
(as the Swap Provider)
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
SIGNED
by DAVID CHRISTOPHER ROLLS
|
)
|
|||
as duly authorized attorney-in-fact
|
)
|
|||
for and on behalf of
|
)
|
/s/ DAVID CHRISTOPHER ROLLS
|
||
DNB BANK ASA
(as the Security Agent)
|
)
|
|||
in the presence of:
|
)
|
|||
Witness signature:
|
/s/ Antonelle Kandis
|
|||
Name: Antonelle Kandis
|
||||
Address: STEPHENSON HARWOOD LLP
|
||||
ARISTON BUILDING
|
||||
2 FILELLINON STR. & AKTI MIAOULI
|
||||
PIRAEUS 18536
|
||||
VAT. NO. 998711156
|
||||
TEL. 210 4295 160
|
Clause
|
|
Page
|
|
|
|
1
|
Interpretation
|
1
|
2
|
Facility
|
13
|
3
|
Drawdown
|
14
|
4
|
Interest
|
14
|
5
|
Interest Periods
|
16
|
6
|
Default Interest
|
16
|
7
|
Repayment and Prepayment
|
18
|
8
|
Conditions Precedent
|
20
|
9
|
Representations and warranties
|
20
|
10
|
General Undertakings
|
23
|
11
|
Corporate Undertakings
|
26
|
12
|
Insurance
|
27
|
13
|
Ship Covenants
|
32
|
14
|
Security Cover
|
37
|
15
|
Payments and calculations
|
38
|
16
|
Application of receipts
|
39
|
17
|
Application of Earnings; swap payments
|
40
|
18
|
Events of Default
|
41
|
19
|
Fees and Expenses
|
45
|
20
|
Indemnities
|
46
|
21
|
No set-off or tax deduction
|
48
|
22
|
Illegality, etc.
|
49
|
23
|
Increased costs
|
50
|
24
|
Set-off
|
51
|
25
|
Transfers and Changes in Lending Office
|
52
|
26
|
Variations and Waivers
|
53
|
27
|
Notices
|
54
|
28
|
Joint and Several Liability
|
56
|
29
|
Supplemental
|
57
|
30
|
Law and Jurisdiction
|
58
|
Schedule 1 | Drawdown Notice | 59 |
Schedule 2 | Condition Precedent Documents | 61 |
Execution Page
|
64
|
(1)
|
TAKA SHIPPING COMPANY INC.,
and
FAYO SHIPPING COMPANY INC.,
each a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, MH96960, Majuro, Marshall Islands (together, the "
Borrowers
"
);
and
|
(2)
|
COMMONWEALTH BANK OF AUSTRALIA
acting through its office at Senator House, 85 Queen Victoria Street, London EC4V 4HA, United Kingdom (the "
Lender
"
).
|
(A)
|
The Lender has agreed to make available to the Borrowers a term loan facility on a joint and several basis of up to $18,000,000 in two Tranches as follows:
|
|
(i)
|
for the purpose of financing part of the acquisition cost of Ship A, the lesser of (1) US$8,500,000 and (2) 50% of the Initial Market Value of Ship A; and
|
|
(ii)
|
for the purpose of financing part of the acquisition cost of Ship B, the lesser of (1) US$9,500,000 and (2) 50% of the Initial Market Value of Ship B.
|
(B
)
|
The Lender has agreed to enter into interest rate swap transactions with the Borrowers from time to time to hedge the Borrowers' exposure under this Agreement to interest rate fluctuations.
|
(C)
|
|
|
(a)
|
the date falling 3 months after the date of this Agreement (or such later date as the Lender may agree with the Borrowers); or
|
|
(b)
|
if earlier, the date on which the Lender's obligations to advance a Tranche is cancelled or terminated;
|
|
(a)
|
except to the extent that they fall within paragraph (b):
|
|
(i)
|
all freight, hire and passage moneys;
|
|
(ii)
|
compensation payable to the relevant Borrower or the Lender in the event of requisition of its Ship for hire;
|
|
(iii)
|
remuneration for salvage and towage services;
|
|
(iv)
|
demurrage and detention moneys;
|
|
(v)
|
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and
|
|
(vi)
|
all moneys which are at any time payable under any Insurances in respect of loss of hire; and
|
|
(b)
|
if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a)(1) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship;
|
|
(a)
|
any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or
|
|
(b)
|
any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,
|
|
(a)
|
any release of Environmentally Sensitive Material from that Ship; or
|
|
(b)
|
any incident in which Environmentally Sensitive Material is released from a vessel other than that Ship and which involves a collision between that Ship and such other vessel or some other incident of navigation or operation, in
either case, in connection with which that Ship is actually or potentially liable to be arrested,
|
|
(c)
|
any other incident in which Environmentally Sensitive Material is released otherwise than from that Ship and in connection with which that Ship is actually or potentially liable to be arrested and/or where the relevant Borrower and/or any operator or manager of that Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;
|
|
(a)
|
this Agreement;
|
|
(b)
|
the Master Agreements;
|
|
(c)
|
the Guarantee;
|
|
(d)
|
the Account Pledges;
|
|
(e)
|
the Master Agreement Assignments;
|
|
(f)
|
the Mortgages;
|
|
(g)
|
the General Assignments;
|
|
(h)
|
the Shares Security Deeds;
|
|
(i)
|
any Charter Assignment;
|
|
(j)
|
the Approved Manager's Undertakings; and
|
|
(k)
|
any other document (whether creating a Security Interest or not) which is executed at any time by the Borrowers (or either of them), the Guarantor, the Approved Manager or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or the Master Agreements or any of the other documents referred to in this definition,
|
|
(a)
|
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;
|
|
(b)
|
under any loan stock, bond, note or other security issued by the debtor;
|
|
(c)
|
under any acceptance credit, guarantee or letter of credit facility or dematerialised equivalent made available to the debtor;
|
|
(d)
|
under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;
|
|
(e)
|
under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or
|
|
(f)
|
under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;
|
|
(a)
|
all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and
|
|
(b)
|
all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract or insurance or entry has expired on or before the date of this Agreement;
|
|
(a)
|
the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, that period which appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m. (London time) on the Quotation Date for that period (and, for the purposes of this Agreement, "REUTERS BBA Page LIBOR 01" means the display designated as "Page 01" on the REUTERS Service or such other page as may replace Page 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying British Bankers' Association Interest Settlement Rates for Dollars); or
|
|
(b)
|
if no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum determined by the Lender to be the arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.) of the rates at which deposits in Dollars are offered to the Lender by leading banks in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for that period for a period equal to that period and for delivery on the first Business Day of it; or
|
|
(c)
|
if any of the above rates is below zero, LIBOR shall be deemed to be zero;
|
|
(i)
|
in relation to Tranche A, the earlier of the date falling on the sixth anniversary of the Drawdown Date relative thereto and 31 January 2020; and
|
|
(ii)
|
in relation to Tranche B, the earlier of the date falling on the eighth anniversary of the Drawdown Date relative thereto and 31 January 2022;
|
|
(a)
|
Mr. Simeon Palios;
|
|
(b)
|
all the lineal descendants in direct line of Mr. Palios;
|
|
(c)
|
a husband or wife or widower or widow of any of the above persons;
|
|
(d)
|
the estates, trusts or legal representatives of which any of the above persons are the beneficiaries; and
|
|
(e)
|
each company (other than a member of the Group) legally or beneficially owned or (as the case may be) controlled by one or more of the persons or entities which would fall within paragraphs (a) to (d) of this definition,
|
|
(a)
|
Security Interests created by the Finance Documents;
|
|
(b)
|
liens for unpaid master's and crew's wages in accordance with usual maritime practice;
|
|
(c)
|
liens for salvage;
|
|
(d)
|
liens arising by operation of law for not more than 2 months' prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;
|
|
(e)
|
liens for master's disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure
|
|
(f)
|
any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where a Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and
|
|
(g)
|
Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;
|
|
(a)
|
any Finance Document;
|
|
(b)
|
any policy or contract of insurance contemplated by or referred to in Clause 12 or any other provision of this Agreement or another Finance Document;
|
|
(c)
|
any other document contemplated by or referred to in any Finance Document; and
|
|
(d)
|
any document which has been or is at any time sent by or to the Lender in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);
|
|
(a)
|
England and Wales;
|
|
(b)
|
the country under the laws of which the company is incorporated or formed;
|
|
(c)
|
a country in which the company has the centre of its main interests or in which the company's central management and control is or has recently been exercised;
|
|
(d)
|
a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;
|
|
(e)
|
a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and
|
|
(f)
|
a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company, whether as main or territorial or ancillary proceedings, or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);
|
|
(a)
|
any transaction or matter contemplated by, arising out of, or connection with a Pertinent Document; or
|
|
(b)
|
any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a);
|
|
(a)
|
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;
|
|
(b)
|
the security rights of a plaintiff under an action
in rem;
and
|
|
(c)
|
any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;
|
|
(a)
|
all amounts which have become due for payment by each of the Borrowers or any Security Party under the Finance Documents have been paid;
|
|
(b)
|
no amount is owing or has accrued (without yet having become due for payment) under any Finance Document; and
|
|
(c)
|
no Borrower nor any Security Party has any future or contingent liability under Clause 19, 20 or 21 or any other provision of this Agreement or another Finance Document;
|
|
(a)
|
actual, constructive, compromised, agreed or arranged total loss of the Ship;
|
|
(b)
|
any expropriation, confiscation, requisition or acquisition of that Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding 1 year without any right to an extension) unless it is within 1 month redelivered to the relevant Borrower's full
control;
|
|
(c)
|
any condemnation of that Ship by any tribunal or by any person or person claiming to be a tribunal; and
|
|
(d)
|
any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless she is within 1 month redelivered to the relevant Borrower's full control;
|
|
(a)
|
in the case of an actual loss of that Ship, the date on which it
occurred or, if that is unknown, the date when that Ship was last heard of;
|
|
(b)
|
in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earliest of:
|
|
(i)
|
the date on which a notice of abandonment is given to the insurers; and
|
|
(ii)
|
the date of any compromise, arrangement or agreement made by or on
behalf of the Borrower owning such Ship with that Ship's insurers in which the insurers agree to treat that Ship as a total loss; and
|
|
(c)
|
in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Lender that the event constituting the total loss occurred;
|
1.2
|
Construction of certain terms
|
(a)
|
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
|
(b)
|
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day
|
(a)
|
a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
|
(b)
|
P has direct or indirect control over a majority of the voting rights attaching to the issued shares of 5; or
|
(c)
|
P has the direct or indirect power to appoint or remove a majority of the directors of 5; or
|
(d)
|
P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P
|
(a)
|
references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;
|
(b)
|
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;
|
(c)
|
words denoting the singular number shall include the plural and vice versa; and
|
(d)
|
Clauses 1.1 to 1.5 apply unless the contrary intention appears.
