[_]
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
[X]
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
[_]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
[_]
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
SEANERGY MARITIME HOLDINGS CORP.
|
(Exact name of Registrant as specified in its charter)
|
|
|
(Translation of Registrant's name into English)
|
|
|
Republic of the Marshall Islands
|
(Jurisdiction of incorporation or organization)
|
|
16 Grigoriou Lambraki Street, 2
nd
Floor, 166 74 Glyfada, Athens, Greece
|
(Address of principal executive offices)
|
|
Stamatis Tsantanis, Chairman & Chief Executive Officer
Seanergy Maritime Holdings Corp.
16 Grigoriou Lambraki Street, 2
nd
Floor, 166 74 Glyfada, Athens, Greece
Telephone: 011-30 210 9638450, Fax: 011-30 210 9638404
|
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
|
Title of class
|
Name of exchange on which registered
|
Shares of common stock, par value $0.0001 per share
|
NASDAQ Capital Market
|
Large accelerated filer [_]
|
Accelerated filer [_]
|
Non-accelerated filer [X]
|
U.S. GAAP [X]
|
International Financial Reporting Standards as issued by the International Accounting Standards Board [_]
|
Other [_]
|
[_] Item 17
|
[_] Item 18
|
[_] Yes
|
[X] No
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | 1 | |
PART I
|
|
2
|
ITEM 1.
|
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|
2
|
ITEM 2.
|
OFFER STATISTICS AND EXPECTED TIMETABLE
|
2
|
ITEM 3.
|
KEY INFORMATION
|
2
|
ITEM 4.
|
INFORMATION ON THE COMPANY
|
26
|
ITEM 4A.
|
UNRESOLVED STAFF COMMENTS
|
40
|
ITEM 5.
|
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|
40
|
ITEM 6.
|
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
60
|
ITEM 7.
|
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
63
|
ITEM 8.
|
FINANCIAL INFORMATION
|
67
|
ITEM 9.
|
THE OFFER AND LISTING
|
68
|
ITEM 10.
|
ADDITIONAL INFORMATION
|
69
|
ITEM 11.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
77
|
ITEM 12.
|
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|
77
|
|
|
|
PART II
|
|
78
|
ITEM 13.
|
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
78
|
ITEM 14.
|
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
78
|
ITEM 15.
|
CONTROLS AND PROCEDURES
|
78
|
ITEM 16A.
|
AUDIT COMMITTEE FINANCIAL EXPERT
|
79
|
ITEM 16B.
|
CODE OF ETHICS
|
79
|
ITEM 16C.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
79
|
ITEM 16D.
|
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
79
|
ITEM 16E.
|
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
80
|
ITEM 16F.
|
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
|
80
|
ITEM 16G.
|
CORPORATE GOVERNANCE
|
80
|
ITEM 16H.
|
MINE SAFETY DISCLOSURE
|
80
|
|
|
|
PART III
|
|
81
|
ITEM 17.
|
FINANCIAL STATEMENTS
|
81
|
ITEM 18.
|
FINANCIAL STATEMENTS
|
81
|
ITEM 19.
|
EXHIBITS
|
81
|
· | our ability to continue as a going concern; |
· | our future operating or financial results; |
· | our financial condition and liquidity, including our ability to pay amounts that we owe, obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities; |
· | our ability to come to a satisfactory resolution with our lenders in our ongoing debt restructuring process; |
· | our ability to pay dividends in the future; |
· | shipping industry trends, including charter rates and factors affecting vessel supply and demand; |
· | future, pending or recent acquisitions and disposition, business strategy, areas of possible expansion or contraction, and expected capital spending or operating expenses; |
· | the useful lives and changes in the value of our vessels and their impact on our compliance with loan covenants; |
· | availability of crew, number of off-hire days, classification survey requirements and insurance costs; |
· | global and regional economic and political conditions; |
· | our ability to leverage the relationships and reputation in the dry bulk shipping industry of V.Ships Greece Ltd., or V.Ships Greece, and Fidelity Marine Inc., or Fidelity; |
· | changes in seaborne and other transportation patterns; |
· | changes in governmental rules and regulations or actions taken by regulatory authorities; |
· | potential liability from future litigation and incidents involving our vessels; |
· | acts of terrorism and other hostilities; |
· | the number of newbuildings under construction in the dry bulk industry; |
· | future charter hire rates and vessel values; |
· | loss of our customers, charters or vessels; |
· | the aging of our fleet and increases in operating costs; |
· | damage to our vessels; and |
· | other factors discussed in "Item 3.D. Risk Factors." |
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
|
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||
Statement of Income Data:
|
|
|
|
|
|
|||||||||||||||
Vessel revenue, net
|
2,010
|
23,079
|
55,616
|
104,060
|
95,856
|
|||||||||||||||
Direct voyage expenses
|
(1,274
|
)
|
(8,035
|
)
|
(13,587
|
)
|
(2,541
|
)
|
(2,399
|
)
|
||||||||||
Vessel operating expenses
|
(1,006
|
)
|
(11,086
|
)
|
(26,983
|
)
|
(34,727
|
)
|
(30,667
|
)
|
||||||||||
Voyage expenses - related party
|
(24
|
)
|
(313
|
)
|
(532
|
)
|
(661
|
)
|
(434
|
)
|
||||||||||
Management fees - related party
|
(122
|
)
|
(743
|
)
|
(1,625
|
)
|
(2,415
|
)
|
(2,328
|
)
|
||||||||||
Management fees
|
-
|
(194
|
)
|
(588
|
)
|
(576
|
)
|
(316
|
)
|
|||||||||||
General and administration expenses
|
(2,987
|
)
|
(3,966
|
)
|
(6,337
|
)
|
(8,070
|
)
|
(7,606
|
)
|
||||||||||
General and administration expenses - related party
|
(309
|
)
|
(412
|
)
|
(402
|
)
|
(603
|
)
|
(697
|
)
|
||||||||||
Loss on bad debts
|
(38
|
)
|
-
|
(327
|
)
|
-
|
-
|
|||||||||||||
Amortization of deferred dry-docking costs
|
-
|
(232
|
)
|
(3,648
|
)
|
(7,313
|
)
|
(3,657
|
)
|
|||||||||||
Depreciation
|
(3
|
)
|
(982
|
)
|
(15,606
|
)
|
(28,856
|
)
|
(29,328
|
)
|
||||||||||
Loss on sale of vessels
|
-
|
-
|
(15,590
|
)
|
-
|
-
|
||||||||||||||
Impairment loss for goodwill
|
-
|
-
|
(4,365
|
)
|
(12,910
|
)
|
-
|
|||||||||||||
Impairment loss for vessels and deferred charges
|
-
|
(3,564
|
)
|
(147,143
|
)
|
(188,995
|
)
|
-
|
||||||||||||
Gain on disposal of subsidiaries
|
-
|
25,719
|
-
|
-
|
-
|
|||||||||||||||
Gain on restructuring
|
85,563
|
-
|
-
|
-
|
-
|
|||||||||||||||
Operating income (loss)
|
81,810
|
19,271
|
(181,117
|
)
|
(183,607
|
)
|
18,424
|
|||||||||||||
Interest and finance costs
|
(1,463
|
)
|
(8,389
|
)
|
(12,480
|
)
|
(13,482
|
)
|
(12,931
|
)
|
||||||||||
Interest income
|
14
|
13
|
59
|
60
|
358
|
|||||||||||||||
Loss on interest rate swaps
|
-
|
(8
|
)
|
(189
|
)
|
(641
|
)
|
(4,164
|
)
|
|||||||||||
Foreign currency exchange (losses) gains, net
|
(13
|
)
|
19
|
(43
|
)
|
(46
|
)
|
14
|
||||||||||||
Net income / (loss) before taxes
|
80,348
|
10,906
|
(193,770
|
)
|
(197,716
|
)
|
1,701
|
|||||||||||||
Income taxes
|
-
|
1
|
2
|
(40
|
)
|
(60
|
)
|
|||||||||||||
Net income / (loss)
|
80,348
|
10,907
|
(193,768
|
)
|
(197,756
|
)
|
1,641
|
|||||||||||||
Less: Net income attributable to the noncontrolling interest
|
-
|
-
|
-
|
-
|
(1,509
|
)
|
||||||||||||||
Net income / (loss) attributable to Seanergy Maritime Holdings Corp.
|
80,348
|
10,907
|
(193,768
|
)
|
(197,756
|
)
|
132
|
|||||||||||||
Net income / (loss) per common share
|
||||||||||||||||||||
Basic and diluted
|
6.01
|
0.91
|
(16.74
|
)
|
(27.04
|
)
|
0.02
|
|||||||||||||
Weighted average common shares outstanding
|
||||||||||||||||||||
Basic
|
13,364,723
|
11,958,140
|
11,576,576
|
7,314,636
|
5,861,129
|
|||||||||||||||
Diluted
|
13,364,750
|
11,959,276
|
11,576,576
|
7,314,636
|
5,861,129
|
|||||||||||||||
|
||||||||||||||||||||
Dividends declared per share
|
-
|
-
|
-
|
-
|
-
|
|
As of December 31,
|
|||||||||||||||||||
|
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|||||||||||||||
Total current assets
|
3,207
|
66,350
|
52,086
|
43,432
|
68,459
|
|||||||||||||||
Vessels, net
|
-
|
-
|
68,511
|
381,129
|
597,372
|
|||||||||||||||
Total assets
|
3,268
|
66,350
|
120,960
|
436,476
|
696,401
|
|||||||||||||||
Total current liabilities, including current portion of long-term debt
|
592
|
157,045
|
222,577
|
58,697
|
72,791
|
|||||||||||||||
Long-term debt, net of current portion
|
-
|
-
|
-
|
300,586
|
346,168
|
|||||||||||||||
Common stock
|
2
|
1
|
1
|
1
|
1
|
|||||||||||||||
Total equity / (deficit)
|
2,676
|
(90,695
|
)
|
(101,617
|
)
|
76,923
|
274,665
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||
Cash Flow Data:
|
|
|
|
|||||||||||||||||
Net cash (used in) provided by operating activities
|
(14,858
|
)
|
1,030
|
2,418
|
26,439
|
31,537
|
||||||||||||||
Net cash provided by investing activities
|
105,895
|
993
|
55,402
|
-
|
7,885
|
|||||||||||||||
Net cash used in financing activities
|
(91,239
|
)
|
(3,246
|
)
|
(71,256
|
)
|
(62,492
|
)
|
(49,242
|
)
|
· | prevailing level of charter rates; |
· | general economic and market conditions affecting the shipping industry; |
· | types and sizes of vessels; |
· | supply and demand for vessels; |
· | other modes of transportation; |
· | cost of newbuildings; |
· | governmental and other regulations; and |
· | technological advances. |
· | decrease in available financing for vessels; |
· | sharp decline in charter rates, particularly for vessels employed in the spot market; |
· | charterers seeking to renegotiate the rates for existing time charters; |
· | widespread loan covenant defaults in the dry bulk shipping industry due to the substantial decrease in vessel values; and |
· | declaration of bankruptcy by some operators, charterers and ship owners. |
· | demand for and production of dry bulk products; |
· | distance that cargo is to be transported by sea; |
· | global and regional economic and political conditions; |
· | environmental and other regulatory developments; and |
· | changes in seaborne and other transportation patterns, including changes in the distances over which cargo is transported due to geographic changes in where commodities are produced and cargoes are used. |
· | factors that influence the supply of vessel capacity include: |
· | number of new vessel deliveries; |
· | scrapping rate of older vessels; |
· | vessel casualties; |
· | price of steel; |
· | number of vessels that are out of service; |
· | changes in environmental and other regulations that may limit the useful life of vessels; and |
· | port or canal congestion. |
· | crew strikes and/or boycotts; |
· | marine disaster; |
· | piracy; |
· | environmental accidents; |
· | cargo and property losses or damage; and |
· | business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries or adverse weather conditions. |
· | generate excess cash flow so that we can invest without jeopardizing our ability to cover current and foreseeable working capital needs (including debt service); |
· | raise equity and obtain required financing for our existing and new operations; |
· | locate and acquire suitable vessels; |
· | identify and consummate acquisitions or joint ventures; |
· | integrate any acquired business successfully with our existing operations; |
· | hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet; |
· | enhance our customer base; and |
· | manage expansion. |
· | our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may be unavailable on favorable terms; |
· | we may need to use a substantial portion of our cash from operations to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities and any future dividends to our shareholders; |
· | our debt level could make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally; and |
· | our debt level may limit our flexibility in responding to changing business and economic conditions. |
· | economic and market conditions affecting the shipping industry in general; |
· | supply of dry bulk vessels, including newbuildings; |
· | demand for dry bulk vessels; |
· | scrap values; |
· | types, sizes and ages of vessels; |
· | other modes of transportation; |
· | competition from other shipping companies; |
· | cost of newbuildings; |
· | technological advances; |
· | new regulatory requirements from governments or self-regulated organizations; and |
· | prevailing level of charter rates. |
· | locating and acquiring suitable vessels at competitive prices; |
· | identifying and consummating acquisitions or joint ventures; |
· | integrating any acquired vessels successfully with our existing operations; |
· | enhancing our customer base; |
· | managing our expansion; and |
· | obtaining required financing, which could include debt, equity or combinations thereof. |
· | renew existing charters upon their expiration; |
· | obtain new charters; |
· | obtain financing on commercially acceptable terms; |
· | maintain satisfactory relationships with our charterers and suppliers; and |
· | successfully execute our business strategies. |
· | quarterly variations in our results of operations; |
· | our lenders' willingness to extend our loan covenant waivers, if necessary; |
· | changes in market valuations of similar companies and stock market price and volume fluctuations generally; |
· | changes in earnings estimates or publication of research reports by analysts; |
· | speculation in the press or investment community about our business or the shipping industry generally; |
· | strategic actions by us or our competitors such as acquisitions or restructurings; |
· | the thin trading market for our common stock, which makes it somewhat illiquid; |
· | the current ineligibility of our common stock to be the subject of margin loans because of its low current market price; |
· | regulatory developments; |
· | additions or departures of key personnel; |
· | general market conditions; and |
· | domestic and international economic, market and currency factors unrelated to our performance. |
· | the rates we obtain from future charters; |
· | the level of our operating costs; |
· | the level of our general and administrative costs; |
· | the number of unscheduled off-hire days and the timing of, and number of days required for, scheduled drydocking of vessels we may acquire in the future; |
· | vessel acquisitions and related financings; |
· | restrictions in any future debt facilities; |
· | prevailing global and regional economic and political conditions; |
· | the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business; |
· | the amount of cash reserves established by our board of directors; and |
· | restrictions under Marshall Islands law. |
· | authorize our board of directors to issue "blank check" preferred stock without shareholder approval; |
· | provide for a classified board of directors with staggered, three-year terms; |
· | require a super-majority vote in order to amend the provisions regarding our classified board of directors with staggered, three-year terms; |
· | permit the removal of any director from office at any time, with or without cause, at the request of the shareholder group entitled to designate such director; |
· | allow vacancies on the board of directors to be filled by the shareholder group entitled to name the director whose resignation or removal led to the occurrence of the vacancy; and |
· | prevent our board of directors from dissolving the shipping committee or altering the duties or composition of the shipping committee without an affirmative vote of not less than 80% of the board of directors. |
ITEM 4. | INFORMATION ON THE COMPANY |
Customer
|
2014
|
2013
|
2012
|
|||
A
|
59%
|
18%
|
-
|
|||
B
|
29%
|
-
|
-
|
|||
C
|
-
|
16%
|
-
|
|||
D
|
-
|
12%
|
19%
|
|||
E
|
-
|
10%
|
-
|
|||
F
|
-
|
-
|
14%
|
|||
G
*
|
-
|
-
|
14%
|
|||
Total
|
88%
|
56%
|
47%
|
(i) | injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs; |
(ii) | injury to, or economic losses resulting from, the destruction of real and personal property; |
(iii) | net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources; |
(iv) | loss of subsistence use of natural resources that are injured, destroyed or lost; |
(v) | lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and |
(vi) | net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources. |
· | on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status; |
· | on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore; |
· | the development of vessel security plans; |
· | ship identification number to be permanently marked on a vessel's hull; |
· | a continuous synopsis record kept onboard showing a vessel's history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and |
· | compliance with flag state security certification requirements. |
Subsidiary
|
|
Jurisdiction of Incorporation
|
Seanergy Management Corp.
|
|
Republic of the Marshall Islands
|
Seanergy Shipmanagement Corp.
|
Republic of the Marshall Islands
|
|
Leader Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Glorius Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Genius Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Furious Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Olympius Shipping Co.
|
Republic of the Marshall Islands
|
|
Amazons Management Inc.
|
|
Republic of the Marshall Islands
|
Lagoon Shipholding Ltd.
|
|
Republic of the Marshall Islands
|
Cynthera Navigation Ltd.
|
|
Republic of the Marshall Islands
|
Martinique International Corp.
|
|
British Virgin Islands
|
Harbour Business International Corp.
|
|
British Virgin Islands
|
Waldeck Maritime Co.
|
|
Republic of the Marshall Islands
|
Maritime Capital Shipping Limited
|
|
Bermuda
|
Maritime Capital Shipping (HK) Limited
|
|
Hong Kong
|
Maritime Grace Shipping Limited
|
|
British Virgin Islands
|
Maritime Glory Shipping Limited
|
|
British Virgin Islands
|
Atlantic Grace Shipping Limited
|
|
British Virgin Islands
|
ITEM 4A. | UNRESOLVED STAFF COMMENTS |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
· | the nature and duration of our charters; |
· | the amount of time that we spent repositioning our vessels; |
· | the amount of time that our vessels spent in dry-dock undergoing repairs; |
· | maintenance and upgrade work; |
· | the age, condition and specifications of our vessels; |
· | the levels of supply and demand in the dry bulk carrier transportation market; and |
· | other factors affecting charter rates for dry bulk carriers under voyage charters. |
· | number of vessels owned and operated; |
· | charter market rates and periods of charter hire; |
· | vessel operating expenses and direct voyage costs, which were incurred in both U.S. dollars and other currencies, primarily Euros; |
· | depreciation expenses, which are a function of vessel cost, any significant post-acquisition improvements, estimated useful lives, estimated residual scrap values, and fluctuations in the market value of our vessels; |
· | financing costs related to indebtedness associated with the vessels; and |
· | fluctuations in foreign exchange rates. |
|
Year Ended December 31,
|
|||||||||||
Fleet Data:
|
2014
|
2013
|
2012
|
|||||||||
|
|
|
||||||||||
Average number of vessels(1)
|
1
|
6.2
|
17.6
|
|||||||||
Ownership days(2)
|
268
|
2,275
|
6,442
|
|||||||||
Available days(3)
|
268
|
2,218
|
6,333
|
|||||||||
Operating days(4)
|
142
|
1,840
|
5,559
|
|||||||||
Fleet utilization(5)
|
53
|
%
|
80.9
|
%
|
86.3
|
%
|
||||||
Fleet utilization excluding drydocking off hire days (6)
|
53
|
%
|
83.0
|
%
|
87.8
|
%
|
||||||
|
||||||||||||
Average Daily Results:
|
||||||||||||
Vessel TCE rate(7)
|
$
|
5,014
|
$
|
8,006
|
$
|
7,465
|
||||||
Vessel operating expenses(8)
|
$
|
3,754
|
$
|
4,873
|
$
|
4,189
|
||||||
Management fees(9)
|
$
|
455
|
$
|
412
|
$
|
344
|
||||||
Total vessel operating expenses(10)
|
$
|
4,209
|
$
|
5,285
|
$
|
4,533
|
(1) | Average number of vessels is the number of vessels that constituted the Company's fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of the Company's fleet during the relevant period divided by the number of calendar days in the relevant period. |
(2) | Ownership days are the total number of days in a period during which the vessels in a fleet have been owned. Ownership days are an indicator of the size of the Company's fleet over a period and affect both the amount of revenues and the amount of expenses that the Company recorded during a period. |
(3) | Available days are the number of ownership days less the aggregate number of days that vessels are off-hire due to major repairs, dry dockings or special or intermediate surveys. The shipping industry uses available days to measure the number of ownership days in a period during which vessels should be capable of generating revenues. During the year ended December 31, 2014, the Company did not incur any off-hire days for vessel surveys. |
(4) | Operating days are the number of available days in a period less the aggregate number of days that 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) | Fleet utilization is the percentage of time that our vessels were generating revenue, and is determined by dividing operating days by ownership days for the relevant period. |
(6) | Fleet utilization excluding drydocking off-hire days is calculated by dividing the number of the fleet's operating days during a period by the number of available days during that period. The shipping industry uses fleet utilization excluding drydocking off-hire days to measure a Company's efficiency in finding suitable employment for its vessels and excluding the amount of days that its vessels are off-hire for reasons such as scheduled repairs, vessel upgrades, or dry dockings or special or intermediate surveys. |
(7) | TCE rates are defined as our net revenues less voyage expenses during a period divided by the number of our operating days during the period, which is consistent with industry standards. Voyage expenses include port charges, bunker (fuel oil and diesel oil) expenses, canal charges and other commissions: |
(In thousands of U.S. dollars, except operating days and daily time charter equivalent rate)
|
2014
|
2013
|
2012
|
|||||||||
|
|
|
|
|||||||||
Net revenues from vessels*
|
$
|
2,010
|
$
|
23,079
|
$
|
55,616
|
||||||
Voyage expenses
|
(1,274
|
)
|
(8,035
|
)
|
(13,587
|
)
|
||||||
Voyage expenses — related party
|
(24
|
)
|
(313
|
)
|
(532
|
)
|
||||||
Net operating revenues
|
$
|
712
|
$
|
14,731
|
$
|
41,497
|
||||||
Operating days
|
142
|
1,840
|
5,559
|
|||||||||
Daily time charter equivalent rate
|
$
|
5,014
|
$
|
8,006
|
$
|
7,465
|
(8) | Average daily vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, are calculated by dividing vessel operating expenses by ownership days (including the ownership days of the vessels employed under bareboat charters) for the relevant time periods: |
|
Year Ended December 31,
|
|||||||||||
(In thousands of U.S. dollars, except ownership days and daily vessel operating expenses)
|
2014
|
2013
|
2012
|
|||||||||
|
|
|
|
|||||||||
Operating expenses
|
$
|
1,006
|
$
|
11,086
|
$
|
26,983
|
||||||
Ownership days
|
268
|
2,275
|
6,442
|
|||||||||
Daily vessel operating expenses
|
$
|
3,754
|
$
|
4,873
|
$
|
4,189
|
(9) | Daily management fees are calculated by dividing total management fees by ownership days for the relevant time period. |
(10) | Total vessel operating expenses, or TVOE, is a measurement of total expenses associated with operating the vessels. TVOE is the sum of vessel operating expenses and management fees. Daily TVOE is calculated by dividing TVOE by fleet ownership days for the relevant time period. |
(amounts in table in millions of US Dollars)
|
|
|||
Cash and restricted cash
|
3.5
|
|||
Vessels and other assets
|
49.5
|
|||
Long-term debt and other liabilities, net of BET's obligation towards the Company
|
(58.2
|
)
|
||
Effect on equity from disposal of subsidiary
|
(5.2
|
)
|
(amounts in table in millions of US Dollars)
|
|
|||
Cash and restricted cash
|
1.9
|
|||
Vessels and other assets
|
22.8
|
|||
Long-term debt and other liabilities
|
(30.4
|
)
|
||
Net liabilities
|
(5.7
|
)
|
(amounts in table in millions of US Dollars)
|
|
|||
Cash and restricted cash
|
0.1
|
|||
Vessels and other assets
|
18.5
|
|||
Long-term debt and other liabilities, net of obligations towards the Company
|
(40
|
)
|
||
Net liabilities
|
(21.4
|
)
|
· | 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 purchased
|
Carrying Value
|
||||||||
2014
|
2013
|
||||||||||
Davakis G.