|
1.6
|
Headings
|
|
In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
|
2
|
FACILITY
|
2.1
|
Amount of facility
|
(a)
|
Tranche A shall be in an amount of up to the lesser of (i) $8,500,000 and (ii) 50 per cent, of the Initial Market Value of Ship A; and
|
(b)
|
Tranche B shall be in an amount of up to the lesser of (i) $9,500,000 and (ii) 50 per cent. of the Initial Market Value of Ship B.
|
2.2
|
Purpose of Tranches
|
(a)
|
in the case of Tranche A, in financing part of the acquisition costs of Ship A; and
|
(b)
|
in the case of Tranche B, in financing part of the acquisition costs of Ship B.
|
3
|
DRAWDOWN
|
3.1
|
Request for Tranche
|
3.2
|
Availability
|
(a)
|
a Drawdown Date in relation to a Tranche has to be a Business Day during the Availability Period relating to such Tranche;
|
(b)
|
each Tranche shall not exceed the amount applicable thereto referred to in Clause 2.1; and
|
(c)
|
the aggregate amount of the Tranches shall not exceed the lesser of (i) $18,000,000 and (ii) 50 per cent. of the Initial Market Value of the Ships in aggregate.
|
3.3
|
Drawdown Notice irrevocable
|
3.4
|
Disbursement of Tranche
|
3.5
|
Disbursement of Tranche to third party
|
4
|
INTEREST
|
4.1
|
Payment of normal interest
|
4.2
|
Normal rate of interest
|
4.4
|
Notification of market disruption
|
4.5
|
Suspension of drawdown
|
4.6
|
Negotiation of alternative rate of interest
|
4.7
|
Application of agreed alternative rate of interest
|
4.8
|
Alternative rate of interest in absence of agreement
|
4.9
|
Notice of prepayment
|
4.10
|
Prepayment
|
4.11
|
Application of prepayment
|
4.12
|
Hedging
|
5
|
INTEREST PERIODS
|
5.1
|
Commencement of Interest Periods
|
5.2
|
Duration of normal Interest Periods
|
(a)
|
1, 3 or 6 months as notified by the Borrowers to the Lender not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or
|
(b)
|
3 months, if the Borrowers fail to notify the Lender by the time specified in paragraph (a); or
|
(c)
|
such other period as the Lender may agree with the Borrowers.
|
5.3
|
Duration of Interest Periods for repayment instalments
|
5.4
|
Non-availability of matching deposits for Interest Period selected
|
5.5
|
No Interest Period to extend beyond the Maturity Date
|
6
|
DEFAULT INTEREST
|
6.1
|
Payment of default interest on overdue amounts
|
(a)
|
the date on which the Finance Documents provide that such amount is due for payment; or
|
(b)
|
if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or
|
(c)
|
if such amount has become immediately due and payable under Clause 18.4, the date on which it became immediately due and payable.
|
6.2
|
Default rate of interest
|
(a)
|
in the case of an overdue amount of principal, the higher of the rates set out at Clauses 6.3(a) and 6.3(b); or
|
(b)
|
in the case of any other overdue amount, the rate set out at Clause 6.3(b).
|
6.3
|
Calculation of default rate of interest
|
(a)
|
the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);
|
(b)
|
the aggregate of the Margin and the Mandatory Cost (if any) plus, in respect of successive periods of any duration (including at call) up to 3 months which the Lender may select from time to time:
|
|
(i)
|
LIBOR; or
|
|
(ii)
|
if the Lender determines that Dollar deposits for any such period are not being made available to it by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Lender by reference to the cost of funds to it from such other sources as the Lender may from time to time determine.
|
6.4
|
Notification of interest periods and default rates
|
6.5
|
Payment of accrued default interest
|
6.6
|
Compounding of default interest
|
6.7
|
Application to Master Agreements
|
7
|
REPAYMENT AND PREPAYMENT
|
7.1
|
Amount of repayment instalments
|
|
The Borrowers shall repay the Loan as follows:
|
(a)
|
Tranche A shall be repaid:
|
|
(i)
|
by 24 equal consecutive quarterly instalments in the amount of $195,833.33 each; and
|
|
(ii)
|
a balloon payment in the amount of $3,800,000; and
|
(b)
|
Tranche B shall be repaid:
|
|
(i)
|
by 32 equal consecutive quarterly instalments in the amount of $156,250 each; and
|
|
(ii)
|
a balloon payment in the amount of $4,500,000;
|
7.2
|
Repayment Dates
|
(a)
|
in relation to Tranche A, the earlier of the date falling on the sixth anniversary of the Drawdown Date relative thereto and 31 January 2020; and
|
(b)
|
in relation to Tranche B, the earlier of the date falling on the eighth anniversary of the Drawdown Date relative thereto and 31 January 2022.
|
7.3
|
Final Maturity Date
|
7.4
|
Voluntary prepayment
|
7.5
|
Conditions for voluntary prepayment
|
(a)
|
a partial prepayment shall be in an amount not less than $500,000 or a higher integral multiple thereof;
|
(b)
|
the Lender has received from the Borrowers at least 10 Business Days' prior written notice specifying the amount to be prepaid, the Tranche to which it relates and the date on which the prepayment is to be made;
|
(c)
|
the Borrowers have provided evidence satisfactory to the Lender that any consent required by either Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects either Borrower or any Security Party has been complied with; and
|
(d)
|
the Borrowers have complied with Clause 7.10 on or prior to the date of prepayment.
|
7.6
|
Effect of notice of prepayment
|
7.7
|
Mandatory prepayment
|
(a)
|
in the case of a sale, on or before the date on which the sale is completed by delivery of that Ship to the buyer; or
|
(b)
|
in the case of a Total Loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.
|
7.8
|
Amounts payable on prepayment
|
7.9
|
Application of partial prepayment
|
7.10
|
Unwinding of Transactions
|
7.11
|
No reborrowing
|
7.12
|
Cancellation of Commitment
|
8
|
CONDITIONS PRECEDENT
|
8.1
|
Documents, fees and no default
|
(a)
|
that, on or before the date of this Agreement, the Lender receives (i) the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers and (ii) payment of the arrangement fee referred to in Clause 19.1(a);
|
(b)
|
that on or before the service of the Drawdown Notice, the Lender receives the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers;
|
(c)
|
that, on or before the service of the Drawdown Date the Lender receives the payment of all accrued commitment fee payable pursuant to Clause 19.1(b) and has received payment of the expenses referred to in Clause 19.2;
|
(d)
|
that both at the date of each Drawdown Notice and at each Drawdown Date:
|
|
(i)
|
no Event of Default or Potential Event of Default has occurred or would result from the borrowing of the relevant Tranche;
|
|
(ii)
|
the representations and warranties in Clause 9.1 and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing;
|
|
(iii)
|
none of the circumstances contemplated by Clause 4.4 has occurred and is continuing; and
|
|
(iv)
|
there has been no material adverse change in the financial position, state of affairs or prospects of either Borrower, the Guarantor or any other Security Party in the light of which the Lender considers that there
is
a significant risk that either Borrower, the Guarantor or any other Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents to which it is a party as they fall due;
|
(e)
|
that, if the ratio set out in Clause 14.1 were applied immediately following the advance of a Tranche, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and
|
(f)
|
that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may request by notice to the Borrowers prior to the relevant Drawdown Date.
|
8.2
|
Waivers of conditions precedent
|
9
|
REPRESENTATIONS AND WARRANTIES
|
9.1
|
General
|
9.2
|
Status
|
9.3
|
Share capital and ownership
|
9.4
|
Corporate power
|
(a)
|
to permanently register the Ship owned by it in its name under an Approved Flag;
|
(b)
|
to execute the Finance Documents to which each Borrower is a party; and
|
(c)
|
to borrow under this Agreement, to enter into Transactions under each Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which it is a party.
|
9.5
|
Consents in force
|
9.6
|
Legal validity; effective Security Interests
|
(a)
|
constitute that Borrower's legal, valid and binding obligations enforceable against that Borrower in accordance with their respective terms; and
|
(b)
|
create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,
|
9.7
|
No third party Security Interests
|
(a)
|
each Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and
|
(b)
|
no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.
|
9.8
|
No conflicts
|
(a)
|
any law or regulation; or
|
(b)
|
the constitutional documents of any Borrower; or
|
(c)
|
any contractual or other obligation or restriction which is binding on either Borrower or any of its assets.
|
9.9
|
No withholding taxes
|
9.10
|
No default
|
9.11
|
Information
|
9.12
|
No litigation
|
9.13
|
Compliance with certain undertakings
|
9.14
|
Taxes paid
|
9.15
|
ISM Code and ISPS Code compliance
|
9.16
|
No money laundering
|
9.17
|
No immunity
|
10
|
GENERAL UNDERTAKINGS
|
10.1
|
General
|
10.2
|
Title; negative pledge
|
(a)
|
hold the legal title to, and own the entire beneficial interest in its Ship, the Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents and except for Permitted Security Interests; and
|
(b)
|
not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future (including, but not limited to, the Borrowers' rights against the Lender under the Master Agreements or all or any part of the Borrowers' interest in any amount payable to the Borrowers by the Lender under each Master Agreement).
|
10.3
|
No disposal of assets
|
(a)
|
all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or
|
(b)
|
any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.
|
10.4
|
No other liabilities or obligations to be incurred
|
(a)
|
liabilities and obligations under the Finance Documents to which it is a party;
|
(b)
|
liabilities or obligations reasonably incurred in the ordinary course of owning, operating and chartering the Ship owned by it; and
|
(c)
|
in respect of the Transactions.
|
10.5
|
Information provided to be accurate
|
10.6
|
Provision of financial statements
|
(a)
|
as soon as possible, but in no event later than 180 days after the end of each financial year (commencing with the financial year ending 31 December 2013) of the Guarantor, the audited annual statements of the Guarantor;
|
(b)
|
as soon as possible, but in no event later than 90 days after a six-month in each financial year (commencing with the financial year ending 31 December 2013) of the Guarantor, the semi-annual management accounts of the Guarantor for such period certified as to their correctness by the chief financial officer of the Guarantor; and
|
(c)
|
promptly after each request by the Lender, such further financial information about the Borrowers, the Guarantor, the Group and/or the Ships including, but not limited to, charter arrangements, Financial Indebtedness and operating expenses as the Lender may reasonably require.
|
10.7
|
Form of financial statements
|
(a)
|
be prepared in accordance with all applicable laws and GAAP consistently applied;
|
(b)
|
give a true and fair view of the state of affairs of the Group, at the date of those accounts and of its profit for the period to which those accounts relate; and
|
(c)
|
fully disclose or provide for all significant liabilities of the Group.
|
10.8
|
Shareholder and creditor notices
|
10.9
|
Consents
|
(a)
|
for each Borrower to perform its obligations under any Finance Document and any Charter to which it is a party;
|
(b)
|
for the validity or enforceability of any Finance Document and any Charter to which it is a party;
|
(c)
|
for that Borrower to own and operate and continue to own and operate its Ship, and each Borrower will comply with the terms of all such consents.
|
10.10
|
Maintenance of Security Interests
Each Borrower will:
|
(a)
|
at its own cost, do all that is necessary to ensure that any Finance Document to which it is a party validly creates the obligations and the Security Interests which it purports to create; and
|
(b)
|
without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or become necessary or desirable for any Finance Document to be valid, enforceable or has admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.
|
10.11
|
Notification of litigation
|
10.12
|
Principal place of business
|
10.13
|
Confirmation of no default
|
(a)
|
states that no Event of Default or Potential Event of Default has occurred; or
|
(b)
|
states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.
|
10.14
|
Notification of default
|
(a)
|
the occurrence of an Event of Default or a Potential Event of Default; or
|
(b)
|
any matter which indicates that an Event of Default or a Potential Event of Default may have occurred
|
10.15
|
Provision of further information
|
(a)
|
to either Borrower, the Guarantor, the Approved Manager, either Ship, its Earnings or its Insurances and any Charter, each other member of the Group and any other Fleet Vessel as the Lender may require; or
|
(b)
|
to any other matter relevant to, or to any provision of, a Finance Document which may be requested by the Lender at any time.
|
10.16
|
"
Know your customer
"
checks
|
(a)
|
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
|
(b)
|
any change in the status of any Borrower or any Security Party after the date of this Agreement;
|
(c)
|
a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
|
10.17
|
Provision of copies and translation of documents
|
11
|
CORPORATE UNDERTAKINGS
|
11.1
|
General
|
11.2
|
Maintenance of status
|
11.3
|
Negative undertakings
|
(a)
|
carry on any business other than the ownership, chartering and operation of its Ship; or
|
(b)
|
pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital if an Event of Default has occurred or could result from the payment of such dividend or the making of any other form of distribution; or
|
(c)
|
effect any form of redemption, purchase or return of share capital;
|
(d)
|
provide any form of credit or financial assistance to:
|
|
(i)
|
a person who is directly or indirectly interested in any Borrower's share or loan capital; or
|
|
(ii)
|
any company in or with which such a person is directly or indirectly interested or connected
|
(e)
|
open or maintain any account with any bank or financial institution except accounts with the Lender for the purposes of the Finance Documents;
|
(f)
|
issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;
|
(g)
|
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than the Transactions; or
|
(h)
|
enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation; or
|
(i)
|
acquire any vessel other than the Ship owned or to be owned by it.
|
11.4
|
Minimum Liquidity
|
12
|
INSURANCE
|
12.1
|
General
|
12.2
|
Maintenance of obligatory insurances
|
(a)
|
fire and usual marine risks (including hull and machinery but excluding excess risks);
|
(b)
|
war risks (including war protection and indemnity, terrorism and piracy risks);
|
(c)
|
protection and indemnity risks; and
|
(d)
|
any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for such Borrower to insure and which are specified by the Lender by notice to such Borrower.
|
12.3
|
Terms of obligatory insurances
|
(a)
|
in Dollars;
|
(b)
|
in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) an amount which when aggregated with the insured value of the other Ship then subject to a Mortgage, is equal to 120 per cent, of the Loan, and (ii) the Market Value of the Ship owned by it; and
|
(c)
|
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market (currently $1,000,000,000);
|
(d)
|
in relation to protection and indemnity risks in respect of the Ship's full value and tonnage;
|
(e)
|
on approved terms; and
|
(f)
|
through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.
|
12.4
|
Further protections for the Lender
|
(a)
|
subject always to paragraph (b), name that Borrower as the sole named assured unless the interest of every other named assured is limited:
|
|
(i)
|
in respect of any obligatory insurances for hull and machinery and war risks;
|
|
(A)
|
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
|
|
(B)
|
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
|
|
(ii)
|
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it
|
(b)
|
in the case of any obligatory insurances against any risks other that protection and indemnity risks, and whenever the Lender requires name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
|
(c)
|
name the Lender as loss payee with such directions for payment as the Lender may specify;
|
(d)
|
provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;
|
(e)
|
provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender; and
|
(f)
|
provide that the Lender may make proof of loss if the relevant Borrower fails to do so.
|
12.5
|
Renewal of obligatory insurances
|
(a)
|
at least 21 days before the expiry of any obligatory insurance:
|
|
(i)
|
notify the Lender of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and
|
|
(ii)
|
obtain the Lender's approval to the matters referred to in paragraph (1);
|
(b)
|
at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Lender's approval pursuant to paragraph (a); and
|
(c)
|
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.
|
12.6
|
Copies of policies; letters of undertaking
|
(a)
|
they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 12.4;
|
(b)
|
they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;
|
(c)
|
they will advise the Lender immediately of any material change to the terms of the obligatory insurances;
|
(d)
|
they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the relevant Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and
|
(e)
|
they will not set off against any sum recoverable in respect of a claim relating to the relevant Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Lender.
|
12.7
|
Copies of certificates of entry
|
(a)
|
a certified copy of the certificate of entry for such Ship;
|
(b)
|
a letter or letters of undertaking in such form as may be required by the Lender; and
|
(c)
|
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.
|
12.8
|
Deposit of original policies
|
12.9
|
Payment of premiums
|
12.10
|
Guarantees
|
12.11
|
Restrictions on employment
|
12.12
|
Compliance with terms of insurances
|
(a)
|
each Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 12.7(d)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;
|
(b)
|
no Borrower shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;
|
(c)
|
each Borrower shall make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and
|
(d)
|
no Borrower shall employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
|
12.13
|
Alteration to terms of insurances
|
12.14
|
Settlement of claims
|
12.15
|
Provision of copies of communications
|
(a)
|
the approved brokers; and
|
(b)
|
the approved protection and indemnity and/or war risks associations; and
|
(c)
|
the approved insurance companies and/or underwriters, which relate directly or indirectly to:
|
|
(i)
|
that Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
|
|
(ii)
|
any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.
|
12.16
|
Provision of information
|
(a)
|
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
|
(b)
|
effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17 below or dealing with or considering any matters relating to any such insurances
|
12.17
|
Mortgagee's interest, additional perils insurance
|
12.18
|
Review of insurance requirements
|
12.19
|
Modification of insurance requirements
|
12.20
|
Compliance with mortgagee's instructions
|
13
|
SHIP COVENANTS
|
13.1
|
General
|
13.2
|
Ship's name and registration
|
(a)
|
keep the Ship owned by it registered in its name under an Approved Flag;
|
(b)
|
not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and
|
(c)
|
not change the name or port of registry of its Ship without the prior written consent of the Lender, such consent not to be unreasonably withheld.
|
13.3
|
Repair and classification
|
(a)
|
consistent with first-class ship ownership and management practice;
|
(b)
|
so as to maintain such Ship with the highest classification available for vessels of the same age, type and specification as such Ship free of overdue recommendations and conditions with a classification society which is a member of the IACS and acceptable to the Lender; and
|
(c)
|
so as to comply with all laws and regulations applicable to vessels registered at ports in the applicable Approved Flag State or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.