|
54,051
|
2008
|
n/a
|
$23.7 million*
|
|||||||
Delos Ranger
|
54,057
|
2008
|
n/a
|
$24.0 million*
|
|||||||
African Oryx
|
24,112
|
2008
|
n/a
|
n/a
|
|||||||
Bremen Max
|
73,503
|
2008
|
n/a
|
$5.6 million*
|
|||||||
Hamburg Max
|
73,498
|
2008
|
n/a
|
$5.9 million*
|
|||||||
African Zebra
|
|
38,632
|
|
2008
|
|
n/a
|
|
|
|
n/a
|
|
BET Commander
|
|
149,507
|
|
2009
|
|
n/a
|
|
|
|
n/a
|
|
BET Intruder
|
|
69,235
|
|
2009
|
|
n/a
|
|
|
|
n/a
|
|
BET Prince
|
|
163,554
|
|
2009
|
|
n/a
|
|
|
|
n/a
|
|
BET Scouter
|
|
172,173
|
|
2009
|
|
n/a
|
|
|
|
n/a
|
|
BET Fighter
|
|
173,149
|
|
2009
|
|
n/a
|
|
|
|
n/a
|
|
Fiesta
|
29,519
|
2010
|
n/a
|
n/a
|
|||||||
Pacific Fantasy
|
29,538
|
2010
|
n/a
|
n/a
|
|||||||
Pacific Fighter
|
29,538
|
2010
|
n/a
|
n/a
|
|||||||
Clipper Freeway
|
29,538
|
2010
|
n/a
|
n/a
|
|||||||
African Joy
|
26,482
|
2010
|
n/a
|
n/a
|
|||||||
African Glory
|
24,252
|
2010
|
n/a
|
n/a
|
|||||||
Asian Grace
|
20,138
|
2010
|
n/a
|
n/a
|
|||||||
Clipper Glory
|
30,570
|
2010
|
n/a
|
n/a
|
|||||||
Clipper Grace
|
30,548
|
2010 | n/a |
n/a
|
|||||||
TOTAL DWT
|
1,295,594
|
· | Leverage : the corporate leverage ratio of the guarantor will not be, at the end of any accounting period or at any other time, higher than 0.75:1.0; |
· | EBITDA : the consolidated interest cover ratio for the accounting period (EBITDA to Interest Expense) shall not be lower than 2:1; |
· | Liquidity : the borrower and/or the guarantor shall maintain minimum free liquidity in an amount equal to borrower's debt service of the next semester as free deposits with the lender; |
· | Liquidity : the guarantor shall maintain minimum free liquidity in an amount equal to guarantor's debt service of the next semester as free deposits. |
· | The financial covenants listed above are to be tested at the end of each semester. |
Contractual Obligations
|
Total
|
less than 1 year
|
1-3 years
|
3-5 years
|
more than 5 years
|
|||||||||||||||
Long-term debt
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Interest expense
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Office rent (1)
|
$
|
38
|
$
|
38
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Total
|
$
|
38
|
$
|
38
|
$
|
-
|
$
|
-
|
$
|
-
|
1. | The office rent reflects our agreement with Waterfront S.A. for the rent of our executive offices. The current lease term had an expiration date of December 31, 2014, which was extended for one month, and the monthly lease payment was EUR 25,000. The monthly payment due under the office rent in U.S. dollars has been computed by using the Euro/U.S. dollar exchange rate as of December 31, 2014, which was €1.00:$1.2141. |
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name
|
|
Age
|
|
|
Position
|
|
Director Class
|
Stamatis Tsantanis
|
|
42
|
|
|
Chairman, Chief Executive Officer, Interim Chief Financial Officer & Director
|
|
A (term expires in 2016)
|
Christina Anagnostara
|
|
43
|
|
|
Director
|
|
B (term expires in 2017)
|
Elias Culucundis
|
|
71
|
|
|
Director
|
|
A (term expires in 2016)
|
Dimitris Anagnostopoulos
|
|
67
|
|
|
Director
|
|
C (term expires in 2015)
|
|
|
|
|
|
|
|
|
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
Title of Class
|
Identity of Person or Group
|
Number of
Shares Owned
|
Percent of Class
|
||||||
Common shares, par value $0.0001 per share
|
|
|
|
||||||
|
United Capital Investments Corp.(1)
|
2,528,731
|
5.4
|
%
|
|||||
|
Atrion Shipholding S.A.(1)
|
2,522,153
|
5.4
|
%
|
|||||
|
Plaza Shipholding Corp.(1)
|
4,271,393
|
9.2
|
%
|
|||||
Claudia Restis (2)
|
60,201,288
|
87.5
|
%
|
||||||
Stamatis Tsantanis
|
1,667,000
|
3.6
|
%
|
||||||
|
Christina Anagnostara
|
667
|
*
|
||||||
|
All directors and executive officers as a group (5 individuals)
|
1,667,667
|
3.6
|
%
|
ITEM 8. | FINANCIAL INFORMATION |
ITEM 9. | THE OFFER AND LISTING |
|
High
|
Low
|
||||||
For the Fiscal Year Ended December 31, 2010
|
$
|
44.85
|
$
|
13.50
|
||||
For the Fiscal Year Ended December 31, 2011
|
$
|
14.84
|
$
|
2.06
|
||||
For the Fiscal Year Ended December 31, 2012
|
$
|
4.23
|
$
|
1.09
|
||||
For the Fiscal Year Ended December 31, 2013
|
$
|
2.46
|
$
|
0.80
|
||||
For the Fiscal Year Ended December 31, 2014
|
$
|
1.99
|
$
|
0.83
|
||||
|
||||||||
For the Quarter Ended
|
||||||||
March 31, 2015 | $ | 0.90 | $ | 0.65 | ||||
March 31, 2014
|
$
|
1.99
|
$
|
1.31
|
||||
June 30, 2014
|
$
|
1.78
|
$
|
1.28
|
||||
September 30, 2014
|
$
|
1.83
|
$
|
1.35
|
||||
December 31, 2014
|
$
|
1.76
|
$
|
0.83
|
||||
March 31, 2013
|
$
|
2.46
|
$
|
1.13
|
||||
June 30, 2013
|
$
|
2.04
|
$
|
1.32
|
||||
September 30, 2013
|
$
|
2.25
|
$
|
1.30
|
||||
December 31, 2013
|
$
|
2.10
|
$
|
0.80
|
For the Month Ended
|
High
|
Low
|
||||||
September 2014
|
$
|
1.83
|
$
|
1.45
|
||||
October 2014
|
$
|
1.76
|
$
|
1.34
|
||||
November 2014
|
$
|
1.43
|
$
|
1.15
|
||||
December 2014
|
$
|
1.24
|
$
|
0.83
|
||||
January 2015
|
$
|
0.90
|
$
|
0.65
|
||||
February 2015
|
$
|
0.83
|
$
|
0.73
|
||||
March 2015
|
$
|
0.90
|
$
|
0.71
|
||||
April 1, 2015 through April 20, 2015
|
$
|
0.85
|
$
|
0.68
|
ITEM 10. | ADDITIONAL INFORMATION |
· | an individual citizen or resident of the United States; |
· | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia; or |
· | an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or a trust if (i) a U.S. court can exercise primary supervision over the trust's administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
· | financial institutions or "financial services entities"; |
· | broker-dealers; |
· | taxpayers who have elected mark-to-market accounting; |
· | tax-exempt entities; |
· | governments or agencies or instrumentalities thereof; |
· | insurance companies; |
· | regulated investment companies; |
· | real estate investment trusts; |
· | certain expatriates or former long-term residents of the United States; |
· | persons that actually or constructively own 10% or more of our voting shares; |
· | persons that hold our warrants; |
· | persons that hold our common stock or warrants as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or |
· | persons whose functional currency is not the U.S. dollar. |
· | we are organized in a foreign country (our "country of organization") that grants an "equivalent exemption" to corporations organized in the United States; and |
· | more than 50% of the value of our stock is owned, directly or indirectly, by "qualified shareholders," that are persons (i) who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, and (ii) who comply with certain documentation requirements, which we refer to as the "50% Ownership Test;" or |
· | our stock is primarily and regularly traded on one or more established securities markets in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test." |
· | we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and |
· | substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States. |
· | at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or |
· | at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income. |
· | the excess distribution or gain would be allocated ratably over the Non-Electing Holders' aggregate holding period for the common stock; |
· | the amount allocated to the current taxable year and any taxable year before we became a passive foreign investment company 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 deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. |
· | fails to provide an accurate taxpayer identification number; |
· | is notified by the IRS that backup withholding is required; or |
· | fails in certain circumstances to comply with applicable certification requirements. |
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROLS AND PROCEDURES |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. | CODE OF ETHICS |
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|
2014
|
2013
|
||||||
Audit fees
|
$
|
146,000
|
$
|
306,000
|
||||
Audit related fees
|
-
|
-
|
||||||
Tax fees
|
-
|
-
|
||||||
All other fees
|
-
|
-
|
||||||
Total fees
|
$
|
146,000
|
$
|
306,000
|
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
|
Issuer purchases of equity securities
|
|||||||||||||||
Period
|
Total
Number of
Shares
Purchased
|
Average
Price Paid
Per Share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Programs
|
Maximum Amount in U.S.
$ that may Yet Be
Expected on Share
Repurchases Under
Programs
|
||||||||||||
|
|
|
|
|
||||||||||||
January 2012
|
4,641,620
|
$
|
2.15442
|
4,641,620
|
$
|
0
|
||||||||||
June 2014
|
1,890,000
|
0.60
|
1,890,000
|
0
|
||||||||||||
September 2014
|
1,600,000
|
0.60
|
1,600,000
|
0
|
||||||||||||
December 2014
|
4,440,000
|
0.25
|
4,440,000
|
0
|
||||||||||||
March 2015
|
26,667,500
|
$
|
0.18
|
26,667,500
|
$
|
0
|
ITEM 16F. | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT |
ITEM 16G. | CORPORATE GOVERNANCE |
· | In lieu of obtaining shareholder approval, under specified circumstances, prior to the issuance of securities in connection with: (i) the acquisition of the stock or assets of another company, (ii) equity-based compensation of officers, directors, employees or consultants, (iii) a change of control, or (iv) private placements, the Company complies with provisions of the BCA providing that the board of directors may approve share issuances. |
· | The Company's Board is not required to be composed of a majority of independent directors. |
ITEM 16H. | MINE SAFETY DISCLOSURE |
ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
ITEM 19. | EXHIBITS |
Exhibit
Number
|
Description
|
1.1
|
Amended and Restated Articles of Incorporation (1)
|
1.2
|
Second Amended and Restated Bylaws (2)
|
1.3
|
Amendment to Amended and Restated Articles of Incorporation (3)
|
1.4
|
Second Amendment to Amended and Restated Articles of Incorporation (4)
|
1.5
|
Third Amendment to Amended and Restated Articles of Incorporation (5)
|
1.6
|
Fourth Amendment to Amended and Restated Articles of Incorporation (6)
|
2.1
|
Specimen Common Stock Certificate(7)
|
2.2
|
Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant (8)
|
2.3
|
Unit Purchase Option (8)
|
2.4
|
Specimen Unit Certificate (9)
|
2.5
|
Form of Underwriters Warrant (10)
|
4.1
|
Master Agreement dated as of May 20, 2008 (1)
|
4.2
|
Amendment to Master Agreement dated July 25, 2008 (1)
|
4.4
|
Form of Convertible Unsecured Promissory Note(1)
|
4.5
|
Amendment to Convertible Promissory Note dated August 28, 2009(11)
|
4.7
|
Management Agreement dated as of May 20, 2008 (1)
|
4.8
|
Amendment No.1 to Management Agreement dated October 1, 2011 (19)
|
4.17
|
Share Purchase Agreement dated January 4, 2012 between registrant and United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp. and Comet Shipholding Inc.(18)
|
4.18
|
Seanergy Maritime Holdings Corp. 2011 Equity Incentive Plan (16)
|
4.19
|
Loan Agreement dated August 27, 2008 between Seanergy and Piraeus Bank (11)
|
4.20
|
Amendment No. 1 to Piraeus Bank Loan Agreement dated September 9, 2009(11)
|
4.21
|
Amendment No. 2 to Piraeus Bank Loan Agreement dated November 13, 2009(12)
|
4.22
|
Amendment No. 3 to Piraeus Bank Loan Agreement dated June 2, 2010(13)
|
4.23
|
Amendment No. 4 to Piraeus Bank Loan Agreement dated January 31, 2012 (19)
|
4.24
|
Second Supplement Agreement dated September 30, 2009 relating to and including the Loan Agreement dated June 26, 2007 between BET and Citibank(11)
|
4.25
|
Supplemental Letter Agreement dated August 4, 2010 relating to the Loan Agreement dated June 26, 2007 between BET and Citibank (14)
|
4.26
|
Third Supplemental Agreement dated December 23, 2010 relating to the Loan Agreement dated June 26, 2007 between BET and Citibank(17)
|
4.27
|
Fourth Supplemental Agreement dated March 31, 2011 relating to the Loan Agreement dated June 26, 2007 between BET and Citibank (17)
|
4.28
|
Fifth Supplemental Agreement dated February 7, 2012 relating to the Loan Agreement dated June 26, 2007 between BET and Citibank (19)
|
4.29
|
Restated Loan Agreement originally dated June 26, 2007 between BET and Citibank (19)
|
4.30
|
Loan Agreement dated October 19, 2007 between MCS and DVB(13)
|
4.31
|
Loan Agreement dated June 5, 2008 between MCS and HSBC(13)
|
Exhibit
Number
|
Description
|
4.32
|
Supplemental Agreement dated May 20, 2010 relating to the Loan Agreement dated October 19, 2007 between MCS and DVB(13)
|
4.33
|
Supplemental Agreement dated May 21, 2010 relating to the Loan Agreement dated June 5, 2008 between MCS and HSBC(13)
|
4.34
|
Supplemental Letter and Amended and Restated Agreement dated May 24, 2010 relating to and including the Loan Agreement dated March 6, 2008 between MCS and UOB (17)
|
4.35
|
Share Purchase Agreement with I.M.I. Holdings Corp., dated November 9, 2012 and Addendums (20)
|
4.36
|
Settlement Agreement with DVB Group Merchant Bank (Asia) Ltd. dated January 25, 2013 (20)
|
4.37
|
HSBC Waiver Letter dated September 4, 2012 and Extension Waiver Letter dated October 24, 2012 (20)
|
4.38
|
Delivery and Settlement Agreement relating to a term loan facility with Piraeus Bank A.E. (23)
|
4.39
|
Settlement Agreement with United Overseas Bank Limited (23)
|
4.40
|
Addendum No. 1 to Settlement Agreement with United Overseas Bank Limited (23)
|
4.41
|
Memorandum of Agreement with respect to
Delos Ranger
(23)
|
4.42
|
Memorandum of Agreement with respect to
Hamburg Max
(23)
|
4.43
|
Memorandum of Agreement with respect to
Davakis G
(23)
|
4.44
|
Memorandum of Agreement with respect to
Bremen Max
(23)
|
4.45
|
Share Purchase Agreement dated June 24, 2014 2014 between registrant and Comet Shipholding Inc. and Plaza Shipholding Corp. (21)
|
4.46
|
Registration Rights Agreement dated June 24, 2014 2014 between registrant and Comet Shipholding Inc. and Plaza Shipholding Corp. (21)
|
4.47
|
Share Purchase Agreement dated September 29, 2014 between registrant and Comet Shipholding Inc. and Plaza Shipholding Corp. (22)
|
4.48
|
Registration Rights Agreement dated September 29, 2014 between registrant and Comet Shipholding Inc. and Plaza Shipholding Corp. (22)
|
4.49
|
Share Purchase Agreement dated December 19, 2014 between registrant and Jelco Delta Holding Corp. (22)
|
4.50
|
Registration Rights Agreement dated December 19, 2014 between registrant and Jelco Delta Holding Corp. (22)
|
4.51
|
Ship Technical Management Agreement dated as of February 11, 2015 with V.Ships Greece Ltd.
|
4.52
|
Commercial Management Agreement dated as of March 2, 2015 with Fidelity Marine Inc.
|
4.53
|
Loan Agreement dated March 6, 2015 between Seanergy and Alpha Bank A.E.
|
4.54
|
Convertible Promissory Note dated March 12, 2015 with
Jelco Delta Holding Corp. (24)
|
4.55
|
Share Purchase Agreement dated March 12, 2015 between registrant and Jelco Delta Holding Corp. (24)
|
4.56
|
Registration Rights Agreement dated March 12, 2015 between registrant and Jelco Delta Holding Corp. (24)
|
4.57
|
Share Purchase Agreement dated March 12, 2015 between registrant and Stamatis Tsantanis.
|
4.58
|
Registration Rights Agreement dated March 12, 2015 between registrant and Stamatis Tsantanis.
|
8.1
|
List of Subsidiaries
|
12.1
|
Certificate of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act
|
12.2
|
Certificate of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
|
13.1
|
Certificate 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
|
Certificate 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 Ernst & Young (Hellas) Certified Auditors Accountants S.A.
|
101
|
The following financial information from Seanergy Maritime Holding Corp.'s Annual Report on Form 20-F for the fiscal year ended December 31, 2014, formatted in Extensible Business Reporting Language (XBRL):
|
|
(1) Consolidated Balance Sheets as of December 31, 2014 and 2013;
|
|
(2) Consolidated Statements of Income/(loss) for the years ended December 31, 2014, 2013 and 2012;
|
|
(3) Consolidated Statements of Shareholders' (Deficit) / Equity for the years ended December 31, 2014, 2013 and 2012;
|
|
(4) Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012;
|
|
(5) Notes to Consolidated Financial Statements.
|
(1)
|
Incorporated herein by reference to the corresponding exhibit in the Annex filed with Seanergy Maritime's proxy statement on Form 6-K submitted to the Commission on July 31, 2008.
|
(2)
|
Incorporated herein by reference to our Company's report on Form 6-K submitted to the Commission on July 20, 2012.
|
(3)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's registration statement on Form F-1MEF filed with the Commission on August 28, 2009 (File No. 333161595).
|
(4)
|
Incorporated herein by reference to the corresponding exhibit to our Company's report on Form 6-K submitted to the Commission on September 16, 2010.
|
(5)
|
Incorporated herein by reference to the corresponding exhibit to our Company's report on Form 6-K submitted to the Commission on June 27, 2011.
|
(6)
|
Incorporated herein by reference to the corresponding exhibit to our Company's report on Form 6-K submitted to the Commission on August 5, 2011.
|
(7)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's registration statement on Form F-1/A filed with the Commission on January 15, 2009 (File No. 333154952).
|
(8)
|
Incorporated herein by reference to the corresponding exhibit filed with Seanergy Maritime's report on Form 8-K filed with the Commission on October 4, 2007.
|
(9)
|
Incorporated herein by reference to the corresponding exhibit filed with Seanergy Maritime's registration statement on Form F-1/A filed with the Commission on July 10, 2007 (File No. 333144436).
|
(10)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's registration statement on Form F-1/A filed with the Commission on January 26, 2010 (File No. 333161961).
|
(11)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's registration statement on Form F-1/A filed with the Commission on October 16, 2009 (File No. 333161961).
|
(12)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's registration statement on Form F-1/A filed with the Commission on November 18, 2009 (File No. 333161961).
|
(13)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's registration statement on Form F-1/A filed with the Commission on July 21, 2010 (File No. 333166872).
|
(14)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's post-effective amendment no. 1 to the registration statement on Form F-1 filed with the Commission on September 24, 2010 (File No. 333-166872).
|
(15)
|
Incorporated herein by reference to the corresponding exhibit to our Company's report on Form 6-K submitted to the Commission on October 29, 2010.
|
(16)
|
Incorporated herein by reference to the corresponding exhibit to our Company's report on Form 6-K submitted to the Commission on February 7, 2011.
|
(17)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's annual report on Form 20-F submitted to the Commission on March 31, 2011.
|
(18)
|
Incorporated herein by reference to the corresponding exhibit filed with a Schedule 13D/A relating to our Company submitted to the Commission on March 18, 2012
|
(19)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's annual report on Form 20-F submitted to the Commission on March 19, 2012.
|
(20)
|
Incorporated herein by reference to the corresponding exhibit filed with our Company's annual report on Form 20-F submitted to the Commission on April 26, 2013.
|
(21)
|
Incorporated herein by reference to the corresponding exhibit filed with a Schedule 13D/A relating to our Company submitted to the Commission on September 12, 2014.
|
(22)
|
Incorporated herein by reference to the corresponding exhibit filed with a Schedule 13D relating to our Company submitted to the Commission on March 12, 2015.
|
(23) | Incorporated herein by reference to the corresponding exhibit filed with our Company's annual report on Form 20-F submitted to the Commission on April 18, 2014. |
(24) | Incorporated herein by reference to the Schedule 13D/A relating to our Company submitted to the Commission on April 13, 2015. |
|
SEANERGY MARITIME HOLDINGS CORP.
|
||
|
|
||
|
|
By:
|
/s/ Stamatis Tsantanis
|
|
|
Name:
|
Stamatis Tsantanis
|
|
|
Title:
|
Chairman & Chief Executive Officer
|
Page
|
||
Report of Independent Registered Public Accounting Firm Ernst & Young (Hellas) Certified Auditors Accountants S.A.
|
F-2
|
|
Consolidated Balance Sheets as of December 31, 2014 and 2013
|
F-3
|
|
Consolidated Statement of Income/(Loss) for the years ended December 31, 2014, 2013 and 2012
|
F-4
|
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2014, 2013 and 2012
|
F-5
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012
|
F-6
|
|
Notes to Consolidated Financial Statements
|
F-7
|
|
Notes
|
2014
|
2013
|
2012
|
|||||||||||||
Revenues:
|
||||||||||||||||
Vessel revenue - related party
|
3
|
-
|
-
|
8,221
|
||||||||||||
Vessel revenue
|
2,075
|
23,838
|
49,026
|
|||||||||||||
Commissions – related party
|
3
|
-
|
-
|
(298
|
)
|
|||||||||||
Commissions
|
(65
|
)
|
(759
|
)
|
(1,333
|
)
|
||||||||||
Vessel revenue, net
|
2,010
|
23,079
|
55,616
|
|||||||||||||
Expenses:
|
||||||||||||||||
Direct voyage expenses
|
13
|
(1,274
|
)
|
(8,035
|
)
|
(13,587
|
)
|
|||||||||
Vessel operating expenses
|
13
|
(1,006
|
)
|
(11,086
|
)
|
(26,983
|
)
|
|||||||||
Voyage expenses - related party
|
3
|
(24
|
)
|
(313
|
)
|
(532
|
)
|
|||||||||
Management fees - related party
|
3
|
(122
|
)
|
(743
|
)
|
(1,625
|
)
|
|||||||||
Management fees
|
-
|
(194
|
)
|
(588
|
)
|
|||||||||||
General and administration expenses
|
14
|
(2,987
|
)
|
(3,966
|
)
|
(6,337
|
)
|
|||||||||
General and administration expenses - related party
|
3
|
(309
|
)
|
(412
|
)
|
(402
|
)
|
|||||||||
Loss on bad debts
|
(38
|
)
|
-
|
(327
|
)
|
|||||||||||
Amortization of deferred dry-docking costs
|
-
|
(232
|
)
|
(3,648
|
)
|
|||||||||||
Depreciation
|
(3
|
)
|
(982
|
)
|
(15,606
|
)
|
||||||||||
Loss on sale of vessels
|
-
|
-
|
(15,590
|
)
|
||||||||||||
Impairment loss for vessels and deferred charges
|
7
|
-
|
(3,564
|
)
|
(147,143
|
)
|
||||||||||
Impairment loss for goodwill
|
-
|
-
|
(4,365
|
)
|
||||||||||||
Gain on disposal of subsidiaries
|
1
|
-
|
25,719
|
-
|
||||||||||||
Gain on restructuring
|
1
|
85,563
|
-
|
-
|
||||||||||||
Operating income / (loss)
|
81,810
|
19,271
|
(181,117
|
)
|
||||||||||||
Other income / (expense), net:
|
||||||||||||||||
Interest and finance costs
|
15
|
(1,463
|
)
|
(8,389
|
)
|
(12,480
|
)
|
|||||||||
Interest income
|
14
|
13
|
59
|
|||||||||||||
Loss on interest rate swaps
|
10
|
-
|
(8
|
)
|
(189
|
)
|
||||||||||
Foreign currency exchange gains (losses), net
|
(13
|
)
|
19
|
(43
|
)
|
|||||||||||
(1,462
|
)
|
(8,365
|
)
|
(12,653
|
)
|
|||||||||||
Income / (loss) before taxes
|
80,348
|
10,906
|
(193,770
|
)
|
||||||||||||
Income tax benefit
|
-
|
1
|
2
|
|||||||||||||
Net income / (loss)
|
80,348
|
10,907
|
(193,768
|
)
|
||||||||||||
Net income / (loss) per common share
|
||||||||||||||||
Basic and diluted
|
16
|
6.01
|
0.91
|
(16.74
|
)
|
|||||||||||
Weighted average common shares outstanding
|
||||||||||||||||
Basic
|
16
|
13,364,723
|
11,958,140
|
11,576,576
|
||||||||||||
Diluted
|
13,364,750
|
11,959,276
|
11,576,576
|
Common stock
|
||||||||||||||||||||
# of Shares
|
Par Value
|
Additional paid-in capital
|
Accumulated deficit
|
Total stockholders' equity / (deficit)
|
||||||||||||||||
Balance, January 1, 2012
|
7,317,662
|
1
|
279,292
|
(202,370
|
)
|
76,923
|
||||||||||||||
Issuance of common stock (Note 3b)
|
4,641,620
|
-
|
10,000
|
-
|
10,000
|
|||||||||||||||
Stock based compensation (Note 17)
|
-
|
-
|
15
|
-
|
15
|
|||||||||||||||
Sale of subsidiary to entity under common control (Note 1a)
|
-
|
-
|
5,213
|
-
|
5,213
|
|||||||||||||||
Net loss for the year ended December 31, 2012
|
-
|
-
|
-
|
(193,768
|
)
|
(193,768
|
)
|
|||||||||||||
Balance, December 31, 2012
|
11,959,282
|
1
|
294,520
|
(396,138
|
)
|
(101,617
|
)
|
|||||||||||||
Cancellation of equity incentive plan shares
|
(11
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Stock based compensation (Note 17)
|
-
|
-
|
15
|
-
|
15
|
|||||||||||||||
Net income for the year ended December 31, 2013
|
-
|
-
|
-
|
10,907
|
10,907
|
|||||||||||||||
Balance, December 31, 2013
|
11,959,271
|
1
|
294,535
|
(385,231
|
)
|
(90,695
|
)
|
|||||||||||||
Related parties liabilities released (Note 3a)
|
-
|
-
|
9,819
|
-
|
9,819
|
|||||||||||||||
Issuance of common stock (Note 3b)
|
7,930,000
|
1
|
3,203
|
-
|
3,204
|
|||||||||||||||
Net income for the year ended December 31, 2014
|
-
|
-
|
-
|
80,348
|
80,348
|
|||||||||||||||
Balance, December 31, 2014
|
19,889,271
|
2
|
307,557
|
(304,883
|
)
|
2,676
|
2014
|
2013
|
2012
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income / (loss)
|
80,348
|
10,907
|
(193,768
|
)
|
||||||||
Adjustments to reconcile net income / (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation
|
3
|
982
|
15,606
|
|||||||||
Amortization of deferred finance charges
|
-
|
1,090
|
466
|
|||||||||
Amortization of deferred dry-docking costs
|
-
|
232
|
3,648
|
|||||||||
Payments for dry-docking
|
(225
|
)
|
(750
|
)
|
(1,607
|
)
|
||||||
Change in fair value of financial instruments
|
-
|
8
|
(2,038
|
)
|
||||||||
Stock based compensation
|
-
|
15
|
15
|
|||||||||
Loss on sale of vessels
|
-
|
-
|
15,590
|
|||||||||
Loss on bad debt
|
38
|
-
|
327
|
|||||||||
Impairment of vessels and deferred charges
|
-
|
3,564
|
147,143
|
|||||||||
Impairment of goodwill
|
-
|
-
|
4,365
|
|||||||||
Gain on disposal of subsidiaries
|
-
|
(25,719
|
)
|
-
|
||||||||
Gain on restructuring
|
(85,563
|
)
|
-
|
-
|
||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Due from related parties
|
-
|
-
|
405
|
|||||||||
Inventories
|
61
|
(1,005
|
)
|
1,152
|
||||||||
Accounts receivable trade, net
|
1,188
|
1,025
|
(1,193
|
)
|
||||||||
Other current assets
|
661
|
1,113
|
(2,013
|
)
|
||||||||
Other non-current assets
|
-
|
141
|
36
|
|||||||||
Trade accounts and other payables
|
(1,884
|
)
|
(658
|
)
|
2,291
|
|||||||
Accrued expenses
|
(805
|
)
|
68
|
486
|
||||||||
Due to related parties
|
875
|
2,914
|
10,205
|
|||||||||
Accrued interest
|
(9,350
|
)
|
6,788
|
1,948
|
||||||||
Deferred revenue – related party
|
-
|
-
|
(142
|
)
|
||||||||
Deferred revenue
|
(205
|
)
|
315
|
(504
|
)
|
|||||||
Net cash (used in) / provided by operating activities
|
(14,858
|
)
|
1,030
|
2,418
|
||||||||
Cash flows from investing activities:
|
||||||||||||
Net proceeds from sale of vessels
|
105,959
|
3,998
|
58,933
|
|||||||||
Cash disposed of upon disposal of subsidiaries
|
-
|
(2,005
|
)
|
(3,531
|
)
|
|||||||
Cash paid at subsidiary disposal
|
-
|
(1,000
|
)
|
-
|
||||||||
Additions to office furniture & equipment
|
(64
|
)
|
-
|
-
|
||||||||
Net cash provided by investing activities
|
105,895
|
993
|
55,402
|
|||||||||
Cash flows from financing activities:
|
||||||||||||
Net proceeds from issuance of common stock
|
3,204
|
-
|
10,000
|
|||||||||
Repayments of long term debt
|
(94,443
|
)
|
(5,246
|
)
|
(98,816
|
)
|
||||||
Restricted cash released
|
-
|
2,000
|
17,560
|
|||||||||
Net cash used in financing activities
|
(91,239
|
)
|
(3,246
|
)
|
(71,256
|
)
|
||||||
Net decrease in cash and cash equivalents
|
(202
|
)
|
(1,223
|
)
|
(13,436
|
)
|
||||||
Cash and cash equivalents at beginning of period
|
3,075
|
4,298
|
17,734
|
|||||||||
Cash and cash equivalents at end of period
|
2,873
|
3,075
|
4,298
|
|||||||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||||||
Cash paid for interest
|
10,557
|
-
|
9,481
|
|||||||||
1.