|
13.4
|
Classification society undertaking
|
(a)
|
to send to the Lender, following receipt of a written request from the Lender, certified true copies of all original class records and any other related records held by the classification society in relation to the Ship;
|
(b)
|
to allow the Lender (or its agents), at any time and from time to time, to inspect the original class and related records of any Borrower and the Ship owned by it at the offices of the classification society and to take copies of them;
|
(c)
|
to notify the Lender immediately in writing if the classification society:
|
|
(i)
|
receives notification from any Borrower or any other person that the relevant Ship's classification society is to be changed; or
|
|
(ii)
|
becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of the relevant Ship's class under the rules or terms and conditions of any Borrower's or the relevant Ship's membership of the classification society; and
|
(d)
|
following receipt of a written request from the Lender:
|
|
(i)
|
to confirm that no Borrower is in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or
|
|
(ii)
|
if any Borrower is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Lender in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.
|
13.5
|
Modification
|
13.6
|
Removal of parts
|
13.7
|
Surveys
|
13.8
|
Inspection
|
13.9
|
Prevention of and release from arrest
|
(a)
|
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, its Earnings or its Insurances;
|
(b)
|
all taxes, dues and other amounts charged in respect of the Ship owned by it, its Earnings or its Insurances; and
|
(c)
|
all other outgoings whatsoever in respect of the Ship owned by it, its Earnings or its Insurances,
|
13.10
|
Compliance with laws etc.
|
(a)
|
comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to its Ship, its ownership, operation and management or to its business;
|
(b)
|
not employ its Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code;
|
(c)
|
in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit it to enter or trade to any zone which is declared a war zone by any government or by any Ship's war risks insurers unless the prior written consent of the Lender has been given and the relevant Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lender may require; and
|
(d)
|
comply with all applicable regulations (in the United States of America and, where relevant, elsewhere) with respect to maintenance of its Certificate of Financial Responsibility and other certificates of third party liability insurance so as to enable its Ship to trade fully at all times.
|
13.11
|
Provision of information
|
(a)
|
the Ship owned by it, its employment, position and engagements;
|
(b)
|
the Earnings and payments and amounts due to any Ship's master and crew;
|
(c)
|
any expenses incurred, or likely to be incurred, in connection with the trading, chartering, operation, maintenance or repair of any Ship and any payments made in respect of that Ship;
|
(d)
|
any towages and salvages; and
|
(e)
|
each Borrower's, the Approved Manager's or any Ship's compliance with the ISM Code and the ISPS Code,
|
13.12
|
Notification of certain events
|
(a)
|
any casualty which is or is likely to be or to become a Major Casualty;
|
(b)
|
any occurrence as a result of which any Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;
|
(c)
|
any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;
|
(d)
|
any arrest or detention of any Ship, any exercise or purported exercise of any lien on that Ship or its Earnings or any requisition of that Ship for hire;
|
(e)
|
any intended dry docking of any Ship;
|
(f)
|
any Environmental Claim made against any Borrower or in connection with any Ship, or any Environmental Incident;
|
(g)
|
any claim for breach of the ISM Code or the ISPS Code being made against any Borrower, the Approved Manager or otherwise in connection with any Ship; or
|
(h)
|
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,
|
13.13
|
Restrictions on chartering, appointment of managers etc
|
(a)
|
let that Ship on demise charter for any period;
|
(b)
|
enter into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 24 months;
|
(c)
|
enter into any charter in relation to that Ship under which more than 2 months' hire (or the equivalent) is payable in advance;
|
(d)
|
charter that Ship otherwise than on bona fide arm's length terms at the time when that Ship is fixed;
|
(e)
|
appoint a manager of that Ship other than the Approved Manager or an affiliate of the Approved Manager or agree to any alteration to the terms of the Approved Manager's appointment;
|
(f)
|
de-activate or lay up that Ship; or
|
(g)
|
put that Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed US$2,000,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason.
|
13.14
|
Notice of Mortgage
|
13.15
|
Sharing of Earnings
|
(a)
|
enter into any agreement or arrangement for the sharing of any Earnings; and
|
(b)
|
enter into any agreement or arrangement for the postponement of any date on which any Earnings are due, the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of the relevant Borrower to the Earnings; or
|
(c)
|
enter into any agreement or arrangement for the release, or adverse alteration to, any guarantee or Security Interest relating to any Earnings.
|
13.16
|
ISPS Code
|
(a)
|
procure that its Ship and the company responsible for that Ship's compliance with the ISPS Code comply with the ISPS Code; and
|
(b)
|
maintain for its Ship an ISSC; and
|
(c)
|
notify the Lender immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of any Ship.
|
13.17
|
Charter Assignment
|
(a)
|
serve notice of the Charter Assignment on the charterer and procure that the charterer acknowledges such notice in such form as the Lender may approve or require; and
|
(b)
|
deliver to the Lender such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Schedule 2, Part A as the Lender may require.
|
14
|
SECURITY COVER
|
14.1
|
Minimum required security cover
|
(a)
|
the aggregate Market Value of the Ships (which are then subject to a Mortgage); plus
|
(b)
|
the net realisable value of any additional security previously provided under this Clause 14 is below 125 per cent. of the Loan.
|
14.1
|
Provision of additional security; prepayment
|
14.3
|
Valuation of Ships
|
(a)
|
as at a date not more than 14 days previously;
|
(b)
|
by two Approved Brokers appointed or approved by the Lender;
|
(c)
|
with or without physical inspection of the Ship (as the Lender may require);
|
(d)
|
on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment;
|
(e)
|
after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.
|
14.4
|
Value of additional vessel security
|
14.5
|
Valuations binding
|
14.6
|
Provision of information
|
14.7
|
Payment of valuation expenses
|
14.8
|
Frequency of Valuations
|
14.9
|
Application of prepayment
|
15
|
PAYMENTS AND CALCULATIONS
|
15.1
|
Currency and method of payments
|
(a)
|
by not later than 11.00 a.m. (London time) on the due date;
|
(b)
|
in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and
|
(c)
|
to such account of the Lender with a bank in New York as the Lender may from time to time notify to the Borrowers.
|
15.2
|
Payment on non-Business Day
|
(a)
|
the due date shall be extended to the next succeeding Business Day; or
|
(b)
|
if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,
|
15.3
|
Basis for calculation of periodic payments
|
15.4
|
Lender accounts
|
15.5
|
Accounts prima facie evidence
|
16
|
APPLICATION OF RECEIPTS
|
16.1
|
Normal order of application
|
(a)
|
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents (including for the avoidance of doubt the Master Agreements) in the following order and proportions:
|
|
(i)
|
first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrowers under Clauses 19, 20 and 21 of this Agreement or by the Borrowers or any Security Party under any corresponding or similar provision in any other Finance Document);
|
|
(ii)
|
secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Lender under the Finance Documents (including for the avoidance of doubt the Master Agreements) (and, for this purpose, the expression "
interest
"
shall include any net amount which the Borrowers shall have become liable to pay or deliver under section 9(h) (Interest and Compensation) of the Master Agreements but shall have failed to pay or deliver to the Lender at the time of application or distribution under this Clause 16); and
|
|
(iii)
|
thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);
|
(b)
|
SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Lender, by notice to the Borrowers and the Security Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of this Clause; and
|
(c)
|
THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.
|
16.2
|
Variation of order of application
|
16.3
|
Notice of variation of order of application
|
16.4
|
Appropriation rights overridden
|
17
|
APPLICATION OF EARNINGS; SWAP PAYMENTS
|
17.1
|
Payment of Earnings
|
(a)
|
(subject only to the provisions of the relevant General Assignment) all the Earnings in respect of each Ship are paid to the Earnings Account for that Ship; and
|
(b)
|
all payments by the Lender to the Borrowers under a Transaction are paid to the Earnings Accounts (or either of them).
|
17.2
|
Location of accounts
|
(a)
|
comply with any requirement of the Lender as to the location or re-location of the Earnings Accounts (or either of them);
|
(b)
|
execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Earnings Accounts (or either of them).
|
17.3
|
Debits for expenses etc.
|
17.4
|
Earnings Accounts balances
|
18
|
EVENTS OF DEFAULT
|
18.1
|
Events of Default
|
(a)
|
any Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or
|
(b)
|
any breach occurs of Clause 8.2, 9.3, 10.2, 10.3, 11.2, 11.3, 11.4, 12.2, 12.3, 13.3, 13.9, 14.2 or 17.1 or clause 12.3 of the Guarantee; or
|
(c)
|
any breach by any Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (b)) if, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 10 days after written notice from the Lender requesting action to remedy the same; or
|
(d)
|
(subject to any applicable grace period specified in any Finance Document) any breach by any Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a), (b) or (c)); or
|
(e)
|
any representation, warranty or statement made by, or by an officer of, a Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated; or
|
(f)
|
any of the following occurs in relation to any Financial Indebtedness of a Relevant Person (exceeding, in the case of the Guarantor, $10,000,000 (or the equivalent in any other currency) in aggregate and, in the case of any other Relevant Person, $500,000 (or the equivalent in any other currency) in aggregate):
|
|
(i)
|
any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or
|
|
(ii)
|
any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or
|
|
(iii)
|
a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or
|
|
(iv)
|
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or
|
|
(v)
|
any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or
|
(g)
|
any of the following occurs in relation to a Relevant Person:
|
|
(i)
|
a Relevant Person becomes, in the opinion of the Lender, unable to pay its debts as they fail due; or
|
|
(ii)
|
any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress, or any form of freezing order, in respect of a sum of, or sums aggregating $100,000 or more or the equivalent in another currency;
|
|
(iii)
|
any administrative or other receiver is appointed over any asset of a Relevant Person; or
|
|
(iv)
|
an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or
|
|
(v)
|
any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or
|
|
(vi)
|
a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or
|
|
(vii)
|
a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than a Borrower or the Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or
|
|
(v
iii
)
|
an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person in any Pertinent Jurisdiction, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 30 days of being made or presented, or (bb) within 30 days of the
|
|
(ix)
|
a Relevant Person or its directors take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or
|
|
(x)
|
any meeting of the members or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or
|
|
(xi)
|
in a Pertinent Jurisdiction other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Lender is similar to any of the foregoing; or
|
(h)
|
any Borrower or any Security Party ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, is material in the context of this Agreement; or
|
(i)
|
it becomes unlawful in any Pertinent Jurisdiction or impossible:
|
|
(i)
|
for any Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or
|
|
(ii)
|
for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or
|
(j)
|
any consent necessary to enable any Borrower to own, operate or charter the Ship owned or to be owned by it or to enable any Borrower or any Security Party to comply with any provision which the Lender considers material of a Finance Document to which it is a party is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or
|
(k)
|
it appears to the Lender that, without its prior written consent, a change has occurred or probably has occurred after the date of this Agreement in the direct shareholders or the legal ownership of any of the shares in any Borrower or in the control of the voting rights attaching to any of those shares; or
|
(l)
|
any person (other than any financial institution acting as a passive investor) becomes at any time the legal or ultimate beneficial owner of a higher percentage of the total issued share capital of the Guarantor than the percentage of the total issued share capital of the Guarantor beneficially owned by any member or members of the Palios Family; or
|
(m)
|
Mr. Simeon Patios ceases to hold an executive position in the Guarantor and active role in the decision making in respect of the Guarantor; or
|
(n)
|
without the prior consent of the Lender, the shares of the Guarantor cease to be listed on the New York Stock Exchange; or
|
(o)
|
any provision which the Lender considers material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or
|
(p)
|
the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
|
(q)
|
an Event of Default (as defined in Section 14 of each Master Agreement) has occurred and is continuing with the Borrowers as the Defaulting Party (as defined in the Master Agreements) under each such Master Agreement or an Early Termination Date has been designated by the Lender in accordance with Section 6(a) of each Master Agreement; or
|
(r)
|
a Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason except with the consent of the Lender; or
|
(s)
|
any other event occurs or any other circumstances arise or develop including, without limitation:
|
|
(i)
|
a material adverse change in the financial position, state of affairs or prospects of any Relevant Person; or
|
|
(ii)
|
any accident or other event involving any Ship or another vessel owned, chartered or operated by a Relevant Person,
|
18.2
|
Actions following an Event of Default
|
(a)
|
serve on the Borrowers a notice stating that all obligations of the Lender to the Borrowers under this Agreement are terminated; and/or
|
(b)
|
serve on the Borrowers a notice stating that all or part of the Loan, together with accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or
|
(c)
|
take any other action which, as a result of the Event of Default or any notice served under paragraph (a) or (b), the Lender is entitled to take under any Finance Document or any applicable law.
|
18.3
|
Termination of Commitment
|
18.4
|
Acceleration of Loan
|
18.5
|
Multiple notices; action without notice
|
18.6
|
Exclusion of Lender liability
|
(a)
|
for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or
|
(b)
|
as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset
|
18.7
|
Relevant Persons
|
18.8
|
Interpretation
|
19
|
FEES AND EXPENSES
|
19.1
|
Arrangement and Commitment fee
|
(a)
|
a non-refundable arrangement fee of $135,000 (representing 0.75 per cent. of the maximum amount of the Commitment) on the date of this Agreement; and
|
(b)
|
quarterly in arrears during the period from (and including) the date of this Agreement to the earlier of (i) the final Drawdown Date to occur and (ii) the last day of the Availability Period and on the last date of that period, a commitment fee at the rate of 1 per cent. per annum on the undrawn amount of the Commitment,
|
19.2
|
Costs of negotiation, preparation etc.
|
19.3
|
Costs of variations, amendments, enforcement etc.
|
(a)
|
any amendment or supplement to a Finance Document (except those made pursuant to clauses 25.2, 25.4 and 25.7), or any proposal for such an amendment to be made;
|
(b)
|
any consent or waiver by the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;
|
(c)
|
the valuation of any security provided or offered under Clause 14 or any other matter relating to such security;
|
(d)
|
where the Lender, in its absolute opinion, considers that there has been a material change to the insurances in respect of any Ship, the review of the Insurances pursuant to Clause 12.18; or
|
(e)
|
any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.
|
19.4
|
Documentary taxes
|
19.5
|
Certification of amounts
|
20
|
INDEMNITIES
|
20.1
|
Indemnities regarding borrowing and reduction of Loan
|
(a)
|
a Tranche not being borrowed on the date specified in the relevant Drawdown Notice for any reason other than a default by the Lender;
|
(b)
|
the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;
|
(c)
|
any failure (for whatever reason) by the Borrowers to make payment of any amount due under a Finance Document, on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 6);
|
(d)
|
the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,
|
20.2
|
Breakage costs
|
(a)
|
in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and
|
(b)
|
in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or that part which the Lender determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating or otherwise in connection with, a number of transactions of which this Agreement is one.
|
20.3
|
Miscellaneous indemnities
|
(a)
|
any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document;
|
(b)
|
any other Pertinent Matter,
|
|
20.4 Currency indemnity
|
(a)
|
making or lodging any claim or proof against any Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or
|
(b)
|
obtaining an order or judgment from any court or other tribunal; or
|
(c)
|
enforcing any such order or judgment,
|
20.5
|
Certification of amounts
|
20.6
|
Application to Master Agreements
|
20.7
|
Environmental indemnity
|
21
|
NO SET-OFF OR TAX DEDUCTION
|
21.1
|
No deductions
|
(a)
|
without any form of set-off, cross-claim or condition; and
|
(b)
|
free and clear of any tax deduction except a tax deduction which a Borrower is required by law to make.
|
21.2
|
Grossing-up for taxes
|
(a)
|
that Borrower shall notify the Lender as soon as it becomes aware of the requirement;
|
(b)
|
that Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;
|
(c)
|
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.
|
21.3
|
Evidence of payment of taxes
|
21.4
|
Exclusion of tax on overall net income
|
21.5
|
Application to Master Agreements
|
22
|
ILLEGALITY, ETC.
|
22.1
|
Illegality
|
(a)
|
unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
|
(b)
|
contrary to, or inconsistent with, any regulation,
|
22.2
|
Notification and effect of illegality
|
22.3
|
Mitigation
|
(a)
|
have an adverse effect on its business, operations or financial condition; or
|
(b)
|
involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or
|
(c)
|
involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage,
|
23
|
INCREASED COSTS
|
23.1
|
Increased costs
|
(a)
|
the introduction or alteration after the date of this Agreement of a law, or a regulation or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or
|
(b)
|
the effect of complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement or
|
(c)
|
the implementation or application of or compliance with the "Basel III, a global regulatory framework for more resilient banks and banking systems", "Basel Ill: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010
(
"
Basel III
"
)
or any other law or regulation which implements Basel III (whether such implementation, application or compliance is by a government, regulator or the Lender or a parent company or affiliate of it),
|
|
(i)
|
an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement of funding or maintaining the Loan or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums;
|
|
(ii)
|
a reduction in the amount of any payment to the Lender under this Agreement, or in the effective return which such a payment represents to the Lender, or on its capital;
|
|
(iii)
|
an additional or increased cost of funding or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan; or
|
|
(iv)
|
a liability to make a payment, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement;
|
23.2
|
Notification to Borrowers of claim for increased costs
|
23.3
|
Payment of increased costs
|
23.4
|
Notice of prepayment
|
23.5
|
Prepayment
|
24
|
SET-OFF
|
24.1
|
Application of credit balances
|
(a)
|
apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of any Borrower at any office in any country of the Lender, including (without limitation) under the Master Agreements, in or towards satisfaction of any sum then due from the Borrowers to the Lender under any of the Finance Documents; and
|
(b)
|
for that purpose:
|
|
(i)
|
break, or alter the maturity of, all or any part of a deposit of either Borrower;
|
|
(ii)
|
convert or translate all or any part of a deposit or other credit balance into Dollars;
|
|
(iii)
|
enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.
|
24.2
|
Existing rights unaffected
|
24.3
|
No Security Interest
|
25
|
TRANSFERS AND CHANGES IN LENDING OFFICE
|
25.1
|
Transfer by Borrowers
|
(a)
|
transfer any of their respective rights, liabilities or obligations under any Finance Document; or
|
(b)
|
enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of, their rights or liabilities would vest in, or pass to, another person.
|
25.2
|
Assignment by Lender
|
25.3
|
Rights of assignee
|
25.4
|
Sub-participation; subrogation assignment
|
25.5
|
Disclosure of information
|
25.6
|
Change of lending office
|
(a)
|
the date on which the Borrowers receive the notice; and
|
(b)
|
the date, if any, specified in the notice as the date on which the change will come into effect.
|
25.7
|
Security over Lender's rights
|
(a)
|
any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and
|
(b)
|
if the Lender is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by the Lender as security for those obligations or securities
|
|
(i)
|
release the Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or
|
|
(ii)
|
require any payments to be made by the Borrowers or any Security Party or grant to any person any more extensive rights than those required to be made or granted to the Lender under the Finance Documents.