|
Basis of Presentation and General Information:
|
a.
|
Disposal of Subsidiaries:
|
Cash and restricted cash
|
3,531
|
|||
Vessels and other assets
|
49,444
|
|||
Long-term debt and other liabilities, net of BET's obligation towards the Company
|
(58,188
|
)
|
||
Effect on equity from disposal of subsidiary
|
(5,213
|
)
|
Cash and restricted cash
|
1,902
|
|||
Vessels and other assets
|
22,780
|
|||
Long-term debt and other liabilities, net of obligations towards the Company
|
(30,382
|
)
|
||
Net liabilities
|
(5,700
|
)
|
Cash and restricted cash
|
103
|
||
Vessels and other assets
|
18,514
|
||
Long-term debt and other liabilities, net of obligations towards the Company
|
(39,957
|
)
|
|
Net liabilities
|
(21,340
|
)
|
b.
|
Disposal of Vessels:
|
c.
|
Vessels Acquisitions:
|
d.
|
Going Concern:
|
e.
|
Subsidiaries in Consolidation:
|
Company
|
Country of Incorporation
|
Date of Incorporation
|
Vessel name
|
Date of Delivery
|
Date of Sale/Disposal
|
Financed by
|
||||||
Seanergy Management Corp.(1) (3)
|
|
Marshall Islands
|
|
May 9, 2008
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Seanergy Shipmanagement Corp. (1)
|
Marshall Islands
|
September 16, 2014
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||
Sea Glorius Shipping Co. (1)
|
Marshall Islands
|
September 16, 2014
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||
Sea Genius Shipping Co. (1)
|
Marshall Islands
|
September 16, 2014
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||
Sea Furious Shipping Co. (1)
|
Marshall Islands
|
September 16, 2014
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||
Sea Olympius Shipping Co. (1)
|
Marshall Islands
|
September 16, 2014
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||
Amazons Management Inc.(1)
|
|
Marshall Islands
|
|
April 21, 2008
|
|
Davakis G.
|
|
August 28, 2008
|
|
March 6, 2014
|
|
Piraeus Bank
|
Lagoon Shipholding Ltd.(1)
|
|
Marshall Islands
|
|
April 21, 2008
|
|
Delos Ranger
|
|
August 28, 2008
|
|
March 11, 2014
|
|
Piraeus Bank
|
Cynthera Navigation Ltd.(1)
|
|
Marshall Islands
|
|
March 18, 2008
|
|
African Oryx
|
|
August 28, 2008
|
|
April 10, 2013
|
|
Piraeus Bank
|
Martinique International Corp.(1)
|
|
British Virgin Islands
|
|
May 14, 2008
|
|
Bremen Max
|
|
September 11, 2008
|
|
March 7, 2014
|
|
Piraeus Bank
|
Harbour Business International Corp.(1)
|
|
British Virgin Islands
|
|
April 1, 2008
|
|
Hamburg Max
|
|
September 25, 2008
|
|
March 10, 2014
|
|
Piraeus Bank
|
Waldeck Maritime Co.(1)
|
|
Marshall Islands
|
|
April 21, 2008
|
|
African Zebra
|
|
September 25, 2008
|
|
February 15, 2012
|
|
Piraeus Bank
|
Maritime Capital Shipping Limited (1)
|
|
Bermuda
|
|
April 30, 2007
|
|
N/A
|
|
May 21, 2010
|
|
N/A
|
|
N/A
|
Maritime Capital Shipping (HK) Limited (3)
|
|
Hong Kong
|
|
June 16, 2006
|
|
N/A
|
|
May 21, 2010
|
|
N/A
|
|
N/A
|
Maritime Glory Shipping Limited (2)
|
|
British Virgin Islands
|
|
April 8, 2008
|
|
Clipper Glory
|
|
May 21, 2010
|
|
December 4, 2012
|
|
HSBC
|
Maritime Grace Shipping Limited (2)
|
|
British Virgin Islands
|
|
April 8, 2008
|
|
Clipper Grace
|
|
May 21, 2010
|
|
October 15, 2012
|
|
HSBC
|
Atlantic Grace Shipping Limited (4)
|
|
British Virgin Islands
|
|
October 9, 2007
|
|
N/A
|
|
May 21, 2010
|
|
N/A
|
|
(1) Subsidiaries wholly owned
|
(2) Vessel owning subsidiaries owned by MCS
|
(3) Management company
|
(4) Dormant company
|
2.
|
Significant Accounting Policies:
|
(a) | Principles of Consolidation |
(b) | Use of Estimates |
(c) | Foreign Currency Translation |
(d) | Concentration of Credit Risk |
Customer
|
2014
|
2013
|
2012
|
|||
A
|
59%
|
18%
|
-
|
|||
B
|
29%
|
-
|
-
|
|||
C
|
-
|
16%
|
-
|
|||
D
|
-
|
12%
|
19%
|
|||
E
|
-
|
10%
|
-
|
|||
F
|
-
|
-
|
14%
|
|||
G
*
|
-
|
-
|
14%
|
|||
Total
|
88%
|
56%
|
47%
|
(e) | Cash and Cash Equivalents |
(f) | Accounts Receivable Trade, Net |
(g) | Inventories |
(h) | Insurance Claims |
(i) | Vessels |
(j) | Vessel Depreciation |
(k) | Long-lived Assets Classified as Held for Sale |
(l) | Impairment of Long-Lived Assets (Vessels) |
(m) | Office equipment, net |
(n) | Goodwill |
(o) | Dry-Docking and Special Survey Costs |
(p) | Commitments and Contingencies |
(q) | Revenue Recognition |
(r) | Commissions |
(s) | Vessel Voyage Expenses |
(t) | Repairs and Maintenance |
(u) | Financing Costs |
(v) | Income Taxes |
(w) | Stock-based Compensation |
(x) | Earnings (Losses) per Share |
(y) | Segment Reporting |
(z) | Financial Instruments |
3.
|
Transactions with Related Parties:
|
4.
|
Due from / Due to Related Parties:
|
5.
|
Inventories:
|
|
December 31, 2014
|
December 31, 2013
|
||||||
Lubricants
|
-
|
266
|
||||||
Bunkers
|
-
|
647
|
||||||
Total
|
-
|
913
|
||||||
|
6.
|
Other Current Assets:
|
The amounts in the accompanying consolidated balance sheets are analyzed as follows:
|
|
December 31, 2014
|
December 31, 2013
|
||||||
Prepaid expenses
|
78
|
441
|
||||||
Insurance claims
|
22
|
134
|
||||||
Other
|
204
|
390
|
||||||
Total
|
304
|
965
|
7.
|
Vessels Held for Sale:
|
December 31, 2014
|
December 31, 2013
|
|||||||
Cost:
|
||||||||
Beginning balance
|
109,178
|
55,647
|
||||||
- Transfers from vessels
|
-
|
101,222
|
||||||
- Transfers from deferred charges
|
-
|
956
|
||||||
- Remeasurement
|
-
|
8,000
|
||||||
- Disposals
|
(109,178
|
)
|
(56,647
|
)
|
||||
Ending balance
|
-
|
109,178
|
||||||
Accumulated depreciation:
|
||||||||
Beginning balance
|
(49,037
|
)
|
(15,897
|
)
|
||||
- Additions
|
-
|
(49,037
|
)
|
|||||
- Disposals
|
49,037
|
15,897
|
||||||
Ending balance
|
-
|
(49,037
|
)
|
|||||
Net book value
|
-
|
60,141
|
8.
|
Long-Term Debt:
|
|
December 31, 2014
|
December 31, 2013
|
||||||
Piraeus Bank reducing revolving credit facility
|
-
|
40,929
|
||||||
Piraeus Bank term facility
|
-
|
93,982
|
||||||
Total
|
-
|
134,911
|
||||||
Less - current portion
|
-
|
(134,911
|
)
|
|||||
Long-term portion
|
-
|
-
|
9.
|
Trade Accounts and Other Payables:
|
The amounts in the accompanying consolidated balance sheets are analyzed as follows:
|
|
December 31, 2014
|
December 31, 2013
|
||||||
Creditors
|
184
|
1,631
|
||||||
Insurances
|
3
|
161
|
||||||
Other
|
77
|
356
|
||||||
Total
|
264
|
2,148
|
10.
|
Financial Instruments:
|
(a)
|
Significant Risks and Uncertainties, including Business and Credit Concentration
|
(b)
|
Interest Rate Risk
|
a.
|
Cash and cash equivalents, accounts receivable trade, net, trade accounts and other payables, due to related parties, accrued expenses, and accrued interest: the carrying amounts approximate fair value because of the short maturity of these instruments.
|
b.
|
Long-term debt: The carrying value approximates the fair market value as the long-term debt bears interest at floating interest rate.
|
(c)
|
Fair Value Hierarchy
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Vessels held for sale (1)
|
-
|
-
|
48,000
|
48,000
|
||||||||||||
-
|
-
|
48,000
|
48,000
|
(1) | The Company compared the carrying values of the vessels which were classified as held for sale in the accompanying consolidated balance sheet for the years ended December 31, 2013 (Note 7), with their estimated fair market values less costs to sell and recognized an impairment loss of $3,564 (including re measurement of $8,000) in the accompanying consolidated statement of income. |
Derivatives not designated as hedging instruments
|
Location of loss recognized
|
Amount of loss
|
|||||||||||
2014
|
2013
|
2012
|
|||||||||||
Interest rate swaps
|
Loss on interest rate swaps
|
-
|
(8
|
)
|
(189
|
)
|
|||||||
11.
|
Commitments and Contingencies:
|
Year ending December 31,
|
|
|||
2015
|
38
|
|||
Total
|
38
|
12.
|
Capital Structure:
|
(b) Warrants and Unit Purchase Option
|
(c) Preferred Stock
|
(d) Dividends
|
13.
|
Direct Voyage Expenses and Vessel Operating Expenses:
|
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Bunkers
|
1,087
|
6,563
|
10,736
|
|||||||||
Port expenses
|
123
|
888
|
1,609
|
|||||||||
Commissions
|
1
|
243
|
266
|
|||||||||
Other
|
63
|
341
|
976
|
|||||||||
Total
|
1,274
|
8,035
|
13,587
|
|||||||||
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Crew wages and related costs
|
700
|
5,624
|
13,670
|
|||||||||
Chemicals and lubricants
|
72
|
862
|
2,831
|
|||||||||
Repairs and maintenance
|
65
|
2,594
|
6,592
|
|||||||||
Insurance
|
169
|
1,233
|
2,791
|
|||||||||
Miscellaneous expenses
|
-
|
773
|
1,099
|
|||||||||
Total
|
1,006
|
11,086
|
26,983
|
14.
|
General and Administration Expenses:
|
|
||||||||||||
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Auditors' and accountants' fees
|
176
|
263
|
712
|
|||||||||
Professional services
|
502
|
968
|
2,142
|
|||||||||
Salaries, BOD remuneration and other compensation
|
1,594
|
1,993
|
2,210
|
|||||||||
Directors and Officers Insurance
|
124
|
133
|
137
|
|||||||||
Other
|
591
|
609
|
1,136
|
|||||||||
Total
|
2,987
|
3,966
|
6,337
|
|
||||||||||||
Year ended December 31
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Seanergy's executive office expenses
|
71
|
96
|
136
|
|||||||||
MCS office rent
|
40
|
86
|
112
|
|||||||||
Travel and transportation
|
90
|
128
|
132
|
|||||||||
Subscriptions
|
23
|
52
|
94
|
|||||||||
Other
|
367
|
247
|
662
|
|||||||||
Total
|
591
|
609
|
1,136
|
15.
|
Interest and Finance Costs:
|
|
||||||||||||
Year ended December 31 | ||||||||||||
2014
|
2013
|
2012
|
||||||||||
Interest on long-term debt
|
811
|
5,075
|
9,602
|
|||||||||
Interest on revolving credit facility
|
396
|
2,144
|
2,252
|
|||||||||
Amortization of debt issuance costs
|
-
|
1,090
|
466
|
|||||||||
Arrangement fees on undrawn facilities
|
246
|
-
|
-
|
|||||||||
Other
|
10
|
80
|
160
|
|||||||||
Total
|
1,463
|
8,389
|
12,480
|
16.
|
Earnings per Share:
|
|
||||||||||||
For the years ended December 31 | ||||||||||||
2014
|
2013
|
2012
|
||||||||||
Basic:
|
||||||||||||
Net income / (loss)
|
80,348
|
10,907
|
(193,768
|
)
|
||||||||
Weighted average common shares outstanding – basic
|
13,364,723
|
11,958,140
|
11,576,576
|
|||||||||
Net income / (loss) per common share – basic
|
$
|
6.01
|
$
|
0.91
|
$
|
(16.74
|
)
|
|||||
Diluted:
|
||||||||||||
Net income / (loss)
|
80,348
|
10,907
|
(193,768
|
)
|
||||||||
Weighted average common shares outstanding – basic
|
13,364,723
|
11,958,140
|
11,576,576
|
|||||||||
Non-vested equity incentive shares
|
27
|
1,136
|
-
|
|||||||||
Weighted average common shares outstanding – diluted
|
13,364,750
|
11,959,276
|
11,576,576
|
|||||||||
Net income / (loss) per common share – diluted
|
$
|
6.01
|
$
|
0.91
|
$
|
(16.74
|
)
|
|||||
2014
|
2013
|
2012
|
||||||||||
Private warrants
|
1,138,917
|
1,138,917
|
1,138,917
|
|||||||||
Non-vested shares
|
-
|
-
|
2,218
|
|||||||||
Total
|
1,138,917
|
1,138,917
|
1,141,135
|
17.
|
Equity Incentive Plan:
|
18.
|
Subsequent Events:
|
a)
|
On January 1, 2015, the lease of Seanergy's executive offices was extended for one month up to January 31, 2015, at a monthly lease payment of EUR 25. On February 1, 2015, the lease of Seanergy's executive offices was further extended for one month up to February 28, 2015, at a monthly lease payment of EUR 25. On March 13, 2015, the lease of Seanergy's executive offices was further extended up to March 15, 2015, at a lease payment of EUR 12.5, at which point the Company relocated its executive offices to premises owned by an unaffiliated third party.
|
b)
|
On January 2, 2015, the Company paid $1,730 as a deposit for the purchase of the second hand Capesize vessel as per agreement dated December 23, 2014, for a gross purchase price of $17,300 (Note 1c).
On March 19, 2015, the Company acquired the 2001 Capesize, 171,199 DWT vessel M/V Leadership from an unaffiliated third party. The acquisition of the vessel was financed by (i) a shareholder's convertible note of $4,000 dated March 12, 2015 by Jelco, (ii) by $8,750 loan agreement with Alpha Bank, dated March 6, 2015 and (iii) by an equity injection of $4,500 on March 16, 2015 by Jelco in exchange for the issuance of 25,000,500 newly issuance shares of common stock. The convertible note is repayable in ten consecutive semi-annual installments of $200, along with a balloon installment of $2,000 payable on the final maturity date. The note bears interest of Libor plus a margin of 5% with quarterly interest payments. At Jelco's option, the Company's obligation to repay the principal amount under the convertible note may be paid in common shares at a conversion price of $0.18 per share. The Company has the right to defer up to three consecutive installments to the balloon installment. The Alpha Bank loan is repayable in twenty consecutive quarterly installments, the first four installments being $200 each and the next sixteen quarterly installments being $250 each, along with a balloon installment of $3,950 payable on the final maturity date. The loan bears interest of Libor plus a margin of 3.75% with quarterly interest payments.
On March 12, 2015, the Company had entered into a share purchase agreement under which the Company sold 25,000,500 of its common shares to Jelco for $4,500. The Company's Board of Directors obtained a fairness opinion from an independent third party for the share price. The price was determined using a build-up method, combining the Company's net asset value with the cost that a private company would incur to be listed on a U.S. stock exchange. On March 16, 2015, the Company completed the equity injection plan with the abovementioned entity. The shares to the entity were issued on March 16, 2015.
|
c)
|
On January 15, 2015, the Company announced that the closing of the previously announced agreement for the contribution of four Capesize vessels to Seanergy has been extended to June 30, 2015. The Company also announced that continued discussions could lead to changes in the transaction which remains subject to certain conditions and sellers' third party consents.
|
d)
|
On January 28, 2015, the Company received written notification from the NASDAQ Stock Market, indicating that because the closing bid price of the Company's common stock for 30 consecutive business days, from December 12, 2014 to January 27, 2015, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, the Company is not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance is 180 days, or until July 27, 2015. The Company intends to monitor the closing bid price of its common stock between now and July 27, 2015 and is considering its options, including a reverse stock split, in order to regain compliance with the Nasdaq Capital Market minimum bid price requirement. The Company can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event the Company does not regain compliance within the 180-day grace period and it meets all other listing standards and requirements, the Company may be eligible for additional 180-day grace period. The Company intends to cure the deficiency within the prescribed grace period. During this time, the Company's common stock will continue to be listed and trade on the Nasdaq Capital Market. The Company's business operations are not affected by the receipt of the notification.
|
e)
|
As of February 2, 2015, by virtue of a proxy granted to Claudia Restis, the beneficial owner of 100% of the capital stock of each of Comet Shipholding Inc. and Jelco, by Plaza Shipholding Corp., Claudia Restis may be deemed to beneficially own 4,271,393 shares of common stock pursuant to which Claudia Restis may be deemed to share the power to vote such shares.
|
f)
|
On February 11, 2015, the Company's wholly owned subsidiary Leader Shipping Co., or Leader, signed a management agreement with V.Ships Greece Ltd. for the provision of technical management services relating to the newly acquired vessel M/V Leadership. The monthly fixed management fee is agreed to approximately $11.
|
g)
|
On March 2, 2015, the Company's wholly owned subsidiary Seanergy Management Corp. signed a commercial management agreement with
Fidelity Marine Inc., or Fidelity, for a minimum period of one year and shall continue thereafter until terminated by either party giving to the other notice in writing. Pursuant to this commercial management agreement, Fidelity will perform the commercial management of the Company's fleet and its employment. The Company shall reimburse Fidelity for all reasonable running and/or out of pocket expenses, including but not limited to, telephone, fax, stationary and printing expenses, as well as any pre-approved travelling expenses in relation to this agreement.
|
h)
|
On March 12, 2015, the Company entered into a share purchase agreement under which the Company sold 1,667,000 of its common shares to its Chief Executive Officer, or CEO, for $300. The Company's Board of Directors obtained a fairness opinion from an independent third party for the share price. The price was determined using a build-up method, combining the Company's net asset value with the cost that a private company would incur to be listed on a U.S. stock exchange. On March 16, 2015, the Company completed the equity injection plan with the abovementioned entity. The shares to the CEO were issued on March 16, 2015. The funds were contributed for general corporate purposes.
|
i)
|
On March 19, 2015, Seanergy Shipmanagement Corp., or Seanergy Shipmanagement, entered into an agreement with Leader, the owner of the M/V Leadership, for the provision of the vessel's insurances, bunkering and operation. Leader shall reimburse Seanergy Shipmanagement for all reasonable running and/or out of pocket expenses in relation to this agreement. The agreement between Leader and Seanergy Shipmanagement is for an indefinite period until terminated by either party giving to the other notice in writing.
|
PART
|
SUBJECT MATTER
|
PAGE NO.
|
|
Part I
|
Vessel Details
|
4
|
|
Part II
|
Terms of Agreement
|
||
1.
|
Definitions & Interpretation
|
6
|
|
2.
|
Appointment of Managers
|
6
|
|
3.
|
Basic Services
|
6
|
|
3.1
|
Crewing
|
7
|
|
3.2
|
Technical Management
|
8
|
|
3.3
|
Purchasing
|
8
|
|
|
|
|
|
3.5
|
Accounting and Budgeting
|
9
|
|
3.6
|
Operations
|
10
|
|
3.7
|
Information System Software
|
10
|
|
3.8
|
Shipboard Oil Pollution Emergency Plan
|
11
|
|
3.9
|
OPA
|
11
|
|
3.10
|
Assistance with Sale of Vessel
|
11
|
|
3.11
|
Vessel trading in high risk areas
|
11
|
|
4.
|
Other Services
|
12
|
|
5.
|
Managers' Obligations
|
12
|
|
6.
|
Owners' Obligations
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12
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7.
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Documentation
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13
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8.
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Management Fee
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14
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9.
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Payments and Management of Funds
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15
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10.
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Managers' Right to Sub-Contract
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16
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11.
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Responsibilities
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16
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11.1
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Force Majeure
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16
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11.2
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Liability to Owners
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16
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11.3
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Indemnity – General
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16
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11.4
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Indemnity – Tax
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17
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11.5
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Himalaya
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17
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13.
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Claims/Disputes
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17
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14.
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Auditing, Records
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18
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15.
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Inspection of Vessel
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18
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16.
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Compliance with Laws & Regulations
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18
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17.
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Duration of the Agreement
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18
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17.1
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Termination by Notice
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18
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17.2
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Termination by Default – Owners
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18
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17.3
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Termination by Default – Managers
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19
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17.4
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Liquidation
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19
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17.5
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Extraordinary Termination
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19
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18.
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Confidentiality
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19
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19.
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Suspension of Services
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20
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20.
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Law and Arbitration
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20
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21.
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Amendments to Agreement
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20
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22.
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Time Limit for Claims
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20
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23.
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Condition of Vessel
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20
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24.
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Use of Associated Companies
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21
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25.
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Notices
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21
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26.
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Staff Loyalty
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21
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27.
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Entire Agreement
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21
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28.
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Partial Validity
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21
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29.
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Non Waiver
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21
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Part III
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Other Services
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22-23
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Part IV
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Fee Schedule
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24
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Part V
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Fleet Details
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25
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Part VI
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Initial Budget
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26-28
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Part VII
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Form of Novation Agreement
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29-32
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V.SHIPS SHIP MANAGEMENT AGREEMENT
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Ship Technical Management Agreement
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OWNERS
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MANAGERS
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V.SHIPS SHIP MANAGEMENT AGREEMENT
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It is mutually agreed between the party mentioned in Box 2 of Part I (hereinafter called "
the Owners
") and the party mentioned in Box 3 of Part I (hereinafter called "
the Managers
") that this Agreement consisting of PARTS I to VII inclusive shall be performed subject to the conditions contained herein. In the event of a conflict of conditions, the provisions of an applicable Appendix of Part III shall prevail over the provisions of PART II to the extent of such conflict but only in respect of the Management Service to be provided in terms of such applicable Appendix. In the event of a conflict between the Fee Schedule and the provisions of an applicable Appendix of Part III, the provisions of the Fee Schedule shall prevail.
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DATE OF AGREEMENT: 11 February 2015 | ||
Signature(s) (Owners)
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Signature(s) (Managers)
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Leader Shipping Co.
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V.Ships Greece Ltd.
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Stamatios Tsantanis
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Capt. Mauro Renaldi
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Title: Director / President / Treasurer
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Title: Managing Director
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Ship Technical Management Agreement
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OWNERS
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MANAGERS
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V.SHIPS SHIP MANAGEMENT AGREEMENT
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Version Number
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1.
Definitions and Interpretation
1.1
In this Agreement, in addition to terms defined in Part I, save where the context otherwise requires, the following words and expressions shall have the meanings hereby assigned to them.
"
Basic Services
" means services relating to Crewing, Technical Management, Purchasing, Operations, Accounting and Budgeting, Information System Software, Shipboard Oil Pollution Emergency Plan, OPA and Assistance with Sale provided in accordance with Clause 3.