|
26
|
VARIATIONS AND WAIVERS
|
26.1
|
Variations, waivers etc. by Lender
|
26.2
|
Exclusion of other or implied variations
|
(a)
|
a provision of this Agreement or another Finance Document; or
|
(b)
|
an Event of Default; or
|
(c)
|
a breach by any Borrower or a Security Party of an obligation under a Finance Document or the general law; or
|
(d)
|
any right or remedy conferred by any Finance Document or by the general law,
|
27
|
NOTICES
|
27.1
|
General
|
27.2
|
Addresses for communications
|
|
A notice by letter or fax shall be sent:
|
(a)
|
to the Borrowers:
|
c/o Approved Manager
16 Pendelis Street
175 64 Paleo Faliro
Athens
Greece
|
|
|
|
|
|
Attn: Chief Financial Officer
|
|
|
|
|
|
Fax No: +30 210 9470101
|
|
|
|
(b)
|
to the Lender:
|
Senator House
85 Queen Victoria Street
London EC4V 4HA
United Kingdom
|
|
|
|
|
|
Attn: Simon Baker/William Barrand
|
|
|
|
|
|
Fax No: +44 207 71039
|
|
|
|
27.3
|
Effective date of notices
|
(a)
|
a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and
|
(b)
|
a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.
|
27.4
|
Service outside business hours
|
(a)
|
on a day which is not a business day in the place of receipt; or
|
(b)
|
on such a business day, but after 5 p.m. local time,
|
27.5
|
Illegible notices
|
27.6
|
Valid notices
|
(a)
|
the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
|
(b)
|
in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.
|
27.7
|
English language
|
27.8
|
Meaning of
"
notice
"
|
27.9
|
Electronic communications
|
(a)
|
the unencrypted information is transported over an open, publicly accessible network and can, in principle, be viewed by others, thereby allowing conclusions to be drawn about a banking relationship;
|
(b)
|
the information can be changed and manipulated by a third party;
|
(c)
|
the sender's identity (sender of the e-mail) can be assumed or otherwise manipulated;
|
(d)
|
the exchange of information can be delayed or disrupted due to transmission errors, technical faults, disruptions, malfunctions, illegal interventions, network overload, the malicious blocking of electronic access by third parties or other shortcomings on the part of the network provider. In certain situations, time-critical orders and instructions might not be processed on time;
|
(e)
|
the Lender assumes no liability for any loss incurred as a result of manipulation of the e-mail address or content by anyone other than the officers and/or employees of the Lender nor is it liable for any loss incurred by the Borrowers and any other Security Party due to interruptions and delays in transmission caused by technical problems.
|
28
|
JOINT AND SEVERAL LIABILITY
|
28.1
|
General
|
28.2
|
No impairment of Borrowers' obligations
|
(a)
|
this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;
|
(b)
|
the Lender entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;
|
(c)
|
the Lender releasing the other Borrower or any Security Interest created by a Finance Document; or
|
(d)
|
any combination of the foregoing.
|
28.3
|
Principal debtors
|
28.4
|
Borrowers' guarantee under the Master Agreements
|
(a)
|
guarantees as primary obligor and independent and without, in respect of its obligations under this Clause 28.4, any of the rights or defences of a surety, the due payment of all amounts payable by the other Borrower under or in connection with the Master Agreements;
|
(b)
|
undertakes to pay to the Lender, on the Lender's demand, any such amount which is not paid by that Borrower when payable; and
|
(c)
|
fully indemnifies the Lender in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Lender as a result of or in connection with any obligation or liability guaranteed by that Borrower being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Lender would otherwise have been entitled to recover.
|
28.5
|
Subordination
|
(a)
|
claim any amount which may be due to it from the other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or
|
(b)
|
take or enforce any form of security from the other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of the other Borrower; or
|
(c)
|
set off such an amount against any sum due from it to the other Borrower; or
|
(d)
|
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower or other Security Party; or
|
(e)
|
exercise or assert any combination of the foregoing.
|
28.6
|
Borrower's required action
|
29
|
SUPPLEMENTAL
|
29.1
|
Rights cumulative, non-exclusive
|
(a)
|
cumulative;
|
(b)
|
may be exercised as often as appears expedient; and
|
(c)
|
shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.
|
29.2
|
Severability of provisions
|
29.3
|
Counterparts
|
29.4
|
Third party rights
|
30
|
LAW AND JURISDICTION
|
30.1
|
English law
|
30.2
|
Exclusive English jurisdiction
|
30.3
|
Choice of forum for the exclusive benefit of the Lender
|
(a)
|
to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; and
|
(b)
|
to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.
|
30.4
|
Process agent
|
30.5
|
Lender's rights unaffected
|
30.6
|
Meaning of
"
proceedings
"
|
|
THIS AGREEMENT
has been entered into on the date stated at the beginning of this Agreement.
|
To:
|
COMMONWEALTH BANK OF AUSTRALIA
|
|
Senator House
|
|
85 Queen Victoria Street
|
|
London EC4V 4HA
|
|
|
|
Fax No.: [
!
]
|
|
|
From:
|
Taka Shipping Company Inc.
|
|
and
|
|
Fayo Shipping Company Inc.
|
[date] |
1
|
We refer to the loan agreement (the "
Loan Agreement
"
)
dated 9 January 2014 and made between ourselves, as joint and several Borrowers, and yourselves, as Lender, in connection with a loan facility of up to US$18,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
|
2
|
We request to borrow Tranche [A][B] as follows:
|
(a)
|
Amount: US$[
!
];
|
(b)
|
Drawdown Date: [
!
];
|
(c)
|
[Duration of the first Interest Period shall be [
!
] months;]
|
(d)
|
Payment instructions: account of [Name of the Borrower] (Account No. xxx) with yourselves.
|
3
|
We represent and warrant that:
|
(a)
|
the representations and warranties in Clause 9 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing;
|
(b)
|
no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Tranche.
|
4
|
This notice cannot be revoked without the prior consent of the Lender.
|
5
|
[We authorise you to deduct all accrued commitment fee referred to in Clause 19 from the amount of the Tranche.]
|
1
|
A duly executed original of each Finance Document (and of each document required to be delivered by each Finance Document) other than those referred to in Part B of this Schedule 2.
|
2
|
Copies of the certificate of incorporation and constitutional documents of each Borrower and the Guarantor.
|
3
|
Copies of resolutions of the shareholders and directors of each Borrower authorising the execution of the Finance Documents to which that Borrower is a party and authorising named signatories to give the Drawdown Notices and other notices under this Agreement.
|
4
|
Copies of the resolutions of the executive committee of the Guarantor authorising the execution of the Finance Documents to which it is party.
|
5
|
The original of any power of attorney under which any Finance Document is to be executed on behalf of each Borrower or the Guarantor.
|
6
|
The originals of any mandates or other documents required in connection with the opening or operation of the Earnings Accounts.
|
7
|
Such evidence as the Lender may require as to the ultimate legal and beneficial shareholders in respect of the Borrowers and the Guarantor.
|
8
|
Documentary evidence that the agent for service of process named in Clause 30 has accepted its appointment.
|
9
|
If the Lender so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Lender.
|
10
|
A favourable legal opinion from lawyers appointed by the Lender on such matters concerning the laws of the Marshall Islands and such other relevant jurisdictions as the Lender may require.
|
11
|
Any documents as the Lender may require in respect of the Borrowers and any Security Party to satisfy the Lender's "know your customer" requirements and its other customary money laundering checks.
|
12
|
The Financial Statements of the Guarantor as described in clause 10.7 of the Loan Agreement.
|
13
|
Any other documents that the Lender may reasonably require in respect of the Borrowers and any Security Party.
|
1
|
A duly executed original of each Account Pledge, the Mortgage and the General Assignment each in respect of the Ship to be financed by the relevant Tranche (the "
Relevant Ship
"
).
|
2
|
Documentary evidence that:
|
(a)
|
the Relevant Ship is definitively and permanently registered in the name of the relevant Borrower under an Approved Flag;
|
(b)
|
the Relevant Ship is in the absolute and unencumbered ownership of the relevant Borrower save as contemplated by the Finance Documents;
|
(c)
|
the Relevant Ship maintains the highest available class with such first class classification society which is a member of the IACS as the Lender may approve free of all recommendations and conditions of such classification society;
|
(d)
|
a Mortgage has been duly registered against the Relevant Ship in accordance with the laws and requirements of the relevant Approved Flag State; and
|
(e)
|
the Relevant Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.
|
3
|
Documents establishing that the Relevant Ship will, as from the relevant Drawdown Date, be managed by the Approved Manager on terms acceptable to the Lender, together with:
|
(a)
|
a letter of undertaking executed by the Approved Manager in favour of the Lender in the terms required by the Lender agreeing certain matters in relation to the management of the Relevant Ship and subordinating the rights of the Approved Manager against the Relevant Ship and the relevant Borrower to the rights of the Lender under the Finance Documents; and
|
(b)
|
copies of the Approved Manager's Document of Compliance and of the Relevant Ship's SMC and ISSC (together with any other details of the applicable safety management system which the Lender requires).
|
4
|
Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Marshall Islands, the applicable Approved Flag State and such other relevant jurisdictions as the Lender may require.
|
5
|
A favourable opinion from an independent insurance consultant acceptable to the Lender on such matters relating to the insurances for the Relevant Ship as the Lender may require.
|
6
|
Two desktop valuations of the Relevant Ship, each addressed to the Lender, stated to be for the purposes of this Agreement and dated not earlier than 14 days before the relevant Drawdown Date, each issued in accordance with Clause 14.3, which show a value for the relevant Ship satisfactory to the Lender.
|
7
|
The financial statements of the Guarantor referred to in clause 10.6 of the Loan Agreement.
|
8
|
The certificates in respect of International Ship and Port Facility Security Code (ISPS) and the International Safety Management Code (including the guidelines on its implementation) (ISM), adopted by the International Maritime Organisation.
|
9
|
Documentary evidence that the agent for service of process named in Clause 30 has accepted its appointment.
|
10
|
Any other documents as the Lender may reasonably require in respect of the Borrowers and any Security Party.
|
11
|
If the Lender so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Lender.
|
64 |
|
|
LOAN AGREEMENT
|
|
relating to an unsecured term loan facility
|
|
of up to US$50,000,000 to be used for
|
|
general corporate purposes and working
|
|
capital requirements
|
(1)
|
DIANA SHIPPING INC., a corporation incorporated under the laws of The Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (the
"Lender"),
as lender;
|
(2)
|
ELUK SHIPPING COMPANY INC., a corporation incorporated under the laws of The Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 and any wholly-owned subsidiary of the Guarantor that becomes an Additional Borrower pursuant to Section 12 hereof (each a
"Borrower",
collectively the "Borrowers"), as borrowers; and
|
(3)
|
DIANA CONTAINERSHIPS INC., a corporation incorporated under the laws of The Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (the
"Guarantor"),
as guarantor.
|
1
|
INTERPRETATION
|
1.1
|
Definitions
.
|
2
|
FACILITY
|
2.1
|
Amount of facility.
Subject to the other provisions of this Agreement, the Lender shall make available to the Borrowers the Loan in up to five (5) advances.
|
2.2
|
Purpose of Loan.
The Borrowers undertake to use the Loan for general corporate purposes, working capital requirements and for partially financing the acquisition cost of the Vessels;
provided, however,
that all
Vessels shall be acquired by a Borrower within twelve (12) months of the execution of this Agreement.
|
3
|
DRAWDOWN
|
3.I
|
Request for Advance.
Subject to the following conditions, a Borrower may request an Advance be made by no later than 2 Banking Days prior to the intended Drawdown Date. A Borrower may request an Advance for up
to
the full undrawn portion of the Loan at any time. Any person becoming an Additional Borrower may request an Advance in an amount not exceeding the undrawn portion of the Loan and
all
Borrowers shall execute an amended and restated Note pursuant to which all Borrowers will be jointly and severally liable for the entirety of the Loan.
|
3.2
|
Availability.
The conditions referred to in Clause 3.1 are that:
|
|
a)
|
the Drawdown Date has to be a Banking Day during the Availability Period; and
|
|
b)
|
the aggregate amount of all Advances shall not
exceed
550,0013,000.
|
4
|
INTEREST
|
4.1
|
Payment of normal interest.
Subject to the
provisions of this Agreement, interest on the Loan
in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.
|
4.2
|
Normal rate of interest.
Subject to the provisions of this Agreement, the rate of interest on the Loan shall be the aggregate of (i) the Margin, and (ii) LIBOR for that Interest Period.
|
5
INTEREST PERIODS
|
5.1
|
Commencement of Interest Periods.
The first Interest Period applicable to an Advance shall commence on the Drawdown Date relative to that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.
|
5.2
|
Duration of Interest Periods.
each Interest Period shall be:
|
|
a)
|
3 or 6 months; or
|
|
b)
|
such other period as the Lender may agree with the Borrowers.
|
6
|
REPAYMENT AND PREPAYMENT
|
6.1
|
Repayment.
Subject to the provisions of this Section 6 regarding voluntary prepayments and the application thereof, each Borrower shall, on the Repayment Date, repay the principal amount of the Loan for which such Borrower is obligated under the applicable Note, and accrued interest thereon.
|
6.2
|
Voluntary prepayment.
Each Borrower may prepay the whole or any part of the Loan, without penalty, at any time during the term of the Loan.
|
7
|
EVENTS OF DEFAULT
|
7.1
|
Events of Default.
An Event of Default occurs if
:
|
|
a)
|
a Borrower fails to pay when due or (if so payable) on demand any sum payable tinder this
Agreement; or
|
|
b)
|
any formal declaration of bankruptcy or any formal statement to the effect that any Borrower or the Guarantor is insolvent or likely to become insolvent is made by any third party; or a provisional liquidator is appointed in respect of the any or Guarantor, a winding up order is made in relation to the Borrower or Guarantor; or
|
|
c)
|
any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Lender is similar to any of the foregoing; or
|
|
d)
|
a change of control, merger or acquisition with respect to any Borrower or the Guarantor; or
|
|
e)
|
any Borrower fails to pay any Indebtedness in the outstanding principal amount equal to or exceeding Five Hundred Thousand Dollars ($500,000) or such Indebtedness is, or by reason of such default is subject to being, accelerated or any party becomes entitled to enforce the security for any such Indebtedness and such party shall take steps to enforce the same, unless such default or enforcement is being contested in good faith and by appropriate proceedings or other acts and the Borrower shall set aside on its books adequate reserves with respect thereto.
|
7.2
|
Actions following an Event of Default. On,
or at any time after, the occurrence of an Event of Default the Lender may:
|
|
a)
|
serve on the Borrowers a notice stating that all obligations of the Lender to the Borrowers under this Agreement are terminated, provided that no notice shall be required in connection with the events contemplated by 7.1(b) and (c); and/or
|
|
b)
|
serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand, provided that no notice shall be required in connection with the events contemplated by 7.1(b) and (c); and/or
|
|
c)
|
take any other action which, as a result of the Event of Default or any notice served under paragraph (a) or (b), the Lender is entitled to take under any applicable law.
|
7.3
|
Termination of Loan. On
the service of a notice under paragraph (a) of Clause 7.2, the Loan and all other obligations of the Lender to the Borrowers under this Agreement shall terminate.
|
7.4
|
Acceleration of Loan.
On the service of a notice under paragraph (b) of Clause 7.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers under this Agreement shall become immediately due and payable or, as the case may be, payable on demand.
|
8
|
NOTICES
|
8.1
|
General.
All notices, requests, demands and other communications to any party hereunder shall be in writing (including prepaid overnight courier, facsimile transmission or similar writing) and shall be given to the Borrowers, the Guarantor and the Lender at their respective address or facsimile number set forth below or at such other address or facsimile numbers as such party may hereafter specify for the purpose by notice to each other party hereto. Each such notice, request or other communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 8.1 and telephonic confirmation
of
receipt thereof is obtained or (ii) if given by mail, prepaid overnight courier or any other means, when received at the address specified in this Section or when delivery at such address is refused.
|
8.2
|
Addresses for communications.
A notice shall be sent:
|
a)
|
|
to the Borrower:
|
Eluk Shipping Company Inc.
|
|
c/o Unitized Ocean Transport Limited
|
||||
|
Pendelis 18, 175 64 Palaio Faliro
|
|||
|
Athens
|
|||
|
Greece
|
|||
|
Fax No.
|
+30 216 6002599
|
||
b)
|
|
to the Guarantor:
|
Diana Containerships Inc.
|
|
c/o Unitized Ocean Transport Limited | ||||
|
Pendelis 18, 175 64 Palaio Faliro
|
|||
|
Athens
|
|||
|
Greece
|
|||
|
Fax No.
|
+30 216 6002599
|
||
c)
|
|
to the Lender
|
Diana Shipping Inc.
|
|
|
Pendelis 16, 175 64 Palaio Faliro
|
|||
|
Athens
|
|||
|
Greece
|
|||
|
Fax No.
|
+30 210 9470 101
|
9
|
COVENANTS
|
9.1
|
Liens
. No Borrower shall create, assume or permit to exist, any mortgage, pledge, lien, charge, encumbrance or any security interest whatsoever upon any vessel acquired by such Borrower with respect to which a portion of the funding was obtained pursuant to the terms of this Agreement except (a) liens in favor of the Lender, (b) pledges or deposits to secure obligations under workmen's compensation laws or similar legislation, deposits to secure public or statutory obligations, warehousemen's or other like liens, or deposits to obtain the release of such liens and deposits to secure surety, appeal or customs bonds on which such Borrower is the principal, as to all of the foregoing, only to the extent arising and continuing in the ordinary course of business or (c) other liens, charges, encumbrances, pledges and deposits to secure obligations incidental to the conduct of the business of each such party, the ownership of any such party's property and assets and which do not in the aggregate materially detract from the value of each such party's property or assets or materially impair the use thereof in the operation of its business.
|
9.2
|
Indebtedness
. No Borrower shall incur, and the Guarantor shall not incur and shall not permit any Borrower or any other subsidiary of the Guarantor to incur, any Indebtedness without the prior written consent of the Lender.
|
10
|
FEES AND EXPENSES
|
10.1
|
Back End Fee
. The Borrowers, jointly and severally, agree to pay to the Lender, on the earlier of the Repayment Date or any date on which a voluntary prepayment is paid pursuant to Section 6.2 hereof (each a "Prepayment Date"), a back end fee in an amount equal to one and one quarter per cent. per annum (1.25%) of (i) the total amount of the Loan outstanding, with respect to a repayment made on the Repayment Date, or (ii) the amount of any prepayment made on a Prepayment Date (the "Back End Fee"), provided that such Back End Fee shall not exceed, in the aggregate for all Borrowers, $2,500,000.
|
11
|
GUARANTEE
|
11.1
|
Guarantee and indemnity.