"
Crew Support Costs
" means all expenses of a general nature not particularly referable to any individual vessel for the time being managed by the Managers and incurred for the purpose of providing an efficient and economic management service including, without prejudice to the generality of the foregoing, cost of crew standby pay, training schemes, cadet training schemes, study pay, recruitment and interviews.
"
Fee Schedule
" means the Schedule comprising Part IV or any revised Fee Schedule prepared by the Managers after the date hereof and agreed by the Owners in writing to record adjustments to the fees payable from time to time under this Agreement.
"
Information System Software
" means the Managers' proprietary ship management software in executable object code form as described in Clause 3.7.1 as the same may be upgraded and updated from time to time.
"
ISM Code
" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by Resolution A.714 (18) of the International Maritime Organisation on 4 November 1994 and incorporated on 19 May 1994 into the SOLAS Convention 1974 as Chapter IX and any amendment thereto or substitution thereof.
"ISPS Code"
means the International Ship and Port Facility Security Code as adopted on 12 December 2002 by resolution 2 of the Conference of Contracting Governments to the International Convention for the Safety of Life at Sea 1974 and any amendment thereto or substitution thereof.
"
Management Services
" means Basic Services and Other Services and all other functions performed by the Managers under the terms of this Agreement.
"
MLC
" means the Maritime Labour Convention 2006
and any amendment thereto, substitution thereof and ratification of the Maritime Labour Convention 2006 in the respective States national law.
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"
OPA
" means the United States Oil Pollution Act of 1990, regulations made thereunder, and any amendment thereto or substitution thereof.
"
Other Services
" means any services provided by Managers affirmatively indicated in Part III of this Agreement.
"
Severance Costs
" means the costs which the employers are legally obliged to pay to or in respect of the Crew as a result of the early termination of any contract for service on board the Vessel.
"
SMS
" means a Safety Management System in accordance with the ISM Code.
"SSP"
means a Ship Security Plan in accordance with the ISPS Code.
"
STCW
" means the International Maritime Organisation Convention on Standards of Training Certification and Watchkeeping for Seafarers 1978, as amended in 1995 and any amendment thereto or substitution thereof.
"
the Vessel
" shall mean the vessel details of which are set out in Box 1 of Part I.
1.2
Clause Headings are inserted for convenience and shall be ignored in construing this Agreement; words denoting the singular number shall include the plural number and
vice
versa
; references to Parts are to Parts of this Agreement; references to Clauses are to Clauses of Part II except where otherwise expressly stated; and references to any enactment include any re-enactments, amendments and extensions thereof.
2.
Appointment of Managers
2.1
With effect from the date stated in Box 4 of Part I (the "Date of Commencement") and continuing unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as the managers of the Vessel in respect of the Management Services.
2.2
In performing any of the Management Services the Managers shall, as agents for and on behalf of the Owners, have authority to take such steps as the Managers may from time to time in their reasonable discretion consider to be necessary to enable them to perform this Agreement in accordance with sound ship management practice.
3.
Basic Services
Subject to the terms and conditions herein provided, during the period of this Agreement the Managers shall carry out, as agents for and on behalf of the Owners, the Basic Services in accordance with the following provisions of this Clause.
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3.1
Crewing
3.1.1 The Managers shall provide suitably qualified crew for the Vessel and its trade as required by the Owners in accordance with current STCW requirements as agents for and on behalf of the Owners, provision of which includes but is not limited to the following functions:
(i)
select and engage Master, officers and crew (hereinafter collectively referred to as the "Crew"); where the Owners make a complaint about any member of the Crew the Managers will promptly investigate the same and if it proves to be justified, replace the Crew member concerned as soon as practicable;
(ii)
ensure that the applicable requirements of the law of the flag of the Vessel are satisfied in respect of manning levels, rank, qualification and certification of the Crew, and employment regulations including Crew's tax, social insurance, discipline and other requirements;
(iii)
ensure that all members of the Crew have passed a medical examination with a qualified doctor certifying that they are fit for the duties for which they are engaged and are in possession of valid medical certificates which are valid for the duration of their service onboard the Vessel and issued in accordance with appropriate flag state requirements and P&I Club requirements; in the absence of applicable Flag state requirement medical certificate shall be dated no more than three (3) months prior to the respective Crew members leaving the country of domicile and maintained for the duration of their service on board the vessel;
(iv)
arrange of transportation of the Crew, including repatriation;
(v)
supervise the efficiency of the Crew and use the Manager's standard crew appraisal system (written or electronic) and administration of all other Crew matters such as planning for the manning of the Vessel;
(vi)
make payroll arrangements, including settling manning and agency expenses for the manning agents in the Crew's country of origin and, if applicable, payment of Severance Costs;
(vii)
if requested by the Owners, conducting union negotiations and making agreed payments to unions;
(viii)
verify that the Crew shall have a command of the English of a sufficient standard to enable them to perform their duties safely;
(ix)
operate the Managers' Drug and Alcohol Policy;
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(ix)
arrange Crew training in accordance with the Managers' policies but always in compliance with STCW (and as provided for in the budget), records of such training being maintained in the Manager's standard format and will be provided to the Owners on a monthly basis.
3.1.2
Crew Claims
The Managers will provide such information as requested by relevant brokers and/or P&I Club managers to enable such brokers or managers to prepare and process all Crew insurance claims with the Owners' approval.
3.1.3
The Owners agree to implement in full the terms and conditions of employment under which the Crew is engaged by the Managers as agent for the Owners. The Owners shall be the employer of the Crew and under no circumstances shall the Managers be deemed to be the employer of the Crew. If the Vessel is covered by an ITF approved agreement the Owners authorize the Managers to sign the ITF Special Agreement on their behalf and agree to provide all information necessary for this purpose. The Managers to provide the Owners copies of the contracts of employment upon request.
3.1.4 The Owners to approve the engagement of any member of the Crew within four (4) working days of receipt from the Managers of reasonable details of the proposed appointee. No response within the stipulated timeframe indicates tacit approval.
3.1.5 In the event that any officers or ratings are supplied by the Owners or on their behalf, the Owners shall procure that they comply with the requirements of STCW and MLC. Owners will instruct such officers and ratings to obey all reasonable orders of the Managers.Any such officers or ratings shall, at the Owners' cost, be trained in accordance with the Managers training matrix.
3.1.6 The Managers shall procure that the Crew consent to processing of their personal data for legitimate business purposes. The Owners warrant that personal data of the Crew will be processed in accordance with the requirements of the Data Protection Act 1998 or any other applicable law or regulation.
3.1.7 For the purposes of the MLC, the Owners shall be deemed "Shipowner" and under no circumstances whatsoever, notwithstanding the Managers agreeing to carry out specific obligations under the MLC on behalf of the Owners, shall the Managers be deemed "Shipowner". It is a condition of this Agreement that the Owners shall provide all Crew with MLC compliant working and living conditions. The Owners shall ensure that, in
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case there is any Seafarer Recruitment & Placement Service supplying any member of the Crew to the Vessel or any entity directly employing other persons to work onboard the Vessel, the latter shall provide to the Managers documentary evidence of MLC compliance issued under the provisions laid down by the applicable ratifying administration or, in the case of a non-ratifying administration, documentary evidence from a Recognised Organisation that is accepted by the flag administration of the Vessel.
3.1.8 The Owners authorise the Managers to sign contracts of employment with the Crew as agent only for and on behalf of the Owners and/or to procure that a Seafarer Recruitment & Placement Service, in the country of domicile of a Crew member, signs contracts of employment with such Crew member as agent only for and on behalf of the Owners. The Managers to provide the Owners copies of all the contracts of employment upon request.
3.2
Technical Management
The Managers shall provide technical management which includes, but is not limited to the following functions:
(i)
provision of personnel to supervise the maintenance and general efficiency of the Vessel;
(ii)
arrangement and supervision of drydockings, repairs, modifications to and the upkeep of the Vessel to the standards agreed with the Owners provided that the Managers shall be entitled to incur the necessary expenditure, which is subject to Owners' prior approval, to ensure that the Vessel will comply with all requirements and recommendations of the classification society and equipment manufacturers, and with the laws and regulations of the country of registry of the Vessel and of the places where she trades;
(iii)
arrangement of periodic analysis of the bunker fuel, lubricating oils and chemicals by third parties (the costs being included in the Vessel's running costs);
(iv)
appointment of surveyors and technical consultants as the Managers may consider from time to time to be necessary, provided they are pre-approved by the Owners;
(v)
visits to the Vessel by superintendents or other staff of the Managers for up to 20 days on board the Vessel in any calendar year (or
pro
rata
for part of a calendar year) excluding the dry-docking period of the vessel and visits to the Vessel by superintendents or other staff
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of the Managers in excess of this allowance to be pre-approved in writing by the Owners;
(vi)
notify and receive prior approval by the Owners of any non-budgeted item of expenditure;
(vii) notify and receive prior approval by the Owners if there is an operational need to exceed quarterly budget allowance as attached to this agreement under Part VI.
(viii)
development, implementation and maintenance of an SMS and an SSP.
3.3
Purchasing
3.3.1 The Managers shall arrange for the supply of necessary victualling, stores, spares, provisions, lubricating oils and services (including drydock services) for the Vessel for any amount of up to US$5,000. With respect to the supply of any items of an amount between US$5,000 to US$10,000 the Managers shall request the Owners pre-approval, which should be provided within 48 hours from the Managers' request. No response within such stipulated timeframe indicates tacit approval by the Owners. For any purchase above US$10,000, the Managers will advise the details and quotations to the Owners in writing requesting authority to proceed. The Owners have the right to arrange for any purchasing and shall advise the Managers accordingly. To enable the Managers to arrange such supplies on the most advantageous terms, the Managers shall be entitled to join with other parties in making arrangements for bulk purchase. The Managers are presently members of MARCAS Limited ("MARCAS"), an independent contracting association providing access to commodities and dry-dock services globally (www.marcas.org). MARCAS negotiates on behalf of its members with selected suppliers the best available price, terms and conditions for the bulk purchase of goods and services for the marine industry with the aim of offering to members and their clients savings on vessel technical operating costs.
3.3.2 Details of the suppliers contracted by MARCAS and prices available for the Vessel at the time of supply shall be made available to Owners upon their request. Owners acknowledge that all information relating to prices is confidential and undertake not to disclose the same to third parties without the prior written consent of the Managers.
3.3.3 Where MARCAS has negotiated terms and conditions with suppliers of any stores, spares provisions, or lubricating oils ("Goods") and/or suppliers of services required by the Vessel, then the purchase of such Goods and services will, unless operational or other circumstances otherwise require, be undertaken with such suppliers on the basis of the terms and conditions negotiated by MARCAS.
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3.3.4 MARCAS will where practicable obtain a best price charter from suppliers that the prices for all Goods and services purchased by MARCAS's members will be the lowest prices available. If the Owners are able to obtain in good faith, on arms' length terms, on a true like for like basis (including quality, certification, timing, manufacturer, place of supply, etc., but ignoring taxes and exchange rate fluctuations), the same Goods and/or services at a lower price than that obtained by MARCAS, the Owners will supply full details to the Managers who will promptly raise the matter with MARCAS and pass on to Owners any refund obtained by MARCAS from the supplier.
3.3.5 The Owners have received details from the Managers of the business rules and operating procedures adopted by MARCAS, including provisions related to fees that MARCAS will retain as applicable, and agree to comply with such rules and operating procedures as the same may be amended from time to time.
3.3.6 The Owners acknowledge that they are aware that prices obtained from suppliers require strict adherence to the payment terms agreed with suppliers (normally 45 days from date of invoice) and any failure by the Owners to provide the Managers with funds to settle sums due to suppliers on time will (in the absence of a good faith dispute) result in an immediate 2% surcharge. The Managers are hereby expressly authorised to settle such surcharge charges from any sums held by them on behalf of Owners. The Owners further acknowledge that they are aware if payments to suppliers are regularly made late, or if suppliers are not satisfied with Owners' credit rating, suppliers may refuse to supply at the prices and on the terms negotiated by MARCAS.
3.3.7 The Owners acknowledge that the Managers may be requested by suppliers to disclose details of the beneficial ownership of the Owners and that the Managers may not be able to obtain the most advantageous terms from such suppliers should the Owners not agree to such disclosure.
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3.5
Accounting and Budgeting
3.5.1
The Managers shall:
(i) maintain records of all costs and expenditure incurred hereunder as well as data necessary or proper for the settlement of accounts between the parties;
(ii) establish an accounting system for the Vessel and supply regular monthly reports (within 5 working days from the end of the preceding month) in accordance therewith in the Managers' standard format or, on agreement of an additional fee, such other form as may be mutually agreed in writing with the Owners.
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3.5.2 The Managers shall present to the Owners annually a budget for the following calendar year in the Managers' standard format. The budget for the period in 2015 following the date stated in Box 4 of Part I is set out in Part VI.
3.5.3 The Owners shall notify the Managers of their acceptance and approval of the annual budget within 14 days of presentation and in the absence of any response the Owners shall be deemed to have accepted the said budget. In the event that the Owners do not accept an annual budget presented by the Managers within the period aforesaid and that budget is, in the reasonable opinion of the Managers, fair and reasonable, the Managers shall be entitled to terminate this Agreement by notice in writing, in which event this Agreement shall terminate on the expiry of a period of one (1) month from the date upon which such notice is given.
3.5.4 The Managers shall produce a monthly comparison between budgeted and actual expenditure of the Vessel in the Managers' standard format or, on agreement of an additional fee, such other form as may be mutually agreed in writing accompanied by proper written justification of variances reports. In addition if required by the Owners the Managers shall produce quarterly forecast report on the annual budget.
3.5.5 This Clause 3.5 is subject to the provisions of Part VI.
3.6 Operations
As required by the Owners, the Managers shall, as agents for the Owners, provide support on the following functions:
(i)
Monitoring voyage instructions and liaising as appropriate with the Owners, the Owners' brokers and charteres;
(ii)
Appointment of agents; and
(iii)
Arrangement of surveying of cargoes.
3.7
Information System Software
3.7.1 The Managers will, subject to the remaining provisions of this Clause 3.7, provide the Owners and the Vessel with the Information System Software to allow information from both the Vessel's and the Managers' office to be accessed directly by the Owners via the "PartnerShip Network" secure website. Financial, technical and operational information relating to the Vessel will be available from both the Vessel and office outputs, with the ability to "drill down" on accounts. This will provide the Owners with immediate access to the same information available
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to the Managers and to reports generated for the Owners, with a view to providing improved efficiency and cost savings to the Owners in his overview of the management of the Vessel.
3.7.2 Should the Owners have existing software applications on board the Vessel which they wish to retain, the Owners will permit the Managers to carry out an on board audit to assess the suitability, compatibility with the Information System Software, and any risks or disadvantages associated with the continued use of such applications.
3.7.3 The main features of the Information System Software at the date of this Agreement are:
(i)
comprehensive management software providing single point of entry to the Vessel incorporating Crew administration, vessel noon reporting, operational and port reporting, defect and deficiency reporting and performance monitoring;
(ii)
a ship to shore and shore to ship e-mail package providing cost efficient communications available to both Owners and their charterers; and
(iii)
a computerised maintenance system including inventory control and automated purchase order handling. (An initial charge, to be agreed with Owners, may be made for the set-up of the maintenance database, depending on the system currently existing on board the Vessel).
3.7.4 The costs for the Information System Software are set out in the Fee Schedule, and are included in the Vessel's running costs, as follows:
(i)
the license fee;
(ii)
remote access from the Owners' Office through the Managers' PartnerShip network;
(iii)
maintenance, updates and upgrades;
(iv)
24 hour support;
(v)
provision of anti-virus software and regular upgrades;
(vi)
operational manuals on CD ROM and regular updates;
(vii)
annual remote audit of the Vessel IT systems providing a system health check;
(viii)
user manuals and training of the Crew in the use of the Information System Software; and
(ix)
e-mail on board the Vessel.
3.7.5 Such costs do not include:
(i)
the costs of appropriate hardware on board the Vessel;
(ii)
travel and other related costs for installation support of the Information System Software on board the Vessel;
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(iii)
the set-up cost of the data base for the maintenance system; the Client remains an owner of the PMS data, which can be exported at any given time on request.
(iv)
any specific reports specified by the Owners where new data/specialist reporting is required; and
(v) costs incurred pursuant to clause 3.7.2.
3.7.6 Installation and set-up of the Information System Software will be undertaken on a date agreed between the Managers and the Owners having regard to the Vessel's schedule and the availability of the Managers' personnel.
3.7.7 Solely for the duration of this Agreement the Managers hereby grant the Owners a personal, non-transferable non-exclusive license to use a single copy of the Information System Software as installed by the Managers on a single computer on board the Vessel.
3.7.8 The Information System Software is owned by the Managers or its subsidiaries and is protected by applicable copyright and patent laws. The Owners may not copy the Information System Software (except for back-up purposes only) or any written materials which accompany it, and may not sell, rent, lease, lend, sub-license, reverse engineer or distribute the Information System Software or such written materials.
3.7.9
The Managers do not warrant that the Information System Software will meet the Owners' requirements or that the use or operation of the Information System Software will be uninterrupted or error free.
3.8
Shipboard Oil Pollution Emergency Plan
3.8.1 The Managers will prepare and obtain all necessary approvals for a shipboard oil pollution emergency plan (SOPEP) in a form approved by the Marine Environment Protection Committee of the International Maritime Organisation pursuant to the requirements of Regulation 26 of Annex I of the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, as amended (MARPOL 73/78).
3.8.2 The SOPEP will be written in the English language and will be reviewed and updated from time to time. If required the Managers will arrange for the translation of the SOPEP into another language, the cost of translation being recoverable in terms of Clause 8.5.
3.8.3 The Managers will also undertake regular training of the Crew in the use of the SOPEP including drills to ensure that the SOPEP functions as expected and that contact and information details specified are accurate.
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3.9
OPA
3.9.1
If instructed by the Owners, the Managers will:
(i)
arrange for the preparation, filing and updating of a contingency Vessel Response Plan in accordance with the requirements of OPA and instruct the Crew in all aspects of the operation of such plan;
(ii)
identify and ensure the availability by contract or otherwise of a Qualified Individual, a Spill Management Team, an Oil Spill Removal Organisation, resources having salvage, firefighting, lightering and, if applicable, dispersant capabilities, and public relations/media personnel to assist the Owners to deal with the media in the event of discharges of oil.
3.9.2 The Managers are expressly authorised as agents for the Owners to enter into such arrangements by Contract or otherwise as are required to ensure the availability of the services outlined in Clause 3.8.1. The Managers are further expressly authorised as agents for the Owners to enter into such other arrangements as may from time to time be necessary to satisfy the requirements of OPA or other Federal or State laws.
3.9.3 The Owners will pay the fees due to third parties providing the services described above together with costs to the Managers if any. The level of fees will be included in the Vessel's running costs.
3.9.4 On termination of this Agreement, the Vessel Response Plan and all documentation will be returned to the Managers at the expense of the Owners, provided such expense does not exceed US$150.
3.10
Assistance with Sale of Vessel
The Managers shall, if requested, provide Owners with technical assistance in connection with any sale of the Vessel. The Managers will, if requested in writing by the Owners, comment on the terms of any proposed Memorandum of Agreement, but the Owners will remain solely responsible for agreeing the terms of any Memorandum of Agreement regulating any sale.
3.11
Vessel trading in high risk areas
In the event that the Vessel is to trade in a high risk area and in particular an area where piracy is prevalent, the Managers shall:
(i)
Comply in full with the guidance provided by 'Best Management Practices to Deter Piracy off the Coast of Somalia and in the Arabian Sea Area (BMP)' as may be revised from time to time and also with any similar guidance which may be issued for other high risk areas.
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(ii)
Monitor daily guidance and updates provided by The Maritime Security Centre – Horn of Africa (MSCHOA) website (www.mschoa.org
) as may be revised from time to time and advise the Vessel accordingly.
(iii)
Comply with the Managers' guidelines for 'Transiting off the coast of Somalia, the Arabian Sea, Gulf of Aden and Red Sea' as may be revised from time to time
and also with any similar guidance which may be issued for other high risk areas
. The Managers' guidelines set out their
policy of full compliance with BMP and additional guidance and information on Self Protection Measures (SPM's) and Citadels or Safe Areas.
The Owners will be provided with a copy of the guidelines and costs for SPM's will be included in the Vessel budget.
(iv)
Where appropriate, ensure the Vessel follows the International Recommended Transit Corridor (IRTC), using the services of an escorted convoy if available or joining a group transit if not.
(v)
Monitor routing recommendations for transiting high risk areas as provided by charterers and insurers and review the same as part of the risk assessment carried out for the transit concerned.
(vi)
Provide sufficient Self Protection Measures (SPM) appropriate to the vessel type, size and speed with a view to protecting the Crew as far as possible in the event of an attack. To be determined by the risk assessment required by BMP for the transit concerned and before entering the high risk area.
(vii)
Provide training for the Crew in BMP prior to transiting any high risk area.
4.
Other Services
4.1
Subject to the terms and conditions herein provided, during the period of this Agreement the Managers shall carry out, as agents for and on behalf of the Owners, such Other Services as shall have been indicated in Part III.
4.2
Other Services shall be provided in accordance with the terms of the Appendices contained in Part III.
5.
Managers' Obligations
5.1
The Managers undertake to use their best endeavours to provide the Basic Services, the Other Services and the Management Services as agents for and on behalf of the Owners in accordance with sound ship management practice and to protect and promote the interests of the Owners in
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all matters relating to the provision of Management Services
provided however that the Managers in the performance of Management Services shall be entitled to have regard to their overall responsibility in relation to all vessels which may from time to time be entrusted to their management and in particular, but without prejudice to the generality of the foregoing, the Managers shall be entitled to allocate available supplies, manpower and services in such manner as in the prevailing circumstances the Managers in their reasonable discretion consider to be fair and reasonable.
5.2
The Managers shall procure that the requirements of the law of the flag of the Vessel are satisfied and they shall be deemed to be "the Company" as defined by the ISM Code, assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code and by the ISPS Code.
5.3
The Managers undertake the responsibility to cooperate fully with the Owner and/or any other third party audit firm the Owner chooses with regard to the establishment (design) and the annual testing of the internal controls followed by the Manager relating to the operations performed during providing the services described herein to the Owners (provision of Type II SSAE16 report included).
6.
Owners' Obligations
6.1
The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this Agreement. Time shall be of the essence in respect of the payment of all such sums.
6.2
The Owners shall report (or where the Owners are not the registered owners of the Vessel procure that the registered owners report) to the flag state administration the details of the Managers as the Company as required to comply with the ISM Code.
6.3
The Owners shall procure that throughout the period of this Agreement the Vessel will be insured at the Owners' expense for not less than sound market value or entered for full gross tonnage, as the case may be, for:
(i)
usual hull and machinery risks (including but not limited to Crew negligence) and excess liabilities;
(ii)
protection and indemnity risks (including but not limited to pollution risks, diversion expenses and Crew risks);
(iii)
freight, defense and demurrage;
(iv)
war risks (including but not limited to blocking and trapping, protection and indemnity, terrorism and Crew risks); and
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(v)
in accordance with MLC, establish insurance to compensate Crew, and/or any officers or ratings supplied by the Owners or on their behalf, for monetary loss that they may incur as a result of the failure of a recruitment and placement service or Owners under the employment agreement, to meet its obligations to them; and
(vi)
such other optional insurances as may be agreed by the Owners (such as piracy, kidnap and ransom, loss of hire)
in accordance with the best practice of prudent owners of vessels of a similar type to the Vessel, with sound and reputable insurance companies underwriters or associations (provided that, protection and indemnity risks must be placed with a member of the International Group of P&I Clubs) ("the Owners' Insurances").
6.4
The Owners shall procure that all premiums and calls on the Owners' Insurances are paid by their due date and that the Owners' Insurances name the Managers and any additional party designated by the Managers as a joint assured for protection and indemnity risks (including pollution risks) and a named assured on all other policies, with the benefit of full cover. The Owners shall, if applicable, provide the Managers with written evidence thereof to the reasonable satisfaction of the Managers on or prior to the Date of Commencement and/or on the date on which the Managers notify the Owners of the appointment of any additional party and within seven (7) days of each renewal date. The Owners shall provide Managers with an appropriate certificate of insurance covering any and all liabilities under the MLC
including but not limited to financial security in accordance with regulation 2.5.
6.5
As between the Owners and the Managers, the Managers shall not be responsible for paying any premiums or calls arising in connection with such insurances. On termination of this Agreement (howsoever occasioned) or where the Owners make a change in the P&I Club in which the Vessel is entered, the Owners shall procure that the Managers and any additional party designated by the Managers as a joint or named assured shall cease to be a joint or named assured and that they are released from and/or secured for any and all liability for premiums and calls that may arise in relation to the period of this Agreement. For the avoidance of doubt, it is agreed that the Owners shall be liable for all deductibles applying to any insurance policy.
6.6
Owners are responsible for the payment of any tonnage tax applicable at the country where this
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agreement will be officially Registered, save as provided in Clause 9.4 of this Agreement.
6.7
The Owners are responsible to maintain this management agreement for a minimum period of three (3) months. Such period will include any novation of this management agreement to V.Ships Limited, of Limassol Cyprus.
7.
Documentation
7.1
On or prior to the Date of Commencement the Owners will deliver to the Managers:
(i)
copies of the Vessel's Certificate of Registry,
(ii)
copies of all the Vessel's trading and classification certificates,
(iii) a copy of the Owners' certificate of incorporation,
(iv)
full details of any resident registered agent for the registered owner of the Vessel,
(v)
if applicable, a copy of the bareboat charterparty pursuant to which the Owners are disponent owners of the Vessel,
(vi)
in the case of a new vessel, the Owners will deliver a copy of the Building Contract and specification, and in the case of a second hand vessel, a copy of the Memorandum of Agreement in terms of which the Owners acquired the Vessel. The Owners shall be entitled to delete any confidential information (such as price) from the Building Contract or Memorandum of Agreement,
(vii) if the Owners are not the registered owners or the bareboat charterer of the Vessel, in addition to the above, evidence satisfactory to the Managers of their beneficial interest in the Vessel and of their authorisation from the registered owners to enter into this Agreement,
(viii) the name and address of the bank through which the Owners will pay funds due under this Agreement.
In any event, the Managers reserve the right to request evidence satisfactory to them that the Owners are in goodstanding and that the person signing this Agreement on their behalf is duly authorized to do so.
7.2
The Owners will on request provide the Managers with full details, in writing, of the registered Owners.
7.3
The Owners shall be obliged to obtain any required guarantee, bond or other security including, without limitation, the SCAC code and International Carrier Bond as required in order to access the US Bureau of Customs and Border Protection automated manifest system, as required by 68 Fed Reg. 68139 and as amended, and USCG Certificate of Financial Responsibility for water pollution. The Owners shall also be obliged to obtain any permits, licences or the like required to be obtained by an operator of a vessel including, without limitation, the US EPA vessel general permit.
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7.4 At the request of the Owners, the Managers will promptly deliver a duly executed technical manager's undertaking and subordination to the Owners' lenders' rights. The Managers further agree that they will cooperate with the Owners' lenders in providing such undertaking and subordination letter and any other further documentation which may be required by the Owners' lenders.
8.
Management Fee
8.1
The Owners shall pay to the Managers a fee in the amounts stated in the Fee Schedule in respect of the Basic Services and Other Services which shall be payable by equal monthly installments, the first installment being payable on the Commencement of this Agreement and the payment of the agreed monthly budgeted amounts fifteen (15) days prior to the purchase of the Vessel including payment of the agreed pre-delivery budget and one (1) month fee applicable for the pre-delivery work in respect of the vessel and subsequent installments being payable monthly in advance and fees for Other Services (if applicable) shall be paid at the rates and times specified in the Fee Schedule.
8.2
If the Managers' superintendents or other staff spend more than 20 days onboard the Vessel in any calendar year but excluding the dry-docking period of the vessel (or
pro
rata
for part of a calendar year) such days in excess of 20 on board the Vessel shall be charged at the rate of US$800 per man per day.
8.3
Where a charterers vetting inspection may be required and a pre-inspection is requested, the costs of such additional services shall be charged to the Vessel's account.
8.4
If the Vessel is placed on time charter, any costs incurred in complying with charterers requirements (including, but not limited to, additional reporting requirements and visits to the charterers) will be paid by the Owners.
8.5
The Managers shall, at no extra cost to the Owners, provide their own office accommodation, office staff and office stationery. The Owners shall reimburse the Managers for all expenses properly incurred under the terms of this Agreement on behalf of the Owners, including, without prejudice to the foregoing generality, postage and communication expenses (which the Managers shall allocate among all vessels managed by them on a basis which the Managers consider to be fair and reasonable having regard to the trade of the vessels, the nationality of the Crews and other relevant factors), Crew Support Costs (as included in the Vessel's running
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costs), vessel documentation, administrative expenses of the SOPEP and SSP, travelling expenses and other out of pocket expenses properly and reasonably incurred by the Managers in pursuance of the Management Services. All the above costs will be incurred by the Managers, provided they have been approved by the Owners.
8.6
In the event of the termination of this Agreement on the completion of the three (3) months minimum period (such period to include any period that this Agreement has been novated to V.Ships Limited, of Limassol Cyprus as provided in this Agreement) the fees payable to the Managers according to the provisions of Clause 8.1 shall, save as aftermentioned, be paid for a further period of two (2) calendar months from the effective date of termination. After that minimum period of the Agreement there will be only one (1) month fees applicable upon termination subject to agreement that the total value of management fees paid will be at least equivalent to five (5) months.
8.7
Fees payable to the Managers will be reviewed annually and shall be adjusted as a minimum by reference to the retail price index relevant to the domicile of the Managers. Where Management Services are wholly or partly provided by third parties, the fees therefor shall be adjusted immediately to take account of increases in the cost of such services. The Managers will, however, use all reasonable endeavours in negotiations with such third parties to minimise such increases.
8.8
All fees are exclusive of Value Added Taxes, if any, or other applicable taxes.
8.9
Save as otherwise provided in this Agreement, all discounts, rebates and commissions obtained by the Managers in the course of the management of the Vessel shall be credited to the Owners.
8.10
If as a result of collision, accident, emergency, or any other extraordinary circumstances, the Managers' workload is increased beyond that which the parties could reasonably have anticipated, the Managers shall be entitled to reasonable additional remuneration having regard to the nature of the incident, the personnel and resources of the Managers deployed, and all other relevant circumstances including insurance recoveries.
8.11
If the Owners decide to lay-up the Vessel and such lay-up lasts for more than two (2) months, an appropriate reduction of the management fee for the period exceeding the two (2) months until the Owners give written notice to remobilize the Vessel, shall be mutually agreed between the parties.
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9.
Payments and Management of Funds
9.1
All sums paid to the Managers by or on behalf of the Owners and all moneys collected by the Managers under the terms of this Agreement (other than fees payable by the Owners to the Managers) shall be held to the credit of the Owners in a separate bank account or accounts which shall be operated by the Managers. The Owners agree to provide to the Managers all information and documentation reasonably required to comply with banking "know your customer" procedures.
9.2
Where any sums howsoever arising and whether in respect of fees, budgeted expenditure, non-budgeted expenditure, other liabilities (present, future, liquidated or unliquidated) or expenses are owed to the Managers in connection with the Vessel, the Managers shall be entitled but not obliged at any time or times to apply any sums standing to the credit of the accounts referred to in Clause 9.1 to settle such sums but shall in any event remain payable by the Owners to the Managers on demand.
9.3
On or prior to the Date of Commencement the Owners shall provide to the Managers an amount equivalent to the prorated budgeted days' expenditure from the Date of Commencement to the end of the first month in management. In addition all pre-delivery expenses are to be funded promptly by the Owners on request from the Managers. The Owners shall provide an amount equivalent to 1/12 of the annual budget for the first full month on or prior to the 1
st
day of the first full month of the management period. In subsequent months the Managers shall request amounts for the total anticipated monthly expenditure as laid out in clause 9.6.
9.4
On or prior to the Date of Commencement the Owners shall provide to the Managers a sum of US$7,500, which shall be available to the Managers in their sole discretion for payment of any sum due under the terms of this Agreement, which sum will be held in the Manager's bank account ("the Float"). The Owners agree that on termination of this Agreement the Managers shall be entitled to retain all or part of the Float in payment of any sums then outstanding under the terms of this Agreement and, subject thereto, the Managers shall reimburse the balance of the Float to the Owners within two (2) months after the termination of this agreement. On or prior to the Date of Commencement the Owners shall provide to the Managers a sum equal to 50% of the applicable Greek tonnage tax to be paid for the Vessel for the year 2015 (the "Tonnage Tax Amount"), which sum will be held in the Manager's bank account. Such Tonnage
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Tax Amount will be provided to the Managers for the payment by the Managers to the Greek Authorities of the applicable Greek Tonnage Tax for the Vessel. Any balance of the Tonnage Tax Amount will be returned to the Owners immediately upon receipt thereof from the applicable Greek Authorities.
9.5
The Owners agree that on termination of this agreement payment of all sums outstanding under the terms of the agreement are to be made in advance of the Vessel leaving management. The sum will include without prejudice to the generality of the foregoing, any amounts due to be paid to suppliers and other third parties (as evidenced, in the absence of manifest error, by an accounts payable listing produced by the Managers)
and any outstanding accruals for items or services invoiced or delivered. The Owners irrevocably undertake to pay forthwith on request from the Managers any other sums which become due after the effective date of termination, but have been incurred during the prosecution of this Agreement.
9.6
The Managers shall each month request (by letter, telex, fax or e-mail) from the Owners the funds required to run the Vessel for the ensuing month. Such request will be for the total of the anticipated monthly expenditure, including, without prejudice to the generality of the foregoing, any sums due to be paid to suppliers and other third parties in the ensuing month (as conclusively evidenced, in the absence of manifest error, by an accounts payable listing produced by the Managers) and any outstanding accruals for items or services invoiced or delivered. In addition, the Owners shall provide the Managers upon request with any funds which the Managers may reasonably request to cover any unbudgeted, unexpected, occasional or extraordinary item of expenditure. All such funds shall be received by the Managers within five (5) days after the receipt of such requests and shall be held to the credit of the Owners in the account(s) referred to in Clause 9.1. The Managers shall be entitled to allocate such funds in such manner as the Managers reasonably determine, and it shall not be open to the Owners to direct the Managers otherwise and under no circumstances shall any funds received be held on trust by the Managers for any specific purpose. In case there is any surplus of funds, same will be applied on the quarterly budget.
9.7
Notwithstanding anything contained herein, the Managers shall in no circumstances be required to use or commit their own funds to finance the provision of the Management Services and all payments due shall be made punctually to the Managers (and not any third party) in accordance with the terms of this Agreement in full without any deduction whatsoever.
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9.8
In addition to the funds referred to above the Owners shall pay and/or reimburse the Managers in respect of all expenses incurred prior to the Date of Commencement including, but not limited to, riding Crew wages, initial Crew movements, Crew standby expenses, communication and liaison expenses and ITF welfare contributions.
10.
Managers' Right to Sub-Contract
10.1
The Managers shall be entitled to procure performance of the Managers' obligations hereunder by their parent, subsidiary or associated companies or (in the case of Other Services) third parties (hereinafter collectively called the "Sub-Managers") in accordance with the following provisions of this Clause 10.1, provided that the Owners have given their prior written consent:
(i)
any such performance of all or any of the Managers' obligations by the Sub-Managers shall be and constitute full and sufficient performance by the Managers of their obligations hereunder;
(ii)
the Owners hereby agree with the Managers that insofar as the Sub-Managers perform the obligations of the Managers the Sub-Managers shall be entitled to the benefits of the provisions of Clause 11; and
(iii)
any performance of the Managers' obligations by the Sub-Managers shall be without prejudice to the rights of the Owners hereunder for any failure by the Managers in performance of the Managers' duties and obligations hereunder and notwithstanding performance by the Sub-Managers the Managers shall remain responsible to the Owners for performance of their obligations hereunder.
10.2
The provisions of Clause 10.1 shall remain in force notwithstanding termination of this Agreement.
11.
Responsibilities
11.1
Force Majeure
11.1.1 Neither the Owners nor the Managers shall be liable for any loss or damage or total or partial failure to perform this Agreement (other than a failure to perform an obligation to pay money) caused wholly or partly by any circumstance or matter beyond the reasonable control of the relevant party, as the case may be, including (without limiting the generality of the foregoing) acts of God, acts of governmental authorities, fires, strikes, floods, epidemics, quarantine restrictions, wars, insurrections, riots, violent demonstrations, criminal offences (other than criminal offences attributable to each Party's employees, agents or sub-contractors), acts and omissions of civil or military authority or of usurped power, requisition or hire by any governmental or other competent authority, embargoes.
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11.1.2 Where a party seeks to rely upon a force majeure event as described in Clause 11.1.1 it will advise the other party of the force majeure event at the earliest opportunity and also advise that party of the likely duration of such force majeure situation.
11.2
Liability to Owners
(i)
Without prejudice to Clause 11.1, the Managers shall be under no liability whatsoever to the Owners for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of performance of the Management Services unless same is proved to have resulted solely from the negligence, gross negligence or wilful default of the Managers or their employees or agents, or sub-contractors employed by them in connection with the Vessel, in which case (save where loss, damage, delay or expense has resulted from the Managers' personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage, delay or expense would probably result) the Managers' liability for each incident or series of incidents giving rise to a claim or claims shall never exceed a total of ten times the annual management fee payable hereunder for Basic Services.
(ii) Notwithstanding anything that may appear to the contrary in this Agreement, the Managers shall not be responsible for any of the actions of the Crew even if such actions are negligent, grossly negligent or wilful, except only to the extent that they are shown to have resulted from a failure to discharge their obligations under Clause 3.1 in which case their liability shall be limited in accordance with the terms of this Clause 11.
11.3
Indemnity - General
Except to the extent and solely for the amount therein set out that the Managers would be liable under Clause 11.2, the Owners hereby undertake to keep the Managers and their employees, agents and sub-contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising out of or in connection with the performance of this Agreement, including, but not limited to, any and all liability arising under the MLC, and against and in respect of all costs, loss, damages and expenses (including legal costs and expenses on a full indemnity basis) which the Managers may suffer or incur (either directly or indirectly) in the course of the performance of this Agreement.
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11.4
Indemnity - tax
Without prejudice to the general indemnity set out in Clause 11.3, the Owners hereby undertake to keep the Managers, their employees, agents and sub-contractors indemnified and to hold them harmless against all taxes, imposts and duties levied by any government as a result of the trading or other activities of the Owners or the Vessel and that whether or not such taxes, imposts and duties are levied on the Owners or the Managers.
11.5
"Himalaya"
Subject to any provision of the Agreement to the contrary, it is hereby expressly agreed that no employee or agent of the Managers (including every sub-contractor from time to time employed by the Managers and the employees of such sub-contractors) shall in any circumstances whatsoever be under any liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act neglect or default on his part while acting in the course of or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this Clause, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability defence and immunity of whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also be available and shall extend to protect every such employee or agent of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this clause 11 the Managers are or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement.
11.6
The provisions of Clause 11 shall remain in force notwithstanding termination of this Agreement.
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13.
Claims/Disputes
13.1
At the request of the Owners, the Managers shall handle and settle all claims arising out of the Management Services hereunder and keep the Owners informed regarding any incident of which the Managers become aware which gives or may give rise to claims or disputes involving third parties.
13.2
The Managers shall, as instructed by the Owners, bring or defend actions, suits or proceedings in connection with matters entrusted to the Managers according to this Agreement.
13.3
The Managers in cooperation with the Owners shall have power to obtain legal or technical or other outside expert advice in relation to the handling and settlement of claims and disputes or all other matters affecting the interests of the Owners in respect of the Vessel.
13.4
The Owners shall arrange for the provision of any necessary guarantee bond or other security.
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13.5
The Owners shall pay to the Managers a fee for time spent by the Managers in carrying out their obligations under Clause 13 and such fee shall be mutually agreed by the Owners and the Managers (such fee to not exceed the rate of US$800 per man per day). In addition any costs incurred by the Managers in carrying out their obligations according to Clause 13 shall be reimbursed by the Owners.
13.6
The Owners agree to the use of MTI Network for crisis management response and agree to pay any fees additional to the annual retainer of MTI Network (as included in the budget) which may be incurred.
14.
Auditing, Records
14.1
The Managers shall at all times maintain and keep true and correct accounts and shall make the same available at the Managers' offices for inspection and auditing by the Owners at such times as may be mutually agreed. The Owners agree that the Managers shall be entitled to charge for their reasonable costs and expenses should the Owners require hard copies of supplier invoices and related documentation.
14.2
The Managers shall be entitled to electronically archive all of the Vessels' records and arrange safe storage of the same, the costs being included in the Vessel's running costs.
14.3
All accounting and other records relating the Vessel will be retained by the Managers for a period of two (2) years after the date of termination, for whatever reason, of this Agreement, and thereafter shall be destroyed or, if electronically archived, expunged unless the Owners request the Managers to deliver such records to them at the Owners' expense.
14.4
The Managers may request and the Owners shall, in a timely manner, make available all documentation, information and records reasonably required by the Managers to enable them to perform the Management Services.
15.
Inspection of Vessel
The Owners shall have the right at any time to inspect the Vessel for any reason they consider necessary. The Owners will, where practicable, give reasonable notice to the Managers of their intention to visit the Vessel. After such inspection should Owners advise Mangers of reasonable comments about the Vessel's condition and the Crew's performance, Managers undertake to take necessary rectifying actions at the Owners expense.
16.
Compliance with Laws and Regulations
16.1 The parties will not do or permit anything to be done which might cause any breach or infringement of the laws and regulations of the country of registry of the Vessel, and of the places where she trades, provided always that the Managers' obligations under this Clause will
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only relate to matters which the Managers are in fact capable of fulfilling and on the understanding that the Managers receive all necessary co-operation, information and funding from the Owners.
16.2
All intended carriage, trade or voyages must be fully compliant with relevant international sanctions and prohibitions. Managers, Crew and Owners accept such requirement as a condition of this Agreement entitling the Managers to terminate the Agreement should there be a breach of international sanctions and prohibitions. The Owners shall indemnify and hold harmless the Managers, their employees, agents and sub-contractors in respect of any consequence that may arise from the Vessel being arrested or detained, and should the Vessel not then be capable of immediate release, as a result of sanctions or prohibitions affecting the Owners' banks and/or insurers.
17.
Duration of the Agreement
17.1
Termination by Notice
This Agreement shall come into effect on the Date of Commencement for a minimum period of three (3) months and shall continue thereafter until terminated by either party giving to the other notice in writing, in which event this Agreement shall, subject as aftermentioned terminate on the expiry of a period of one (1) month from the date upon which such notice is received. Where the Vessel is not at a convenient port or place on the expiry of such period, this Agreement shall terminate on the subsequent arrival of the Vessel at a convenient port or place.
It is hereby agreed between the Parties that this Agreement may be novated by the Owners to V.Ships Limited, of Limassol Cyprus at any time from the Date of Commencement by a sole written notice of the Owners to the Managers. The Managers hereby undertake to procure that V.Ships Limited, of Limassol Cyprus enters into a novation agreement. Upon the Owners' notice to the Managers, the Owners, the Managers and V.Ships Limited, of Limassol Cyprus will enter into a novation agreement in the form attached in Part VII of this Agreement.
17.2
Termination by default - Owners
(i)
The Managers shall be entitled to terminate the Agreement with immediate effect by notice in writing if any moneys requested by the Managers from the Owners, shall not have been received in the Managers' nominated account within ten (10) calendar days of payment having been requested in writing by the Managers or if the Owners fail to comply to the reasonable satisfaction of the Managers with the requirements of clauses 6.3, 6.4 and 6.5 or if the Vessel is repossessed by a mortgagee.
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(ii)
If the Owners
(a)
otherwise fail materially to meet their obligations hereunder for reasons within their control, or
(b)
proceed with employment of or continue to employ the Vessel in the carriage of contraband, blockade running or in an unlawful and/or sanctionable trade, or on a voyage or in a manner which, in the opinion of the Managers, is unduly hazardous or improper, or potentially unlawful and/or sanctionable or
(c)
fail to comply with any recommendation of the Managers which the Managers consider to be reasonable and non-compliance with which may affect the Managers' reputation or its obligations under the ISM Code or any other applicable laws or regulations
then the Managers may give written notice to the Owners specifying the default and requiring them to remedy it. In the event that the Owners fail to remedy such default (in the case of (a) above, if remediable) within a reasonable time to the reasonable satisfaction of the Managers, the Managers shall be entitled to terminate this Agreement with immediate effect by notice in writing.
17.3
Termination by Default - Managers
If the Managers fail materially to meet their obligations under this Agreement for reasons within the control of the Managers, the Owners may give written notice to the Managers specifying the default and requiring them to remedy it as soon as practically possible. In the event that the Managers fail to remedy such default within a reasonable period of time but in any case latest within fifteen (15) days from the date of the Owners' notice, if remediable, to the reasonable satisfaction of the Owners, the Owners shall be entitled to terminate this Agreement with immediate effect by notice in writing.
17.4
Liquidation
The Parties to this Agreement shall be entitled to terminate this Agreement forthwith in the event of an order being made or resolution passed for the winding up, dissolution, liquidation or bankruptcy of the Owners of the Vessel (otherwise than for the purpose of reconstruction or amalgamation) or the Managers or if a receiver or similar officer is appointed to the Owners or the Managers or if either Party ceases to carry on business or make any special arrangement or
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composition with their creditors or if the Owners suspend payment under this Agreement.
17.5
Extraordinary Termination
This Agreement shall be deemed to be terminated in the case of the sale of the Vessel or its being bareboat chartered, if applicable and unless otherwise agreed, when the bareboat charter comes to an end or if the Vessel becomes a total loss or is declared as a constructive or compromised or arranged total loss or is requisitioned. Notwithstanding such deemed termination, fees shall be paid in accordance with the provisions of Clause 8.6.
17.6 For the purpose of sub-clause 17.5 hereof:
(i)
the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the registered owners cease to be registered as owners of the Vessel;
(ii)
the Vessel shall not be deemed to be lost until either she has become an actual total loss or agreement has been reached with her Underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred or a Notice of Abandonment is issued to underwriters.
17.7 The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination.
17.8 All outstanding fees and other sums payable by the Owners require to be paid in full on or prior to termination, for whatever reason, of this Agreement. Save where the Agreement is terminated by the Owners in accordance with Clause 17.3, the Managers shall be paid fees in accordance with Clause 8.6.The Owners shall also pay on demand Severance Costs together with repatriation costs and expenses.
18.
Confidentiality
18.1
As between the Owners and the Managers, the Owners hereby agree and acknowledge that all title and property in and to the management manuals of the Managers and other written material of the Managers concerning management functions and activities is vested in the Managers and the Owners agree not to disclose the same to any third party and, on the termination of this Agreement, to return all such manuals and other material to the Managers. For the purposes of this Clause reference to "the Managers" includes the parent, subsidiary and associated companies of the Managers and any third parties providing Management Services.
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19. Suspension of Services
If, at any time, the Owners have failed to pay the sums due and owing, as set out in Clause 9, or are in breach of any other terms of this Agreement, in addition to the Managers' rights pursuant to Clause 17 to terminate, the Managers shall, without prejudice to their liberty to terminate, be entitled to withhold/suspend the performance of any and all of their obligations hereunder (including, but not limited to, removal of Crew) and shall have no responsibility whatsoever for any consequences thereof, in respect of which the Owners hereby indemnify the Managers, and fees (as set out in the Fee Schedule) shall continue to accrue and any extra expenses resulting from such withholding shall be for the Owners' account.
20.
Law and Arbitration
20.1
This Agreement shall be governed by English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 and any amendment thereto or substitution therefor.
20.2
The arbitration shall be conducted in accordance with the London Maritime Arbitrators' (LMAA) Terms current at the time when the arbitration is commenced.
20.3
Save as aftermentioned, the reference shall be to three arbitrators, one to be appointed by each party and the third by the two so appointed. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment to the other party requiring the other party to appoint its arbitrator within fourteen (14) days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and give notice that it has done so within the fourteen (14) days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the party referring the dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be as binding as if he had been appointed by agreement.
20.4
In cases where neither the claim nor any counterclaim exceeds the sum of US$50,000 (or
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such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.
20.5 Unless otherwise provided for in a separate agreement, the Owners hereby agree that any claim by any company providing services under clause 24 below shall, unless such company elects otherwise, be subject to English law and any dispute shall be referred to arbitration in accordance with the foregoing provisions of this clause 20.
20.6
Except to the extent provided for in clauses 10, 11 and 20.5 no third party shall have the right to enforce any term of this Agreement.
21.
Amendments to Agreement
Any and all amendments will be agreed by all the parties in the Agreement and will be in writing.
22.
Time Limit for Claims
Any and all liabilities of either party to the other arising under this Agreement or otherwise in relation to the Vessel (except in the case of fraud) shall be deemed to be waived and absolutely barred on the relevant date unless prior to the relevant date written particulars of any claim (giving details of the alleged breach in respect of which such claim is made and a preliminary statement of the amount claimed) have been intimated in writing by the claimant by the relevant date, and any such claim shall be deemed (if it has not previously been satisfied, settled or withdrawn) to have been withdrawn unless arbitration proceedings have been commenced under Clause 20 prior to the expiry of six (6) months after the relevant date. For the purposes of this Clause 22, the "relevant date" is one year after the date of termination, for whatever reason, of this Agreement.
23.
Condition of Vessel
The Owners acknowledge that they are aware that the Managers are unable to confirm that the Vessel, its systems, equipment and machinery are free from defects, and agree that the Managers shall not in any circumstances be liable for any losses, costs, claims, liabilities and expenses which the Owners may suffer or incur resulting from pre-existing or latent deficiencies in the Vessel, its systems, equipment and machinery.
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24.
Use of Associated Companies
24.1
The Managers hereby disclose to the Owners that they may, in the course of performing Management Services, utilize the services of companies associated with the Managers. Without prejudice to the foregoing generality, associated companies of the Managers may be used in connection with
inter
alia
travel, insurance, port agency catering and consultancy services. Where companies associated with the Managers provide services in connection with the above or any other matters, such companies will be entitled to charge and retain for their own benefit usual remuneration for the provision of their services (whether in the form of commission or fees). The Managers will send a list of the Associated Companies to Owners on or prior to the Date of Commencement.
24.2
The Owners hereby consent to the arrangements set out in Clause 24.1.
25.
Notices
25.1
Any notice or other communication under or in relation to this Agreement (a "Communication") may be sent by fax, registered or recorded mail, by personal delivery.
25.2
The addresses of the parties for service of a Communication shall be as stated in Boxes 5 and 6 respectively of Part I.
25.3
A Communication shall be deemed to have been delivered and shall take effect:
(i)
in the case of a fax on the day of transmission; and
(iii)
if delivered personally or sent by registered or recorded mail at the time of delivery.
26.
Staff Loyalty
The Owners shall not and shall procure that their parent, subsidiary and associate companies shall not, without the written consent of the Managers, during the course of this Agreement or for a period of six (6) months following termination directly or indirectly offer any employment to any employee of the Managers engaged in providing Management Services or directly or indirectly induce or solicit any such person to take up employment with the Owners or any associated or affiliated company or use the services of any such person either independently or via a third party. In the event that the Managers agree to any of its employees accepting an offer of employment as aforesaid, the Owners shall pay to the Managers a sum equivalent to 25% of
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the new annual salary of that employee, payable within seven days of the date of the written agreement of the Managers.
Such payment shall be construed as liquidated damages and not as a penalty, being the parties agreed reasonable estimate of the Managers' loss. This clause will not apply to any staff recruited or seconded specifically from Seanergy for the Seanergy vessels.
27.