In order to induce the Lender to make the Loan to the Borrower, the Guarantor irrevocably and unconditionally:
|
|
a)
|
guarantees, as a primary obligor and not merely
as
a surety, to Lender, the punctual payment and performance by each Borrower when due, whether at stated maturity, by acceleration or otherwise, of all obligations of the Borrower hereunder, whether for principal, interest, fees, expenses or otherwise (collectively, the
"
Guaranteed Obligations");
|
|
b)
|
undertakes with the Lender that whenever any Borrower does not pay any Guaranteed Obligation when due, the Guarantor shall immediately on demand pay that Guaranteed Obligation as if it were the primary obligor; and
|
|
c)
|
indemnifies the Lender immediately, on demand, against any cost, loss or liability suffered or incurred by the Lender if any Guaranteed Obligation is or becomes unenforceable, invalid or illegal.
|
11.2
|
Waiver of promptness, etc.
The Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of non-performance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations.
|
11.3
|
Waiver of revocation.
The Guarantor hereby unconditionally and irrevocably waives any right to revoke this guarantee.
|
12
|
ADDITIONAL BORROWERS
|
12.1
|
The parties acknowledge and agree that one or more current or future wholly-owned subsidiaries of the Guarantor may become Additional Borrowers under the Loan Agreement by executing and delivering an Accession Agreement, in substantially the form attached hereto as
Schedule II,
and an amended and restated Note, pursuant to which such Addition Borrower(s) shall agree to be bound by all terms and provisions of the Loan Agreement and the Note, and the Guarantor hereby guarantees all Guaranteed Obligations of such Additional Borrower.
|
l2.2
|
Such Additional Borrowers shall be entitled to request Advances under this Loan Agreement in accordance with Section 3 hereof. In addition, the parties agree that all Borrowers shall be jointly and severally liable for all distributed before and after such Borrower became a party hereto.
|
13
|
AMENDMENT
|
13.1
|
No amendment or supplement to this Loan Agreement or the Note shall be made without the prior written consent of The Royal Bank of Scotland plc,
provided however,
that no consent shall be required with respect to an amendment or supplement made in accordance with Section 12 hereof.
|
14
|
APPLICABLE LAW, JURISDICTION AND WAIVER
|
14.1
|
Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws thereof other than Sections 51401 and 5-1402 of the General Obligations Law of the State of New York.
|
14.2
|
Jurisdiction. The Borrowers and the Guarantor hereby irrevocably submits to the jurisdiction of the courts of the State of New York and of the United States District Court for the Southern District of New York in any action or proceeding brought against it by the Lender under this Agreement or under any document delivered hereunder. By executing and delivering this Agreement, each of the Borrowers and the Guarantor, for itself and in connection with its properties, hereby expressly and irrevocably (i) submits generally and unconditionally to the exclusive jurisdiction and venue of such courts, (ii) waives jurisdiction and venue of courts in any other jurisdiction in which it may be entitled to bring suit by reason of its present and future domicile or otherwise and any defense of forum non conveniens and (iii) agrees that service delivered to the addresses provided in Section 8 hereof and in accordance with Section 8 hereof is sufficient to confer personal jurisdiction over it in any such proceeding in any such court and (iv) agrees that such service is and would be effective and binding in every respect under the Federal Rules of Civil Procedure and the New York Practice Law and Rules, and the Borrower waives any defense or objection of insufficient service or service of process or of lack of personal jurisdiction. Notwithstanding anything herein to the contrary, the Lender may bring any legal action or proceeding in any other appropriate jurisdiction.
|
14.3
|
WAIVER OF IMMUNITY. TO THE EXTENT THAT ANY BORROWER OR THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS OR REMEDY) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH BORROWER AND THE GUARANTOR EACH HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT, THE NOTE, AND ANY INTEREST RATE AGREEMENT.
|
14.4
|
WAIVER OF JURY TRIAL. IT IS AGREED BETWEEN THE BORROWERS, THE GUARANTOR AND THE LENDER THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH
THIS AGREEMENT AND THE NOTE.
|
THIS AGREEMENT
has been entered into on the date stated at the beginning of this Agreement.
|
BORROWER
|
|
|
SIGNED
by
|
|
)
|
Margarita Veniou
|
|
)
/s/ Margarita Veniou
|
for and on behalf of
|
|
)
|
Eluk Shipping Company Inc.
|
|
)
|
in the presence of:
|
|
)
|
Ioannis Z
afirakis
|
||
GUARANTOR
|
|
|
SIGNED
by
|
|
)
|
Anastasios Margaronis
|
|
)
/s/ Anastasios Margaronis
|
for and on behalf of
|
|
)
|
Diana Containerships Inc.
|
|
)
|
in the presence of:
|
|
)
|
Ioannis Zafirakis
|
||
LENDER
|
|
|
SIGNED
by
|
|
)
/s/ Simeon Palios
|
Simeon Palios
|
|
)
|
for and on behalf of
|
|
)
|
Diana Shipping Inc.
|
|
)
|
in the presence of:
|
|
)
|
Ioannis Zafirakis
|
SCHEDULE I
DRAWDOWN NOTICE
|
To:
|
Diana Shipping Inc.
|
|
Greece
|
|
Attention:
|
|
[ ]
|
|
DRAWDOWN NOTICE
|
ADDITIONAL BORROWER
|
|
|
SIGNED
by
|
|
)
|
|
)
|
|
for and on behalf of
|
|
)
|
|
)
|
|
in the presence of:
|
|
)
|
GUARANTOR
|
|
|
SIGNED
by
|
|
)
|
|
)
|
|
for and on behalf of
|
|
)
|
Diana Containerships Inc.
|
|
)
|
in the presence of:
|
|
)
|
LENDER
|
|
|
SIGNED
by
|
|
)
|
|
)
|
|
for and on behalf of
|
|
)
|
Diana Shipping Inc.
|
|
)
|
in the presence of:
|
|
)
|
If to the Company:
|
If to the Manager:
|
|
|
Diana Shipping Inc.
do Diana Shipping Services S.A.
Pendelis 16,
175 64 Palaio Faliro,
Athens, Greece
Attention: Director and President
Tel: 30-210-947-0000
Fax: 30-210-942-4975
E-mail: diana@dianashippingservices.com
|
Diana Shipping Services S.A.
Pendelis 16,
175 64 Palaio Faliro,
Athens, Greece
Attention: Director and President
Tel: 30-210-947-0000
Fax: 30-210-942-4975
E-mail: diana@dianashippingservices.com
|
With Copy to:
|
With Copy to:
|
|
|
Gary J.Wolfe, Esq.
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
(212) 574 1223 (telephone number)
(212) 480 8421 (facsimile number)
|
Gary J.Wolfe, Esq.
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
(212) 574 1223 (telephone number)
(212) 480 8421 (facsimile number)
|
|
DIANA SHIPPING INC.
|
|
|
|
|
|
/s/ Simeon Palios
|
|
Name: Simeon Palios
|
|
Title: Director, Chief Executive Officer and Chairman of the Board
|
|
|
|
|
|
|
|
|
|
|
|
DIANA SHIPPING SERVICES S.A.
|
|
|
|
|
|
/s/ Ioannis Zafirakis
|
|
Name: Ioannis Zafirakis
|
|
Title: Director and Treasurer
|
|
(c)
|
If the Broker terminates this Agreement within six (6) months following
|
|
(c)
|
be sent:
|
DIANA SHIPPING SERVICES S.A.
|
||
/s/ Simeon Palios
|
||
By: Simeon Palios
Title: Director and President
|
DIANA ENTERPRISES INC..
|
||
/s/ Andreas Nikolaos Michalopoulos
|
||
By: Andreas Nikolaos Michalopoulos
Title: Director and Secretary
|
DIANA SHIPPING SERVICES S.A.
|
|
|
|
/s/ Simeon Palios
|
|
By: Simeon Palios
|
|
Title: Director and President
|
|
|
|
|
|
|
|
DIANA ENTERPRISES INC.
|
|
|
|
/s/ Andreas Nikolaos Michalopoulos
|
|
By: Andreas Nikolaos Michalopoulos
|
|
Title: Director and Secretary
|
|
Person
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Diana Shipping Capacity
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Diana Containerships Capacity
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Symeon Palios
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Director, Chief Executive Officer and Chairman
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Director, Chief Executive Officer and Chairman
|
Anastasios Margaronis
|
Director and President
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Director and President
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Ioannis Zafirakis
|
Director, Executive Vice President and Secretary
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Director, Chief Operating Officer and Secretary
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Andreas Michalopoulos
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Chief Financial Officer and Treasurer
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Chief Financial Officer and Treasurer
|
Subsidiary
|
Country of Incorporation
|
Ailuk Shipping Company Inc.
|
Marshall Islands
|
Bikar Shipping Company Inc.
|
Marshall Islands
|
Bikini Shipping Company Inc.
|
Marshall Islands
|
Erikub Shipping Company Inc.
|
Marshall Islands
|
Gala Properties Inc.
|
Marshall Islands
|
Guam Shipping Company 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
|
Mandaringina Inc.
|
Marshall Islands
|
Majuro Shipping Company Inc.
|
Marshall Islands
|
Namu Shipping Company Inc.
|
Marshall Islands
|
Palau Shipping Company Inc.
|
Marshall Islands
|
Taka Shipping Company Inc.
|
Marshall Islands
|
Tuvalu Shipping Company Inc.
|
Marshall Islands
|
Wotho Shipping Company Inc.
|
Marshall Islands
|
Aster Shipping Company Inc.
|
Marshall Islands
|
Aerik Shipping Company Inc.
|
Marshall Islands
|
Pulap Shipping Company Inc.
|
Marshall Islands
|
Bokak Shipping Company Inc.
|
Marshall Islands
|
Makur Shipping Company Inc.
|
Marshall Islands
|
Jabat Shipping Company Inc.
|
Marshall Islands
|
Fayo Shipping Company Inc.
|
Marshall Islands
|
Husky Trading, S.A.
|
Panama
|
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
|
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)
|