Entire Agreement
27.1
This Agreement
constitutes the entire agreement and understanding between the parties with respect to the subject matter of this Agreement and
(in relation to such subject matter) supersedes all prior discussions, understandings and agreements between the parties and all prior representations and expressions of opinion by the parties.
27.2
Each of the parties acknowledges that it is not relying on any statements, warranties, representations or understandings (whether negligently or innocently made) given or made by or on behalf of the other in relation to the subject matter hereof and that it shall have no rights or remedies with respect to such subject matter otherwise than under this Agreement. The only remedy available shall be for breach of contract under the terms of this Agreement. Nothing in this clause shall, however, operate to limit or exclude any liability for fraud.
28.
Partial Validity
If any provision of this Agreement is or becomes or is held by any arbitrator or other competent body to be illegal, invalid or unenforceable in any respect under any law or jurisdiction, the provision shall be deemed to be amended to the extent necessary to avoid such illegality, invalidity or unenforceability, or, if such amendment is not possible, the provision shall be deemed to be deleted from this Agreement to the extent of such illegality, invalidity or unenforceability and the remaining provisions shall continue in full force and effect and shall not in any way be affected or impaired thereby.
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.
Non Waiver
No failure to exercise nor any delay in exercising any right, power, privilege or remedy under this Agreement shall in any way impair or affect the exercise thereof or operate as a waiver in whole or in part. No single or partial exercise of any right, power, privilege or remedy under this Agreement shall prevent any further or other exercise thereof or the exercise of any other right, power, privilege or remedy.
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APPENDIX 1* - Chartering
APPENDIX 2* - Post Fixture Services
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APPENDIX 3* - Surveys or other Consultancy Services
APPENDIX 4* - Bunker Services
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APPENDIX 5 - On Board Safety Audit and Safety Training
(only applicable if not deleted – at no extra cost)
1.
The Managers shall arrange on board safety audit and training which will include the following functions:
(i)
preparation and updating of specialist safety manuals not already included in the SMS;
(ii)
periodic on board safety audit and on board safety training;
(iii)
reporting to the Vessel (via the Managers) on information gained from visits to other vessels and industry forums.
2.
The cost of the foregoing services shall be such sum as is set out in the Fee Schedule and shall be included in the budget agreed with the Owners.
3.
The Managers have entered into sub-contracts with third parties to permit them to supply this service.
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BASIC SERVICES
(Clause 3 of Part II)
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Amount
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Frequency
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Management Fee
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US$10,800 per month
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Monthly
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Information System fees (Shipsure)
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At cost (already in the budget)
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Per year
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Planned maintenance - data base development fee (maximum of 42 chargeable days)
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At cost (already on the pre-delivery budget)
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30 days of invoice
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Crewing: Fixed Cost invoice – Crewing Costs (Part VI)
Other Crew costs (ITF, SEPF, PNO fee etc.)
Management Expenses:
Greek Tonnage Tax (if applicable)
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US$94,914 per year
US$29,957 per year
At cost
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Monthly
Monthly
Monthly
50% Deposited in advance (15 days prior to commencement)
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1
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Master
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Ukrainian
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2
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Chief Officer
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Ukrainian
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3
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2nd Officer
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Filipino
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4
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3rd Officer
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Filipino
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5
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Chief Engineer
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Ukrainian
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6
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2nd Engineer
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Ukrainian
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7
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3rd Engineer
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Filipino
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8
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4th Engineer
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Filipino
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9
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Electrical Officer
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Filipino
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10
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Bosun
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Filipino
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11
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AB
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Filipino
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12
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AB
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Filipino
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13
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AB
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Filipino
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14
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AB
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Filipino
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15
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OS
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Filipino
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16
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OS
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Filipino
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17
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Oiler
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Filipino
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18
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Oiler
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Filipino
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19
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Oiler
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Filipino
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20
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Fitter
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Filipino
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21
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Wiper
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Filipino
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22
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Cook
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Filipino
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23
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Messman
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Filipino
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2015 OPERATING COSTS
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Crew Wages
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840,888
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Crew Travel
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96,300
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Other Crew Costs
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29,957
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Victualling
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67,160
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Recruitment & Operational
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94,914
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TOTAL CREW COSTS
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1,129,219
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Stores
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127,500
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Spares
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125,500
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LubOils
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178,789
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Surveys & Services
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29,000
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Repairs
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88,500
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TOTAL TECHNICAL COSTS
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549,289
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Safety & Quality
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30,750
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TOTAL SAFETY & QUALITY
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30,750
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Registration Expenses
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0
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Management Fees
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129,600
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Management Expenses
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39,500
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Other Costs
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12,500
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TOTAL GENERAL EXPENSES
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181,600
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ANNUAL OPERATING COSTS
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$1,890,858
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DAILY OPERATING COSTS
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$5,180
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1 | V.Ships Greece Ltd. , of Bermuda, with registered address at Par la ville place 14, Par la ville road, Hamilton HM 08, Bermuda, c/o Agiou Dionisiou 3, (herein referred to as the " Existing Manager ") |
2 | Leader Shipping Co. , of the Marshall Islands, with registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960 Marshall Islands (herein referred to as the " Owner ") |
3 | V.Ships Limited , of Limassol Cyprus, with registered address at Zenas Gunther, 16-18, Agia Triada, 3035 Limassol, Cyprus (herein referred to as the " New Manager ") |
A. | This Novation Agreement is supplemental to a Ship Management Agreement dated 11 February 2015 made between the Existing Manager and the Owner in respect of the vessel "LEADERSHIP" registered in the name of the Owner under the Bahamas flag with IMO no. 9233923 (the " Management Agreement "). |
B. | In accordance with Clause 17 of the Management Agreement, the Existing Manager and the Owner have agreed that the Management Agreement may be novated by the Owners to the New Manager at any time from the Date of Commencement (as defined in the Management Agreement) by a sole written notice of the Owners to the Managers. |
C. | The Owners have notified the Existing Manager on the novation of the Management Agreement and it has been agreed that the Existing Manager be released and discharged from the Management Agreement as from [ ] (the " Effective Date ") and that the Owner releases and discharges the Existing Manager with respect to the Management Agreement from the Effective Date upon the terms of the New Manager undertaking to perform in all respects the Management Agreement and be bound by all the terms of the Management Agreement in place of the Existing Manager. |
D. | The Management Agreement, as Annexed hereto, has not been amended, varied, cancelled, novated or terminated and represents the entire agreement between the Existing Manager and the Owner. |
1. | Novation and Release |
1.1 | With effect from the Effective Date as defined in paragraph "C" above and by mutual agreement between the parties and in consideration of the mutual undertakings and releases herein contained, the New Manager shall substitute the Existing Manager under the Management Agreement and the New Manager shall as from the Effective Date assume all rights and obligations of the Existing Manager arising out of or in connection with the Management Agreement and agrees to be bound in all respects in place of the Existing Manager by the terms of the Management Agreement, which shall hereafter be construed and treated in all respects as if the New Manager had been originally named as a party to the Management Agreement. |
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1.2 | The Owner hereby agrees to continue to be bound by the Management Agreement in all respects vis-a-vis the New Manager from the Effective Date and further agrees to release the Existing Manager from any further liability under the Management Agreement that may arise or be incurred from events after the Effective Date. |
1.3 | Any issues or disputes arising between the Existing Manager and the New Manager in connection with the Management Agreement shall be resolved between themselves without involving or prejudicing the Owner. |
2. | Amendments to the Management Agreement |
(a) | all references to the "Managers" in the Management Agreement shall be deemed to mean the New Manager and not the Existing Manager; and |
(b) | In Box 3 of Part I of the Management Agreement will be replaces as of the Effective Date with the following: |
3. | Law and Jurisdiction |
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1. | Definitions |
1.1 | In this Agreement, except where the context otherwise requires:- |
1.2. | Unless the context otherwise requires, words in the singular include the plural and vice versa. |
1.3. | References to any document include the same as varied, supplemented or replaced from time to time. |
1.4. | References to any enactment include re-enactments, amendments and extensions thereof. |
1.5. | Clause headings are for convenience of reference only and are not to be taken into account in construction. |
2 | Appointment of Commercial Manager |
3 | Purpose, Authority and Basis of Agreement |
3.1 | Subject to the terms and conditions provided herein during the period of this Agreement the Commercial Manager shall carry out the Management Services in respect of the Vessels as agent for and on behalf of the Shipowning Entities. The Commercial Manager (unless otherwise provided for herein) shall have authority to take such actions as it may from time to time in its discretion consider necessary to enable it to perform its obligations pursuant hereunder in accordance with sound ship management practices, provided the Company has given its written approval. |
3.2 | The Company hereby ratifies, confirms and undertakes at all times to ratify and to confirm all lawful conduct of the Commercial Manager, its employees, agents and subcontractors in connection with the provision of the Management Services pursuant to this Agreement. |
3.3 | The Company shall procure forthwith that each Shipowning Entity (including such entities as may become members of the Group from time to time) shall evidence its agreement to be bound by the terms and conditions of this Agreement by executing a deed of accession to this Agreement in the form of Schedule 1. |
4 | Obligations of Commercial Manager |
(a) | required to exercise its powers pursuant hereto as to give preference in any respect to Shipowning Entities, it being understood and agreed that the Commercial Manager shall so far as is practicable ensure a fair distribution of available manpower, supplies and services to all ships owned or managed by it; |
(b) | restricted from carrying on or (whether as manager or otherwise) being concerned or interested in carrying on any business which is or may be similar to or competitive with the business presently or at any time carried on by the Shipowning Entity; and |
(c) | answerable for the consequences of any decision or exercise of judgment taken or made in the exercise of its powers and taken or made honestly and in good faith. |
5 | Obligations of the Company |
6 | Management Services |
6.1 | The Commercial Manager shall provide and/or procure the provision of the services specified hereunder in the name of the Shipowning Entities or otherwise on its behalf and do all things which may be expedient or necessary for the provision of said services or otherwise in relation to the commercial operation of the Vessels, such services as stated below:- |
(i) | Employment of the Vessels |
(aa) | Chartering |
(ii) | Commercial operation |
(aa) | Providing detailed voyage estimates and accounts and calculating hire, freights, demurrage and/or dispatch moneys due from or due to the charterers of the Vessels; |
(bb) | Issuing voyage instructions; |
(cc) | Arranging surveys associated with the commercial operation of the Vessels; |
(dd) | Estimation of bunker quantities and types to be supplied. |
(iii) | Accounting Services |
(aa) | calculating and arranging for the collection of and receiving for and on behalf of the Shipowning Entity all hire, revenue or other monies of whatsoever kind to which the Shipowning Entity may from time to time be entitled arising out of the employment of or otherwise in connection with the Vessel and to this end co-ordinating the invoicing procedures on behalf of the Shipowning Entity of all aforesaid amounts due to the Shipowning Entity; |
(bb) | arranging for the proper payment to the Company, or the Shipowning Entity or its nominee of all such monies; |
(cc) | establishing and operating an accounting system which meets the requirements of the Company and providing regular accounting services, supplying regular reports and records in this regard; and |
(dd) | maintaining the records of all costs and expenditure incurred as well as data necessary or proper for the settlement of accounts between the parties. |
6.2 | The Commercial Manager shall not be entitled to appoint any third party to provide any of the Management Services provided by it without the prior written consent of the Company, provided however that where such consent is obtained and appointment made, in each such case the Commercial Manager shall continue to be responsible for the due performance of the Management Services concerned. |
6.3 | The Commercial Manager shall have the express authority to negotiate, conclude and execute all forms of documentation and agreements including contracts and |
acknowledgements on behalf of the Company in so far as is necessary for the provision by the Commercial Manager of its Management Services, provided that all such documentation will be approved in advance in writing by the Company.
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7 | Accounts and Management of Funds |
7.1 | In so far as applicable to the Commercial Managers' Services the Commercial Manager shall operate accounting systems satisfactory to the Shipowning Entity and provide regular services, reports and records in this regard and maintain records of all expenditure and cost together with information necessary and appropriate for the settlement of accounts between the parties hereto. |
7.2 | Notwithstanding any contrary provisions herein the Commercial Manager shall in no circumstances whatsoever be required to use or commit its own funds to finance the provision of the Management Services. |
7.3 | The Commercial Manager shall at all times maintain and keep true and correct accounts and shall make the same available for inspection and auditing by the Company at such times as may be mutually agreed. On the termination, for whatever reasons, of this Agreement, the Commercial Manager shall release to the Shipowning Entities, if so requested, the originals where possible, or otherwise certified copies, of all such accounts and all documents specifically relating to the Vessels and their commercial operation. |
8 | Management Expenses |
8.1 | The Commercial Manager shall, at no extra cost to the Company, provide its office accommodation and office staff. The Company will reimburse the Commercial Manager for all reasonable running and/or out of pocket expenses, including but not limited to, telephone, fax, stationary and printing expenses. Any required travelling expenses in relation to this Agreement and the Management Services will be pre-approved by the Company and the relevant expenses will be reimbursed to the Commercial Manager. |
8.2 | All moneys collected by the Commercial Manager pursuant to this Agreement (other than moneys payable by the Company to the Commercial Manager) and any interest thereon shall be held to the credit of each applicable Shipowning Entity in a separate bank account. |
9 | Termination |
9.1 | Company's default |
9.2 | Commercial Managers' default |
9.3 | Extraordinary Termination |
9.4 | For the purpose of sub-clause 9.3. hereof: |
(a) | the date upon which the Vessel is to be treated as having been sold or otherwise disposed of shall be the date on which the Shipowning Entity cease to be registered as owner of the Vessel; |
(b) | the Vessel shall only be deemed lost where she has become an actual total loss or agreement has been reached with her underwriters in respect of her constructive, compromised or arranged total loss or if such agreement with her underwriters is not reached it is nevertheless adjudged by a competent tribunal that a constructive total loss of the Vessel has been occurred. |
9.5 | Either party hereto may by notice to the other party terminate forthwith the appointment if an order is made or resolution is passed for the winding up, dissolution, liquidation or bankruptcy of such party (otherwise than for the purpose of reconstruction or amalgamation) or if any party ceases to carry on business or makes any special arrangement or composition with its creditors. |
9.6 | The termination of this Agreement shall be without prejudice to all rights accrued due between the parties prior to the date of termination. |
10 | Insurances |
(a) | at no expense to the Commercial Manager, the Vessels are insured for not less than their sound market value or entered for their full gross tonnage, as the case may be for: |
(i) | usual hull and machinery marine risks (including crew negligence) and excess liabilities; |
(ii) | protection and indemnity risks (including pollution risks and crew insurances); and |
(iii) | war risks (including protection and indemnity and crew risks), |
(b) | all premiums and calls on the Shipowning Entities' Insurances are paid promptly by their due date; |
(c) | the Shipowning Entities' Insurances name the Commercial Manager and, subject to underwriters' agreement, any third party designated by the Commercial Manager as a joint assured, with full cover, with the Company procuring on behalf of the relevant Shipowning Entity cover in respect of each of the insurances specified in sub-clause 6.1, if reasonably obtainable, on terms such that neither the Commercial Manager nor any such third party shall be under any liability in respect of premiums or calls arising in connection with the Shipowning Entities' Insurances; |
(d) | written evidence is provided, to the reasonable satisfaction of the Commercial Manager, of compliance with the obligations under Clause 4 within a reasonable time from the commencement of this Agreement, and of each renewal date and, if specifically requested, of each payment date of the Shipowning Entities' Insurances. |
11 | Force Majeure |
12 | Indemnities |
12.1 | Subject to any liability of the Commercial Manager pursuant to Clause 12.2 hereto the members of the Group hereby ratify and confirm, and undertake at all times to ratify and confirm, whatever may be done or caused to be done by the Commercial Manager in the course of or in the provision of the Management Services and the members of the Group hereby undertake to keep the Commercial Manager and its respective employees and agents indemnified and to hold them harmless against all actions, proceedings, claims, demands or liabilities whatsoever or howsoever arising which may be brought against them or any one of them or incurred or suffered by them or any one of them arising out of or in connection with the performance of this Agreement, and against and in respect of all loss, damages, costs and expenses (including legal costs and expenses on a full indemnity basis) which the Commercial Manager may suffer or incur (either directly or indirectly) in defending or settling the same. |
12.2 | The Commercial Manager shall be under no liability whatsoever to the members of the Group for any loss, damage, delay or expense of whatsoever nature, whether direct or indirect, (including but not limited to loss of profit arising out of or in connection with detention of or delay to the Vessel) and howsoever arising in the course of the performance of the Management Services hereunder unless same is proved to have resulted solely from the negligence, gross negligence or willful default of the Commercial Manager or its employees or agents or subcontractors employed by it in connection with the Vessel, in which case (except where loss, damage, delay or expense has resulted from the Commercial Managers' personal act or omission committed with the intent to cause same or recklessly and with knowledge that such loss, damage delay or expense would probably result) the Commercial Manager's liability (any such liability arising in accordance herewith always being on an individual basis in relation to each Manager). |
12.3 | No employee, agent or subcontractor of the Commercial Manager shall in any circumstances whatsoever be liable to the members of the Group for any loss, damage or delay arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course or in connection with his employment and without prejudice to the generality of the forgoing provisions of this Clause 12, every exemption, limitation, condition and liberty herein contained and every right, exemption from liability, defence and immunity of whatsoever nature applicable to and enjoyed by the Commercial Manager or to which the said Commercial Manager is entitled hereunder shall also be available and shall extend to protect every such employee, agent or subcontractor of the Commercial Manager acting as aforesaid and for the purpose of all the foregoing provisions of this clause 12 the Commercial Manager is or shall be deemed to be acting as agents or trustee on behalf of and for the benefit of all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to this Agreement. |
13 | Confidentiality and Commercial Manager's Documents |
13.1 | Save for the purpose of enforcing or carrying out as may be necessary the rights or obligations of the Commercial Manager hereunder, the Commercial Manager agrees to maintain and to use its best endeavours to procure that its officers and employees maintain confidence and secrecy in respect of all information relating to the Company's business received by the Commercial Manager directly or indirectly pursuant to this Agreement. |
13.2 | As between the Company, the members of the Group and the Commercial Manager, the Company hereby agrees and acknowledges that all title and property in and to the management manuals of the Commercial Manager and other written material concerning management functions and activities is vested in the Commercial Manager and the Company agrees not to disclose the same to any third party and, on termination of this Agreement, to return all such manuals and other material to the Commercial Manager. |
14 | Notices and Other Matters |
14.1 | Every notice, request, demand or other communication under this Agreement shall: |
(a) | be in writing, delivered personally or by registered or recorded first-class prepaid letter (airmail if available) facsimile or telex; |
(b) | be deemed to have been received, subject as otherwise provided in this Agreement, in the case of a telex at the time of dispatch with confirmed answerback of the addressee appearing at the beginning and end of the communication (provided that if the date of dispatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day), in the case of a facsimile at the time of dispatch evidenced by a timed and dated transmittal confirmation (provided that if the date of dispatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next business day), and in the case of a letter when delivered personally or five (5) days after it has been put into the post; and |
(c) | be sent to the respective addresses hereto or to such other address, facsimile or telex number as is notified by the parties hereto to the other parties to this Agreement: |
15 | Law and Arbitration |
15.1 | This Agreement shall be governed by English Law and any dispute arising out of or in connection herewith shall be referred to arbitration in London |
15.2 | Arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) rules current at the time of commencement of the arbitration. |
15.3 | Any referral made pursuant to this Clause 15 shall be to three (3) Arbitrators on the following basis: if a dispute arises between the parties then each shall appoint an Arbitrator and the two Arbitrators so appointed shall appoint a third. |
15.4 | Upon receipt of notice of appointment of an Arbitrator by the first notifying party (who shall therein state that it shall appoint its own arbitrator as sole arbitrator if the other party does not appoint an Arbitrator in accordance herewith), the second party shall appoint its Arbitrator and give notice of such appointment within fourteen (14) days, failing which the prior notifying party shall be entitled either to appoint its Arbitrator as Sole Arbitrator or appoint an Arbitrator on behalf of the second party who shall accept such appointment as if it had been made by itself. |
15.5 | If a party does not appoint its own Arbitrator and give due notice in accordance with Clause 15.4 the party referring the dispute to arbitration may without requirement for further notice to such other party failing to so appoint make appointment in accordance with Clause 15.4 and shall advise the other party accordingly and the award of a Sole Arbitrator or panel appointed in accordance with Clause 15.4 shall be binding on all parties as if appointment had been by agreement. |
15.6 | Nothing in this Clause 15 shall prevent the parties agreeing in writing to vary these provisions to provide for appointment of a Sole Arbitrator or to consolidate arbitration proceedings hereunder where thought appropriate or desirable. |
15.7 | In cases where neither the claim nor any counterclaim exceeds the sum of UK £50,000 (or such other sum as the parties may agree) (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
15.8 | Any such Arbitration shall be in accordance with and subject to the Arbitration Act 1996 and any statutory amendment or modification thereto. |
16 | Miscellaneous |
16.1 | Subject to Clause 16.2 this Commercial Management Agreement contains the entire agreement and understanding between the parties and supersedes all prior negotiations, representations, warranties and other documents or matter related to any of the subject matter of this Commercial Management Agreement. |
16.2 | This Agreement may be amended by mutual agreement of both parties hereto provided that any such amendment is evidenced by written amendment duly executed by both parties and following which any such amendment shall be considered part of, appended to and read together with this Agreement. |
16.3 | All details of or pertaining to this Agreement shall be kept strictly private and confidential. |
EXECUTED
as a
DEED
|
)
|
by Stamatis Tsantanis
|
) /s/ Stamatis Tsantanis
|
the duly authorised attorney of
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)
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SEANERGY MANAGEMENT CORP.
|
)
|
of the Marshall Islands
|
)
|
in the presence of: Theodora Mitropetrou
|
)
|
EXECUTED
as a
DEED
|
)
|
by Nikos Frantzeskakis
|
) /s/ Nikos Frantzeskakis
|
the duly authorised attorney of
|
)
|
FIDELITY MARINE INC.
|
)
|
of the Marshall Islands
|
)
|
in the presence of: Theodora Mitropetrou
|
)
|
From: | [ ] |
To: | [ ] |
Re: | Commercial Management Agreement of [ ] and made between (1) Seanergy Management Corp. (the "Company") and Fidelity Marine Inc. (the "Commercial Manager") |
(a) | the Company has entered into the Agreement as our agent, for and on our behalf; and |
(b) | we are bound to observe the terms and conditions of the Agreement as if we were a named signatory therein. |
LOAN AGREEMENT
for a secured floating interest rate
loan facility of up to US$8,750,000
|
CLAUSE
|
HEADINGS
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PAGE
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1.
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PURPOSE, DEFINITIONS AND INTERPRETATION
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3
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2.
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THE LOAN
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20
|
3.
|
INTEREST
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23
|
4.
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REPAYMENT - PREPAYMENT
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27
|
5.
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PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION
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30
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6.
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REPRESENTATIONS AND WARRANTIES
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32
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7.
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CONDITIONS PRECEDENT
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38
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8.
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COVENANTS
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43
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9.
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EVENTS OF DEFAULT
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56
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10.
|
INDEMNITIES - EXPENSES – FEES
|
63
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11.
|
SECURITY, APPLICATION, AND SET-OFF
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69
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12.
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UNLAWFULNESS, INCREASED COSTS
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71
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13.
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EARNINGS ACCOUNT
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74
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14.
|
ASSIGNMENT, TRANSFER, PARTICIPATION, LENDING OFFICE
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76
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15.
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MISCELLANEOUS
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80
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16.
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NOTICES
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83
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17.
|
LAW AND JURISDICTION
|
85
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SCHEDULE 1:
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Form of Drawdown Notice
|
|
SCHEDULE 2:
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Form of Insurance Letter
|
|
SCHEDULE 3:
|
Form of Compliance Certificate
|
(1) | ALPHA BANK A.E. , a banking société anonyme incorporated in and pursuant to the laws of the Hellenic Republic with its head office at 40 Stadiou Street, Athens GR 102 52, Greece, acting, except as otherwise herein provided, through its office at 93 Akti Miaouli, Piraeus, Greece ( hereinafter called the "Lender", which expression shall include its successors and assigns ) ; and |
(2) | LEADER SHIPPING CO. , a company duly incorporated and validly existing under the laws of the Republic of the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the " Borrower", which expression shall include its successors ) |
1. | PURPOSE, DEFINITIONS AND INTERPRETATION |
1.1 | Amount and Purpose |
1.2 | Definitions |
"Accounting Period" means each consecutive period of six (6) months falling during the Security Period for which Accounting Information is required to be delivered pursuant to this Agreement and the Guarantee ; |
(a) | all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature, (including, without limitation, Taxes, repair costs, registration fees and insurance premiums, crew wages, repatriation expenses and seamen's pension fund dues) suffered, incurred, charged to or paid or committed to be paid by the Lender in connection with the exercise of the powers referred to in or granted by any of the Security Documents or otherwise payable by the Borrower in accordance with the terms of any of the Security Documents; |
(b) | the expenses referred to in Clause 10.2; and |
(c) | interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings from, in the case of Expenses referred to in sub-paragraph (b) above, the date on which such Expenses were demanded by the Lender from the Borrower and in all other cases, the date on which the same were suffered, incurred or paid by the Lender until the date of receipt or recovery thereof (whether before or after judgement) at the Default Rate (as conclusively certified by the Lender but always absent manifest error); |
(a) | sections 1471 to 1474 of the US Internal Revenue Code of 1986 (the " Code ") or any associated regulations or other associated official guidance; |
(b) | any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or |
(c) | any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction; |
(a) | in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 January 2014; |
(b) | in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2015; or |
(c) | in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2017, |
(a) | the increase in a payment made by the Borrower or a Security Party to the Lender under Clause 10.10 or 10.11(b) of this Agreement; or |
(b) | a payment under Clause 10.11(d) of this Agreement; |
(a) | "The International Management Code for the Safe Operation of Ships and for Pollution Prevention", currently known or referred to as the "ISM Code", adopted by the Assembly of the International Maritime Organisation by Resolution A. 741(18) on 4 th November, 1993 and incorporated on 19 th May, 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and |
(b) | all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the "Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations" produced by the International Maritime Organisation pursuant to Resolution A. 788(19) adopted on 25 th November, 1995; |
(a) | the DOC and SMC issued by the Classification Society in all respects acceptable to the Lender in its absolute discretion pursuant to the ISM Code in relation to the Vessel within the period specified by the ISM Code; |
(b) | all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require by request; and |
(c) | any other documents which are prepared or which are otherwise relevant to establish and maintain the Vessel's or the Borrower's compliance with the ISM Code which the Lender may require by request; |
(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, the relevant Interest Period which appears on page LIBOR 1 of the REUTERS screen at or about 11.00 a.m. (London time) on the Quotation Day for that Interest Period (and, for the purposes of this Agreement, "REUTERS LIBOR page 01" means the display designated as the "REUTERS LIBOR 01" on the Reuters Money News Service or such other page as may replace REUTERS LIBOR 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 ICE as the information vendor for the purpose of displaying ICE Interest Settlement Rates for Dollars); or |
(b) | if on such date no rate is quoted on REUTERS LIBOR page 01 or if the rate quoted on such pages does not reflect the Lender's cost of funding, LIBOR for such period shall be the rate per annum (rounded upward if necessary to five decimal place) at which the Lender is able in accordance with its usual practices to obtain deposits in Dollars in an amount approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such period in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Day for that Interest Period for a period equal to that Interest Period and for delivery on the first Banking Day of it; |
(a) | the amounts incurred by the Guarantor during such Financial Year as expenses of its business (including, without limitation, vessel and voyage expenses, commissions, vessel running expenses (including, but not limited to voyage, operating, repair, insurance, victualing and other related expenses), management fees, Directors fees and general and administration expenses); |
(b) | interest expense; |
(c) | taxes; and |
(d) | other items charged to the Guarantor's consolidated profit and loss account (including but not limited to depreciation and/or amortisation but excluding impairment charges) for the relevant Financial Year. |
(a) | actual, constructive, compromised or arranged total loss of the Vessel; or |
(b) | the Compulsory Acquisition of the Vessel; or |
(c) | the condemnation, capture, seizure, confiscation, arrest or detention of the Vessel (other than where the same amounts to the Compulsory Acquisition of the Vessel) by any Government Entity, or by persons acting on behalf of any Government Entity or otherwise, unless the Vessel be released and restored to from such condemnation, capture, seizure, confiscation arrest or detention or within sixty (60) days after the occurrence thereof; and |
(d) | the hijacking, capture, seizure or confiscation of the Vessel arising as a result of a piracy or related incident unless the Vessel be released and restored to from such hijacking, capture, seizure or confiscation within one hundred eighty (180) days after the occurrence thereof; and |
1.3 | Interpretation. In this Agreement: |
(a) | " asset " includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment; |
(b) | " company " includes any partnership, joint venture and unincorporated association; |
(c) | " consent " includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation; |
(d) | "control" means either ownership of more than fifty percent (50%) of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise and "controlled" shall be construed accordingly; |
(e) | " contingent liability " means a liability which is not certain to arise and/or the amount of which remains unascertained; |
(f) | " document " includes a deed; also a letter or fax; |
(g) | " legal or administrative action " means any legal proceeding or arbitration and any administrative or regulatory action or investigation; |
(h) | " liability " includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise; |
(i) | " law " includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council; |
(j) | " policy ", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms; |
(k) | " protection and indemnity risks " means the usual risks covered by a protection and indemnity association which is a member of the international group of protection and indemnity associations (" IG "), including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision; |
(l) | " successor in title " includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person's rights under this Agreement or any other Security Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor in title include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person; |
(m) | " War risks " includes the risk of mines, blocking and trapping, missing vessel, confiscation, war P&I and all risks excluded by clause 24 of the Institute Time Clauses (Hulls) (1/11/95). |
(n) | reference to: |
(i) | any "enactment" shall be deemed to include references to such enactment as re-enacted, amended or extended; |
(ii) | a " person " shall be construed as including reference to an individual, firm, company, corporation, unincorporated body of persons or any State, political sub-division of a state and local or municipal authority, any agency of such State and any international organisation and any person includes such person's assignees and successors in title; |
(iii) | a " regulation " includes any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or national or supranational body, agency, department, central bank or government department or any regulatory, self regulatory or other authority or organisation and, for the avoidance of doubt, shall include any Basel II Regulation and Basel III Regulation; |
(iv) | a " guarantee " include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and " guaranteed " shall be construed accordingly; |
(v) | this Agreement (or to any specified provisions thereof) and all documents referred to in this Agreement (or to any specified provisions thereof) shall be construed as references to this Agreement, that provision or that document as are in force for the time being and as are amended and/or supplemented from time to time; |
(vi) | this Agreement includes all the terms of this Agreement and any schedules, annexes or appendices to this Agreement, which form an integral part of same; |
(vii) | clauses, sub-clauses and schedules are to Clauses, Sub-Clauses and schedules in this Agreement; |
(viii) | the opinion of the Lender or a determination or acceptance by the Lender or to documents, acts, or persons acceptable or satisfactory to the Lender or the like shall be construed as reference to opinion, determination, acceptance or satisfaction of the Lender at the sole discretion of the Lender and such opinion, determination, acceptance or satisfaction of the Lender shall be conclusive and binding on the Borrowers; and |
(o) | Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement; |
(p) | subject to any specific provision of this Agreement or of any assignment and/or participation or syndication agreement of any nature whatsoever, reference to each of the parties hereto and to the other Security Documents shall be deemed to be reference to and/or to include, as appropriate, their respective successors and permitted assigns; |
(q) | where the context so admits, words in the singular include the plural and vice versa; and |
(r) | the words "including" and "in particular" shall not be construed as limiting the generality of any foregoing words. |
2. | THE LOAN |
2.1 | Commitment to Lend. The Lender, relying upon (inter alia) each of the representations and warranties set forth in Clause 6 and in each of the other Security Documents, agrees to lend to the Borrower in one (1) Advance and upon and subject to the terms of this Agreement, the amount specified in Clause 1.1. |
2.2 | Drawdown Notice and Commitment to Borrow. Subject to the terms and conditions of this Agreement, the Commitment shall be advanced to the Borrower following receipt by the Lender from the Borrower of a Drawdown Notice not later than 10:00 a.m. (London time) on the second Banking Day before the date on which the drawdown is intended to be made. A Drawdown Notice shall be effective on actual receipt thereof by the Lender and, once given, shall, subject as provided in Clause 3.6, be irrevocable. |
2.3 | Number of Advances Agreed. The Commitment shall be advanced to the Borrower in one (1) Advance. |
2.4 | Disbursement. Upon receipt of the Drawdown Notice complying with the terms of this Agreement the Lender shall, subject to the provisions of Clause 7, on the date specified in the Drawdown Notice, make the Commitment available to the Borrower. |
2.5 | Application of Proceeds. Without prejudice to the Borrower's obligations under Clause 8.1(c), the Lender shall have no responsibility for the application of the proceeds of the Loan (or any part thereof) by the Borrower. |
2.6 | Termination Date of the Commitment. Any part of the Commitment undrawn and uncancelled at the end of the Availability Period shall thereupon be automatically cancelled. |
2.7 | Evidence. It is hereby expressly agreed and admitted by the Borrower that abstracts or photocopies of the books of the Lender as well as statements of accounts or a certificate signed by an authorised officer of the Lender shall be conclusive binding and full evidence, save for manifest error, on the Borrower as to the existence and/or the amount of the at any time Outstanding Indebtedness, of any amount due under this Agreement, of the applicable interest rate or Default Rate or any other rate provided for or referred to in this Agreement, the Interest Period, the value of additional securities under Clause 8.5(a), the payment or non payment of any amount. Nevertheless, enforcement procedures or any other court or out-of-court procedure can be commenced by the Lender on the basis of the above mentioned means of evidence including written statements or certificates of the Lender. |
2.8 | Cancellation. The Borrower may, cancel any undrawn part of the Commitment under this Agreement upon giving the Lender not less than five (5) Banking Days' notice in writing to that effect, provided, that no Drawdown Notice has been given to the Lender under Clause 2.2 for the full amount of the Commitment or in respect of the portion thereof in respect of which cancellation is required by the Borrower. Any such notice of cancellation, once given, shall be irrevocable. Any amount cancelled may not be drawn. Notwithstanding any such cancellation pursuant to this Clause 2.8 the Borrower shall continue to be liable for any and all amounts due to the Lender under this Agreement including without limitation any amounts due to the Lender under Clause 10. |
2.9 | No security or lien from other person. The Borrower has not taken or received, and the Borrower undertakes that until all moneys, obligations and liabilities due, owing or incurred by the Borrower under this Agreement and the Security Documents have been paid in full, it will not take or receive, any security or lien from any other person liable or for any liability whatsoever. |
2.10 | Disbursement of Commitment to Seller's Bank |
(a) | Notwithstanding the foregoing provisions of this Clause 2, in the event that the Commitment is required to be drawn down prior to the satisfaction of the requirements of Clause 7 and remitted to the Seller's Bank in accordance with clause 3 of the MOA (the " Seller's Bank "), the Lender may in its absolute discretion agree to remit such amount to the Seller's Bank prior to the satisfaction of the requirements of Clause 7 expressly subject to the following conditions: |
(i) | such amount is remitted to the Seller's Bank to be held by it in an account in the Lender's name (the " deposit account ") and to the order of the Lender; |
(ii) | the principal amount (the " deposited amount ") of such funds will only be released to the Seller strictly in accordance with Lender's instructions set out in the SWIFT payment instructions (herein, the " SWIFT Instructions ") of the Lender to the Seller's Bank; |
(iii) | the deposited amount so released may be used only for payment to the account of the Seller with the Seller's Bank in satisfaction of the balance of the purchase price of the Vessel; and |
(iv) | in the event that: |
aa) | none of the said amount so remitted is released (whether on the expected Delivery Date or thereafter) in accordance with the SWIFT instructions or any part thereof is not so released, or |
bb) | the Seller's Bank fails to remit the said amount and any earned interest to the Earnings Account of the Borrower in accordance with the SWIFT Instructions: |
(v) | Any amounts remitted by the Seller's Bank to the Lender and returned pursuant to this Clause 2.10 will be applied in or towards prepayment of the Loan pursuant to Clause 4.2 provided that if any such amount so returned is not a part of the amount of the Loan but part of the Borrower's equity such amount shall be freely available to the Borrower. |
2.11 | Without prejudice to the obligations of the Borrower so to indemnify the Lender on demand, the Lender shall in good faith take reasonable and proper steps diligently to seek recovery of the deposited amount from the Seller's Bank ( provided that prior to taking such action the Borrower shall have agreed to indemnify the Lender for all costs and expenses which may be incurred in seeking recovery of such amount, including, without limitation, all legal fees and disbursements reasonably and properly incurred) and if the Lender shall recover any part of the deposited amount (and provided that it has previously recovered full indemnification under Clause 2.10(a)(iv)) the Lender shall, so long as no Continuing Event of Default has occurred, pay to the Borrower the amount so recovered after subtracting any tax suffered or incurred thereon or Expenses incurred by the Lender. |
3. | INTEREST |
3.1 | Normal Interest Rate . The Borrower shall pay interest on the Loan (or as the case may be, each portion thereof to which a different Interest Period relates) in respect of each Interest Period (or part thereof) on each Interest Payment Date. The interest rate for the calculation of interest shall be the rate per annum determined by the Lender to be the aggregate of (i) the Margin and (ii) LIBOR for such Interest Period, unless there is an Alternative Rate in which case the interest rate for the calculation of interest shall be the rate per annum determined by the Lender to be the aggregate of (i) the Margin and (ii) the Alternative Rate. |
3.2 | Selection of Interest Period. The Borrower may by notice received by the Lender not later than 10:00 a.m. (London time) on the third Banking Day before the beginning of each Interest Period specify (subject to Clause 3.3 below) whether such Interest Period shall have a duration of one (1) or two (2) or three (3) or six (6) months (or such other period as may be requested by the Borrower and as the Lender, in its sole discretion, may agree to). |
3.3 | Determination of Interest Periods. Every Interest Period shall, subject to market availability to be conclusively determined by the Lender, be of the duration specified by the Borrower pursuant to Clause 3.2 but so that: |
(a) | the initial Interest Period in respect of the Loan will commence on the Drawdown Date and each subsequent Interest Period will commence forthwith upon the expiry of the previous Interest Period; |
(b) | if any Interest Period would otherwise overrun one or more Repayment Dates, then, in the case of the last Repayment Date, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be divided into parts so that there is one part equal to the amount of the Repayment Instalment due on each Repayment Date falling during that Interest Period and having an Interest Period ending on the relevant Repayment Date and another part equal to the amount of the balance of the Loan having an Interest Period determined in accordance with Clause 3.2 and the other provisions of this Clause 3.3 and the expression " Interest Period in respect of the Loan " when used in this Agreement refers to the Interest Period in respect of the balance of the Loan; and |
(c) | if the Borrower fails to specify the duration of an Interest Period in accordance with the provisions of Clause 3.2 and this Clause 3.3, such Interest Period shall have a duration of three (3) months unless another period shall be agreed between the Lender and the Borrower provided, always, that such period (whether of three months or different duration) shall comply with this Clause 3.3. |
3.4 | Default Interest. If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to this Clause 3.4) on its due date for payment under any of the Security Documents, the Borrower shall pay interest on such sum from the due date up to the date of actual payment (as well after as before judgement) at the rate determined by the Lender pursuant to this Clause 3.4. The period beginning on such due date and ending on such date of payment shall be divided into successive periods of not more than three (3) months as selected by the Lender each of which (other than the first, which shall commence on such due date) shall commence on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Lender) of (i) two per cent (2%), per annum, (ii) the Margin and (iii) LIBOR. Such interest shall be due and payable on the last day of each such period as determined by the Lender and each such day shall, for the purposes of this Agreement, be treated as an Interest Payment Date, provided that if such unpaid sum is of principal which became due and payable by reason of a declaration by the Lender under Clause 9.2 or a prepayment pursuant to Clauses 4.2, 4.3, 8.5(a) 12.1 and 12.2 on a date other than an Interest Payment Date relating thereto, the first such period selected by the Lender shall be of a duration equal to the period between the due date of such principal sum and such Interest Payment Date and interest shall be payable on such principal sum during such period at a rate two per cent (2%) above the rate applicable thereto immediately before it fell due. If for the reasons specified in Clause 3.6, the Lender is unable to determine a rate in accordance with the foregoing provisions of this Clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Lender to be two per cent (2%) per annum above the aggregate of (i) the Margin and (ii) the Alternative Rate. Interest payable by the Borrower as aforesaid shall be compounded quarterly (or if the period fixed by the Lender is longer, at the end of such longer period) and shall be payable on demand. |
3.5 | Notification of Interest and interest rate. The Lender shall notify the Borrower promptly of the duration of each Interest Period and of each rate of interest determined by it under this Clause 3 without prejudice to the right of the Lender to make determinations at its sole discretion. However, omission of the Lender to make such notification (without the application of the Borrower) will not constitute and will not be interpreted as if to constitute a breach of obligation of the Lender except in case of wilful misconduct. |
3.6 | Market disruption – Non Availability |
(a) | Market Disruption Event : If and whenever, at any time prior to the commencement of any Interest Period, the Lender (in its discretion) shall have determined (which determination shall be conclusive in the absence of manifest error) that a Market Disruption Event has occurred in relation to the Loan for any such Interest Period, then the Lender shall forthwith give notice thereof (a "Determination Notice" ) to the Borrower and the rate of interest on the Loan (or the relevant part thereof) for that Interest Period shall be the percentage rate per annum which is the sum of: |
(i) | the Margin; and |
(ii) | the rate which expresses as a percentage rate per annum the cost to the Lender of funding the Loan (or the relevant part thereof) from whatever source it may select; |
(b) | Meaning of "Market Disruption Event" : In this Agreement "Market Disruption Event" means: |
(i) | at or about noon on the Quotation Day for the relevant Interest Period LIBOR is not available; and/or |
(ii) | before close of business in London on the Quotation Day for the relevant Interest Period, the Lender determines (in its sole discretion) that the cost to it of obtaining matching deposits in the London Interbank Market to fund the Loan (or the relevant part thereof) for such Interest Period would be in excess of the LIBOR for such Interest Period; and |
(iii) | before close of business in London on the Quotation Day for the relevant Interest Period, deposits in Dollars are not available to the Lender in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for such Interest Period. |
(c) | Alternative basis of interest or funding : |
(i) | If a Market Disruption Event occurs and the Lender or the Borrower so requires, the Lender and the Borrower shall enter into negotiations (for a period of not more than five (5) days (the " Negotiation Period ")) after the giving of the relevant Determination Notice with a view to agreeing a substitute basis for determining the rate of interest. |
(ii) | Any alternative basis agreed pursuant to paragraph (i) above shall be binding on the Lender and all Security Parties. |
(d) | Alternative basis of interest in absence of agreement : If the Lender and the Borrower will not enter into negotiations as provided in Clause 3.6(c)(i) or if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set the following Interest Period and an interest rate representing the cost of funding of the Lender in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period; if the relevant circumstances are continuing at the end of the Interest Period so set by the Lender, the Lender shall continue to set the following Interest Period and an interest rate representing its cost of funding in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period. |
(e) | Notice of prepayment : If the Borrower does not agree with an interest rate set by the Lender under Clause 3.6(d), the Borrower may give the Lender not less than 5 Banking Days' notice of its intention to prepay the Loan at the end of the interest period set by the Lender. |
(f) | Prepayment; termination of Commitment : A notice under Clause 3.6(e) shall be irrevocable; and on the last Banking Day of the interest period set by the Lender, the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin and the balance of the Outstanding Indebtedness. |
(g) | Application of prepayment : The provisions of Clause 4 shall apply in relation to the prepayment made hereunder. |
3.7 | Interest Derivatives Transactions. The Borrower, in order to manage interest rate risks, may, subject to the consent of the Lender (which the Lender shall be in full liberty to withhold) request the Lender (in writing) to enter with the Borrower into interest derivatives transactions. Any such transaction shall be subject to the Borrower accepting the Lender's standard ISDA Master Agreement. |
4. | REPAYMENT - PREPAYMENT |
4.1 | Repayment. The Borrower shall and it is expressly undertaken by the Borrower to repay the Loan by (a) twenty (20) consecutive quarterly Repayment Instalments (the "Repayment Instalments" ) to be repaid on each of the Repayment Dates so that the first be repaid on the date falling three (3) months after the Drawdown Date and each of the subsequent ones consecutively falling due for payment on each of the dates falling three (3) months after the immediately preceding Repayment Date with the last (the 20 th ) of such Repayment Instalments falling due for payment on the Final Maturity Date and (b) the Balloon Instalment , payable on the Final Maturity Date; subject to the provisions of this Agreement the amount of each Repayment Instalment shall be as follows: |
(a) | 1 st to 4 th (both incl.) Dollars Two hundred thousand ($200,000) each; and |
(b) | 5 th to 20 th (both incl.) Dollars Two hundred fifty thousand ($250,000) each; |
4.2 | Voluntary Prepayment. The Borrower shall have the right, upon giving the Lender not less than five (5) Banking Days' notice in writing, to prepay, without penalty or prepayment fee, part or all of the Loan, in each case together with all unpaid interest accrued thereon and all other sums of money whatsoever due and owing from the Borrower to the Lender hereunder or pursuant to the other Security Documents and all interest accrued thereon, provided, that : |
(a) | the giving of such notice by the Borrower will irrevocably commit the Borrower to prepay such amount as stated in such notice; |
(b) | if the Borrower shall request consent to make such prepayment on a day other than the last day of an Interest Period the Borrower will pay, in addition to the amount to be prepaid, any such sum as may be payable to the Lender pursuant to Clause 10.1; |
(c) | each such prepayment shall be in an amount of a Repayment Instalment or a whole multiple thereof or the balance of the Loan and will be applied by the Lender in or towards prepayment of the remaining Repayment Instalments in direct chronological order of maturity or in inverse chronological order of maturity, at the Borrower's option; |
(d) | every notice of prepayment shall be effective only on actual receipt (including by fax) by the Lender, shall be irrevocable and shall oblige the Borrower to make such prepayment on the date specified; |
(e) | no amount prepaid may be re-borrowed; and |
(f) | the Borrower may not prepay the Loan or any part thereof, save as expressly provided in this Agreement or as otherwise agreed by the Lender. |
4.3 | Compulsory Prepayment in case of Total Loss or sale of the Vessel. Total Loss : On the Vessel becoming a Total Loss or suffering damage or being involved in an incident which may, in the reasonable opinion of the Lender, result in the Vessel being subsequently determined to be a Total Loss : |
(i) | prior to the advancing of the Commitment, the obligation of the Lender to advance the Commitment shall immediately cease and the Commitment shall be reduced to zero; or |
(ii) | in case the Commitment has been already advanced, the Borrower shall prepay the Outstanding Indebtedness the latest on the date falling one hundred and eighty (180) days after the occurrence of such Total Loss or the date on which the relevant Vessel suffered damage or the incident which, in the reasonable opinion of the Lender, may result in the Vessel being subsequently determined to be a Total Loss occurred or, if earlier, on the date upon which the insurance proceeds in respect of such Total Loss are or Requisition Compensation is received by the Borrower (or the Lender pursuant to the Security Documents). |
(aa) | in the case of an actual total loss of the Vessel, at the actual date and time the Vessel was lost but in the event of the date of the loss being unknown then the actual total loss shall be deemed to have occurred on the date falling fifteen (15) days after the date on which the Vessel was last reported; |
(bb) | in the case of a constructive total loss of the Vessel, at the date and time notice of abandonment (the " NOA date ") of the Vessel is given to the insurers of the Vessel for the time being (provided a claim for such Total Loss is admitted by such insurers) or, if such insurers do not admit such a claim on the earlier of (aa) the date when either the total loss is subsequently admitted by the insurers, or (bb) a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred and (bb) the date falling one hundred and eighty days ( 180) days after the NOA date, or, in the event that such notice of abandonment is not given by the Owner thereof to the insurers of the Vessel, at the date and time on which occurred the incident which may result, in the reasonable opinion of the Lender, in the Vessel being subsequently determined to be a Total Loss; |
(cc) | in the case of a compromised or arranged total loss of the Vessel, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the then insurers of the Vessel; |
(dd) | in the case of Compulsory Acquisition of the Vessel, on the date upon which the relevant requisition of title or other compulsory acquisition occurs excluding a requisition for hire; |
(ee) | in the case of, condemnation, capture, seizure, confiscation, arrest, or detention of the Vessel (other than where the same amounts to Compulsory Acquisition of the Vessel) by any Government Entity, or by persons acting on behalf of any Government Entity or otherwise, which deprives the Owner thereof of the use of the Vessel for more than sixty (60) days, upon the expiry of the period of sixty (60) days after the date upon which the relevant, condemnation, capture, seizure or confiscation, arrest or detention; and |
(ff) | in the case of hijacking, capture, seizure or confiscation of the Vessel arising as a result of a piracy or related incident unless the Vessel be released and restored to the Owner from such hijacking, capture, seizure or confiscation within one hundred eighty (180) days after the occurrence thereof. |
(a) | Sale of the Vessel : In the event of a sale or other disposal of the Vessel, or in case of refinancing by another bank or if the Borrower requests the Lender's consent for the discharge of the Mortgage on the Vessel, the Borrower shall prepay the Outstanding Indebtedness. |
4.4 | Amounts payable on prepayment. Any prepayment of all or part of the Loan under this Agreement shall be made together with (a) accrued interest on the amount to be prepaid to the date of such prepayment (calculated, in the case of a prepayment pursuant to Clause 3.6 at a rate equal to the aggregate of the Margin and the cost to the Lender of funding the Loan), (b) any additional amount payable under Clause 5.3 and (c) all other sums payable by the Borrower to the Lender under this Agreement or any of the other Security Documents including, without limitation, any amounts payable under Clause 10. |
5. | PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION |
5.1 | Payments – No set-off or counterclaims |
(a) | The Borrower acknowledges that in performing its obligations under this Agreement, the Lender will be incurring liabilities to third parties in relation to the funding of amounts to the Borrower, such liabilities matching the liabilities of the Borrower to the Lender and that it is reasonable for the Lender to be entitled to receive payments from the Borrower gross on the due date in order that the Lender is put in a position to perform its matching obligations to the relevant third parties. Accordingly, all payments to be made by the Borrower under this Agreement and/or any of the other Security Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in Clause 5.3, free and clear of any deductions or withholdings or Governmental Withholdings whatsoever, as follows: |
(i) | in Dollars, not later than 10:00 a.m. (London time) on the Banking Day (in Piraeus, Athens, London and New York City) on which the relevant payment is due under the terms of this Agreement; and |
(ii) | to the Receiving Bank for the account of the Lender, reference: " Leader Shipping Co. - Loan Agreement dated: ……… MARCH, 2015 ", provided, however, that the Lender shall have the right to change the place of account for payment, upon three (3) Banking Days' prior written notice to the Borrower. |
(b) | If at any time it shall become unlawful or impracticable for the Borrower to make payment under this Agreement to the relevant account or bank referred to in Clause 5.1(a), the Borrower may request and the Lender may agree to alternative arrangements for the payment of the amounts due by the Borrower to the Lender under this Agreement or the other Security Documents. |
5.2 | Payments on Banking Days. All payments due shall be made on a Banking Day. If the due date for payment falls on a day which is not a Banking Day, that payment due shall be made on the next following Banking Day unless such Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day. |
5.3 | Gross Up. If at any time any law, regulation, regulatory requirement or requirement of any governmental authority, monetary agency, central bank or the like compels the Borrower to make payment subject to Governmental Withholdings, or any other deduction or withholding, the Borrower shall pay to the Lender such additional amounts as may be necessary to ensure that there will be received by the Lender a net amount equal to the full amount which would have been received had payment not been made subject to such Governmental Withholdings or other deduction or withholding. The Borrower shall indemnify the Lender against any losses or costs incurred by the Lender by reason of any failure of the Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrower shall, not later than thirty (30) days after each deduction, withholding or payment of any Governmental Withholdings, forward to the Lender official receipts and any other documentary receipts and any other documentary evidence reasonably required by the Lender in respect of the payment made or to be made of any deduction or withholding or Governmental Withholding. The obligations of the Borrower under this provision shall, subject to applicable law, remain in force notwithstanding the repayment of the Loan and the payment of all interest due thereon pursuant to the provisions of this Agreement. |
5.4 | Loan Account. All sums advanced by the Lender to the Borrower under this Agreement and all interest accrued thereon and all other amounts due under this Agreement from time to time and all repayments and/or payments thereof shall be debited and credited respectively to a separate loan account maintained by the Lender in accordance with its usual practices in the name of the Borrower. The Lender may, however, in accordance with its usual practices or for its accounting needs, maintain more than one account, consolidate or separate them but all such accounts shall be considered parts of one single loan account maintained under this Agreement. In case that a ship mortgage in the form of Account Current is granted as security under this Agreement, the account(s) referred to in this Clause shall be the Account Current referred to in such mortgage. |
5.5 | Computation. All interest and other payments payable by reference to a rate per annum under this Agreement shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year. |
6. | REPRESENTATIONS AND WARRANTIES |
6.1 | Continuing representations and warranties. The Borrower hereby represents and warrants to the Lender that: |
(a) | Due Incorporation/Valid Existence : each of the Borrower and the other corporate Security Parties is duly incorporated and validly existing and in good standing under the laws of their respective countries of incorporation, and have power to own their respective property and assets, to carry on their respective business as the same are now being lawfully conducted and to purchase, own, finance and operate vessels, or, as the case may be, manage vessels, as well as to undertake the obligations which they have undertaken or shall undertake pursuant to the Security Documents; |
(b) | Due Corporate Authority : each of the Borrower and the other corporate Security Parties has power to execute, deliver and perform its obligations under the Security Documents to which it is a party and to borrow the Commitment and each of the corporate Security Parties has power to execute and deliver and perform its obligations under the Security Documents to which it is or is to be a party; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Borrower to borrow will be exceeded as a result of borrowing the Loan; |
(c) | Litigation : no litigation or arbitration, tax claim or administrative proceeding relating to sums exceeding Five hundred thousand Dollars ($500,000) involving a potential liability of the Borrower or any other Security Party is current or pending or (to its or its officers' knowledge) threatened against the Borrower or any other Security Party, which, if adversely determined, would have a materially adverse effect on the business, position, profitability, assets or the financial condition of any of them; |
(d) | No conflict with other obligations : the execution and delivery of, the performance of its obligations under, and compliance with the provisions of, the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Borrower or any other Security Party is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which the Borrower or any other Security Party is a party or is subject to or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the memorandum and articles of association/articles of incorporation/by-laws/statutes or other constitutional documents of the Borrower or any other Security Party or (iv) result in the creation or imposition of or oblige the Borrower or any other Security Party to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of the Borrower or any other Security Party (other than the Manager); |
(e) | Financial Condition : to the knowledge of the officers/directors or shareholders of the Borrower the financial condition of the Borrower and of the other Security Parties has not suffered any material deterioration since that condition was last disclosed to the Lender; |
(f) | No Immunity : neither the Borrower nor any other Security Party nor any of their respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); |
(g) | Shipping Company : each of the Borrower and the Managers is a shipping company involved in the owning or, as the case may be, managing of ships engaged in international voyages and earning profits in free foreign currency; |
(h) | Licences/Authorisation : every consent, authorisation, license or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of each of the Security Documents or the performance by each Security Party of its obligations under the Security Documents to which such Security Party is or is to be a party has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same so far as the Borrower is aware; |
(i) | Perfected Securities : when duly executed, the Security Documents will create a perfected security interest in favour of the Lender, with the intended priority, over the assets and revenues intended to be covered, valid and enforceable against the Borrower and the other Security Parties; |
(j) | No Notarisation/Filing/Recording : save for the registration of any mortgage in the Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement or any of the other Security Documents that it or they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere or that any stamp, registration or similar tax or charge be paid on or in relation to this Agreement or the other Security Documents; |
(k) | Validity and Binding effect : the Security Documents constitute (or upon their execution - and in the case of any mortgage upon its registration at the Registry - will constitute) valid and legally binding obligations of the relevant Security Parties enforceable against the Borrower and the other Security Parties in accordance with their respective terms and that there are no other agreements or arrangements which may adversely affect or conflict with the Security Documents or the security thereby created; and |
(l) | Valid Choice of Law : the choice of law agreed to govern this Agreement and/or any other Security Document and the submission to the jurisdiction of the courts agreed in each of the Security Documents are or will be, on execution of the respective Security Documents, valid and binding on the Borrower and any other Security Party which is or is to be a party thereto; and |
(m) | Shareholdings |
(i) | the control of the Guarantor and at the voting rights attaching to at least 51% of the shares issued and outstanding in the share capital of the Guarantor are and at least 51% of the shares issued and outstanding in the share capital of the Guarantor and the voting rights attaching to such shares shall, throughout the Security Period, be ultimately beneficially held directly or indirectly by the person(s) disclosed to the Lender at the negotiation of this Agreement; and |
(ii) | no change has been made directly or indirectly in the ownership, beneficial ownership, control or management of the Borrower or any share therein or of the Vessel (especially concerning class or flag); |
(iii) | no change has been made directly or indirectly in the ultimate beneficial ownership of any of the shares in the Guarantor or in the ultimate control of the voting rights attaching to any of those shares from that existing on the date of this Agreement which results in the person(s) disclosed by the Borrower to the Lender in the negotiation of this Agreement not having at least 51% of the shares issued and outstanding in the share capital in the Guarantor and the voting rights attaching to such shares; |
6.2 | Initial representations and warranties. The Borrower hereby further represents and warrants to the Lender that: |
(a) | Direct obligations - Pari Passu : the obligations of the Borrower under this Agreement are direct, general and unconditional obligations of the Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrower with the exception of any obligations which are mandatorily preferred by law; |
(b) | Information : all information, accounts, statements of financial position, exhibits and reports furnished by or on behalf of any Security Party to the Lender in connection with the negotiation and preparation of this Agreement and each of the other Security Documents are true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; to the best knowledge of the Directors/Officers or shareholders of the Borrower, there are no other facts the omission of which would make any fact or statement therein misleading and, in the case of accounts and statements of financial position, they have been prepared in accordance with generally accepted accounting principles which have been consistently applied; |
(c) | No Continuing Event of Default : no Continuing Event of Default has occurred; |
(d) | No Taxes : no Taxes are imposed by deduction, withholding or otherwise on any payment to be made by the Borrower under this Agreement and/or any other of the Security Documents or are imposed on or by virtue of the execution or delivery of this Agreement and/or any other of the Security Documents or any document or instrument to be executed or delivered hereunder or thereunder. In case that any Tax exists now or will be imposed in the future, it will be borne by the Borrower; |
(e) | No Continuing Event of Default under other Indebtedness : no Continuing Event of Default has occurred and is continuing with respect to the Borrower or the Guarantor under any agreement relating to Indebtedness to which it is a party or by which it may be bound; |
(f) | Ownership/Flag/Seaworthiness/Class/Insurance of the Vessel : the Vessel is and on the Drawdown Date will be: |
(i) | in the absolute and free from Encumbrances (other than in favour of the Lender) ownership of the Borrower who is and will on and after the Drawdown Date be the sole legal and beneficial owner of the Vessel; |
(ii) | registered in the name of the Borrower through the Registry under the laws and flag of the Flag State; |
(iii) | operationally seaworthy and in every way fit for service; |
(iv) | classed with the Classification Society which is a member of IACS and which has been approved by the Lender in writing and such class will be free of any overdue requirements and recommendations of the Classification Society affecting class; |
(v) | insured in accordance with the provisions of this Agreement and the Mortgage; |
(vi) | managed by the relevant Manager(s); and |
(vii) | in full compliance with the ISM and the ISPS Code; |
(g) | No Charter : unless otherwise permitted in writing by the Lender (such permission not to be unreasonably withheld), the Vessel will not on or before the Drawdown Date be subject to any charter or contract nor to any agreement to enter into any charter or contract which, if entered into after the Drawdown Date would have required the consent of the Lender under any of the Security Documents and there will not on or before the Drawdown Date be any agreement or arrangement whereby the Earnings of the Vessel may be shared with any other person; |
(h) | No Encumbrances : neither the Vessel, nor its Earnings, Requisition Compensation or Insurances nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will, on the Drawdown Date, be subject to any Encumbrances other than Permitted Encumbrances or otherwise permitted by the Security Documents; |
(i) | Compliance with Environmental Laws and Approvals : except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Lender: |
(i) | the Borrower has complied with the provisions of all Environmental Laws; |
(ii) | the Borrower has obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; and |
(iii) | the Borrower has not received notice of any Environmental Claim that the Borrower is not in compliance with any Environmental Law or any Environmental Approval; |
(j) | No Environmental Claims : except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Lender: |
(i) | there is no Environmental Claim pending or, to the best of the Borrower's knowledge and belief, threatened against the Borrower or the Vessel or any other Related Ship; and |
(ii) | there has been no emission, spill, release or discharge of a Material of Environmental Concern from the Vessel or any other Related Ship or any vessel owned by, managed or crewed by or chartered to the Borrower which could give rise to an Environmental Claim; |
(k) | Copies true and complete : the copies of the MOA and the Management Agreement delivered or to be delivered to the Lender pursuant to Clause 7.2 are, or will when delivered be, true and complete copies of such documents; such documents will when delivered constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there will have been no amendments or variations thereof or defaults thereunder; |
(l) | Application made for DOC and SMC : in relation to the Vessel, the Operator has applied to the appropriate Regulatory Agency for a DOC for itself and an SMC in respect of the Vessel to be issued pursuant to the ISM Code within any time limit required or recommended by such Regulatory Agency and that neither the Borrower nor any Operator is aware of any reason why such application may be refused; |
(m) | Compliance with the ISPS code : the Vessel will comply on the Drawdown Date and the Operator complies with the requirements of the ISM Code and the SMC which has been or, as the case may be, shall be issued in respect of the Vessel and shall remain valid on the Drawdown Date and thereafter throughout the Security Period. |
(n) | Compliance with ISPS Code : the Owner has a valid and current ISSC in respect of its Vessel and the vessel owned by it and is in full compliance with the ISPS Code; |
(o) | No default under MOA : the Borrower is not in default under any of its obligations under the MOA; |
(p) | No Rebates : there will be no commissions, rebates, premiums or other payments by or to or on account of the Borrower or any other Security Party or, to the knowledge of the Borrower, any other person in connection with the MOA other than as shall be disclosed to the Lender by the Borrower in writing; |
(q) | FATCA : None of the Security Parties is a FATCA FFI or a US Tax Obligor. |
(r) | Shareholding : the shares in the Borrower are legally and beneficially owned by the persons disclosed to the Lender in the negotiation of this Agreement |
6.3 | Acting for its own account - Money laundering . The Borrower represents and warrants and confirms that it is the beneficiary of the Loan made or to be made available to it and it will promptly inform the Lender by written notice if it is not, or ceases to be, the beneficiary and notify the Lender in writing of the name and the address of the new beneficiary/beneficiaries; the Borrower is aware that under applicable money laundering provisions, it has an obligation to state for whose account the Loan is obtained; the Borrower confirms that, by entering into this Agreement and the other Security Documents, it is acting on its own behalf and for its own account and it is obtaining the Loan for its own account. In relation to the borrowing by the Borrower of the Loan , the performance and discharge of its obligations and liabilities under this Agreement or any of the Security Documents and the transactions and other arrangements effected or contemplated by this Agreement or any of the Documents to which the Borrower is a party, it is acting for its own account and that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented to combat "money laundering" (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Community). |
6.4 | Representations Correct. At the time of entering into this Agreement all above representations and warranties or any other information given by the Borrower and/or the Guarantor to the Lender are true and accurate. |
6.5 | Repetition of Representations and Warranties. The representations and warranties in this Clause 6 (except in relation to the representations and warranties in Clause 6.2) shall be deemed to be repeated by the Borrower on the Drawdown Date and on each Interest Payment Date throughout the Security Period as if made with reference to the facts and circumstances existing on each such day. |
7. | CONDITIONS PRECEDENT |
7.1 | Conditions precedent to the execution of this Agreement. The obligation of the Lender to make the Commitment or any part thereof available shall be subject to the condition that the Lender shall have received, not later than two (2) Banking Days before the day on which the Drawdown Notice in respect of the Commitment or such part thereof is given, the following documents and evidence in form substance satisfactory to the Lender: |
(a) | a duly certified true copy of the Articles of Incorporation and By-Laws or the Memorandum and Articles of Association, or of any other constitutional documents, as the case may be, of each corporate Security Party; |
(b) | a recent certificate of incumbency of each corporate Security Party issued by the appropriate authority or, as appropriate, signed by the secretary or a director thereof, stating the officers and the directors of each of them; |
(c) | a recent certificate as to the shareholding of each corporate Security Party issued by an appropriate authority or, at the discretion of the Lender, signed by the secretary or a director of each of them as the case may be, stating respectively the full names and addresses of the person or persons beneficially entitled as shareholders/ stockholders of the entire issued and outstanding shares/ stock of each of them; |
(d) | minutes of separate meetings of the directors and (if required) shareholders of each corporate Security Party at which there was approved (inter alia) the entry into, execution, delivery and performance of this Agreement, the other Security Documents and any other documents executed or to be executed pursuant hereto or thereto to which the relevant corporate Security Party is or is to be a party; |
(e) | the original of any power(s) of attorney and any further evidence of the due authority of any person signing this Agreement, the other Security Documents, and any other documents executed or to be executed pursuant hereto or thereto on behalf of any corporate person; |
(f) | evidence that all necessary licences, consents, permits and authorisations (including exchange control ones) have been obtained by any Security Party for the execution, delivery, validity, enforceability, admissibility in evidence and the due performance of the respective obligations under or pursuant to this Agreement and the other Security Documents; |
(g) | evidence that the fees referred to in Clause 10.9 have been paid in full; |
(h) | a copy of the DOC applicable to Manager certified as true and in effect; |
(i) | any other documents or recent certificates or other evidence which would be required by the Lender in relation to any corporate Security Party evidencing that the relevant Security Party has been properly established, continues to exist validly and is in good standing; and |
(j) | a copy of each of the following documents certified as true and complete by the legal counsel of the Borrower : |
(i) | the MOA; |
(ii) | the Management Agreement evidencing that the Vessel is managed by the relevant Manager on terms acceptable to the Lender ; and |
(iii) | any Charterparty. |
7.2 | Conditions precedent to the making of the Commitment. The obligation of the Lender to advance the Commitment (or any part thereof) is subject to the further condition that the Lender shall have received prior to the drawdown or, where this is not possible, simultaneously with the drawdown of the Commitment or the relevant part thereof: |
(a) | the Drawdown Notice duly executed and issued; |
(b) | each of the Security Documents (as set out in Clause 11.1) duly executed and where appropriate duly registered with the Registry or any other competent authority (as required); |
(c) | evidence that, prior to or simultaneously with the relevant drawdown, the Vessel will be duly registered in the ownership of the Borrower with the Registry and under the laws and flag of the Flag State free from any Encumbrances save for those in favour of the Lender and otherwise as contemplated herein; |
(d) | evidence in form and substance satisfactory to the Lender that the Vessel has been or will - on the Drawdown Date - be insured in accordance with the insurance requirements provided for in this Agreement and the other Security Documents, including a MII, together with an opinion from insurance consultants (appointed by the Lender at the Borrower's expense) as to the adequacy of the insurances effected or to be effected in respect of the Vessel, to be followed by full copies of cover notes, policies, certificates of entry or other contracts of insurance and irrevocable authority is hereby given to the Lender at any time at its discretion to obtain copies of the policies, certificates of entry or other contracts of insurance from the insurers and/or obtain any information in relation to the Insurances relating to the Vessel; |
(e) | copies of the trading certificates of the Vessel certified as true and complete by the legal counsel of the Borrower evidencing the same to be valid and in force; |
(f) | all necessary confirmations from the insurers of the Vessel that they will issue letters of undertaking and endorse notice of assignment and loss payable clauses on the Insurances, in form and substance satisfactory to the Lender in its sole discretion and - in the event of fleet cover - accompanied by waivers for liens for unpaid premium of other vessels managed by the Manager(s) and which are not subject to any mortgage in favour of the Lender) and (if required by the Lender) an opinion signed by an independent firm of marine insurance brokers appointed and/or approved by the Lender at the expenses of the Borrower confirming the adequacy of the Insurances maintained on the Vessel; |
(g) | evidence from the Classification Society that the Vessel is classed with the class notation (referred to in the Mortgage), with the Classification Society or to a similar standard with another classification society of like standing to be specifically approved by the Lender and remains free from any overdue requirements or recommendations affecting her class; |
(h) | a copy of the trim and stability booklet certifying the lightweight of the Vessel certified as true and complete by the legal counsel of the Borrower ; |
(i) | copy of the DOC referred to in paragraph (a) in the definition of the ISM Code Documentation certified as true and complete by the legal counsel of the Borrower; |
(j) | copies of such applications for ISM Code Documentation as the Lender may by written notice to the Borrower have requested not later than two (2) days before the Drawdown Date certified as true and complete in all material respects by the Borrower and the Manager(s); |
(k) | true and complete copy of the application for ISSC certificates issued pursuant to the ISPS Code; |
(l) | recent charter free valuation of the Vessel, at the Borrower's expense, as at a date determined by the Lender but in any event before the Drawdown Date, prepared on the basis specified in Clause 8.5(b) by major shipbrokers appointed and/or approved by the Lender in form and substance satisfactory to the Lender; |
(m) | due authorisation in form and substance satisfactory to the Lender authorising the Lender to have access and/or obtain any copies of class records or other information at its discretion from the classification society of the Vessel specified in the Mortgage, provided, however, that the Lender shall not exercise such right unless and until an Event of Default has occurred and is continuing; |
(n) | the Insurance Letter duly executed; |
(o) | evidence that the Earnings Account has been duly opened and all mandate forms, signature cards and authorities have been duly delivered to the Lender; |
(p) | evidence to the full satisfaction of the Lender, proving the Seller's title to the Vessel free of any Encumbrances, debts or claims of any nature whatsoever; |
(q) | duly certified copy of the Bill of Sale, the protocol of delivery and acceptance of the Vessel as well as of all other Seller's documents; |
(r) | evidence that no Encumbrances are registered against the Vessel on her previous register; and |
(s) | evidence that the Purchase Price of the Vessel has been (or upon her delivery will have been) paid in full in accordance with the provisions of the MOA. |
7.3 | No change of circumstances. The obligation of the Lender to advance the Commitment or any part thereof is subject to the further condition that at the time of the giving of the Drawdown Notice and on the Drawdown Date: |
(a) | the representations and warranties set out in Clause 6 and in each of the Security Documents are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; |
(b) | no Default shall have occurred and be continuing or would result from the drawdown; and |
(c) | the Lender shall be satisfied that there has been no change in the ownership, management, operations and/or adverse change in the financial condition of any Security Party which (change) might, in the sole opinion of the Lender, be detrimental to the interests of the Lender; and |
(d) | the interest rate applicable to the Loan during the first Interest Period would not fail to be determined pursuant to Clause 3.6. |
7.4 | General Conditions. The obligation of the Lender to advance the Commitment or any part thereof is subject to the further condition that the Lender, prior to or simultaneously with the drawdown, shall have received: |
(a) | draft opinions from lawyers appointed by the Lender as to all the matters referred to in Clauses 6.1(a) and (b) and all such aspects of law as the Lender shall deem relevant to this Agreement and the other Security Documents and any other documents executed pursuant hereto or thereto and any further legal or other expert opinion as the Lender at its sole discretion may require; |
(b) | confirmation from any agents nominated in this Agreement and elsewhere in the other Security Documents for the acceptance of any notice or service of process, that they consent to such nomination; and |
(c) | a receipt in writing in form and substance satisfactory to the Lender including an acknowledgement and admission of the Borrower and the other Security Parties to the effect that the Commitment or relevant part thereof (as the case may be) was drawn by the Borrower and a declaration by the Borrower that all conditions precedent have been fulfilled, that there is no Event of Default and that all the representations and warranties are true and correct. |
7.5 | Know your customer and money laundering compliance. The obligation of the Lender to advance the Commitment or any part thereof is subject to the further condition that the Lender, prior to or simultaneously with the drawdown, shall have received, to the extent required by any change in applicable law and regulation or any changes in the Lender's own internal guidelines since the date on which the applicable documents and evidence were delivered to the Lender pursuant to Clause 8.7, such further documents and evidence as the Lender shall require to identify the Borrower and the other Security Parties and any other persons involved or affected by the transaction(s) contemplated by this Agreement. |
7.6 | Further documents. Without prejudice to the provisions of this Clause 7 the Borrower hereby undertakes with the Lender to make or procure to be made such amendments and/or additions to any of the documents delivered to the Lender in accordance with this Clause 7 and to execute and/or deliver to the Lender or procure to be executed and/or delivered to the Lender such further documents as the Lender and its legal advisors may reasonably require to satisfy themselves that all the terms and requirements of this Agreement have been complied with. |
7.7 | Waiver of conditions precedent. The conditions specified in this Clause 7 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions. Without prejudice to any of the other provisions of this Agreement, in the event that the Lender, in its sole and absolute discretion, makes the Commitment available to the Borrower prior to the satisfaction of all or any of the conditions referred to in Clause 7.1, 7.2 and 7.3, the Borrower hereby covenants and undertakes to satisfy or procure the satisfaction of such condition or conditions by no later than fourteen (14) days after the Drawdown Date or within such longer period as the Lender may, in its sole and absolute discretion, agree to or specify. |
8. | COVENANTS |
8.1 | General. The Borrower hereby undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under any of the Security Documents and while all or any part of the Loan remain outstanding, they will: |
(a) | Notice on adverse change or Default : immediately inform the Lender upon becoming aware of any occurrence which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents and, without limiting the generality of the foregoing, will inform the Lender of any Default forthwith upon becoming aware thereof and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing; |
(b) | Consents and licenses : without prejudice to Clauses 6.1 and 7, obtain or cause to be obtained, maintain in full force and effect and comply in all material respects with the conditions and restrictions (if any) imposed in, or in connection with, every consent, authorisation, license or approval of governmental or public bodies or authorities or courts and do or cause to be done, all other acts and things which may from time to time be necessary or desirable under applicable law for the continued due performance of all the obligations of the Security Parties under each of the Security Documents; |
(c) | Use of Loan proceeds : use the Loan exclusively for the purposes specified in Clause 1.1; |
(d) | Pari passu : ensure that its obligations under this Agreement shall, without prejudice to the provisions of this Clause 8.1, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness of the Borrower with the exception of any obligations which are mandatorily preferred by law and not by contract; |
(e) | Financial statements : furnish the Lender with (i) unaudited annual financial statements of the Borrower and audited annual financial statements of the Guarantor, by auditors acceptable to the Lender, prepared in accordance with the Applicable Accounting Principles in respect of each Financial Year as soon as practicable but not later than 120 days after the end of the financial period to which they relate and (ii) semi-annual company-prepared financial statements of the Guarantor, prepared in accordance with the Applicable Accounting Principles in respect of each semester as soon as practicable but not later than 90 days after the end of each such financial period to which they relate, commencing on 31 st June, 2015; |
(f) | Provision of further information : provide the Lender with such financial and other information concerning the Security Parties and their respective affairs as the Lender may from time to time reasonably require; |
(g) | Financial Information: provide the Lender from time to time as the Lender may reasonably request with information on the financial conditions and operations of the Borrower and the Guarantor, as such information may be reasonably requested by the Borrower and such information to be certified by an authorized signatory of the Borrower as to their correctness; |
(h) | Information on the employment of the Vessel : provide the Lender from time to time as the Lender may request with information on the employment of the Vessel, as well as on the terms and conditions of any charterparty, contract of affreightment, agreement or related document in respect of the employment of the Vessel, such information to be certified by one of the directors of the Borrower as to their correctness; |
(i) | Banking operations : ensure that all banking operations in connection with the Vessel are carried out through the Lending Office of the Lender ; |
(j) | Liquidity : ensure that throughout the Security Period the Borrower and/or the Guarantor shall maintain minimum free liquidity in an amount equal to Borrower's Debt Service of the next semester as free deposits with the Lender; |
(k) | Obligations under Security Documents : duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents; |
(l) | Payment on demand : pay to the Lender on demand any sum of money which is payable by the Borrower to the Lender under this Agreement but in respect of which it is not specified in any other Clause when it is due and payable; and |
(m) | Compliance with Laws and Regulations : to comply, or procure compliance with all laws or regulations relating to the Borrower and/or the Vessel, its ownership, operation and management or to the business of the Borrower and cause this Agreement and the other Security Documents to comply with and satisfy all the requirements and formalities established by the applicable laws to perfect this Agreement and the other Security Documents as valid and enforceable Security Documents; |
(n) | Compliance with ISM Code : procure that each Manager and any Operator: |
(i) | will comply with and ensure that the Vessel and any Operator by no later than the Drawdown Date complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; |
(ii) | immediately inform the Lender if there is any threatened or actual withdrawal of the Borrower's, the Manager(s)' or an Operator's DOC or the SMC in respect of the Vessel; and |
(iii) | promptly inform the Lender upon the issue to the Borrower, the relevant Manager(s) or any Operator of a DOC and to the Vessel of an SMC or the receipt by the Borrower, the relevant Manager(s) or any Operator of notification that its application for the same has been realised; |
(o) | Compliance with ISPS Code : procure that the relevant Manager(s) or any Operator will: |
(i) | maintain at all times a valid and current ISSC respect of the Vessel; |
(ii) | immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Vessel; and |
(iii) | procure that the Vessel will comply at all times with the ISPS Code; |
(p) | Inspections/Surveys : at reasonable times and upon reasonable notice and without interfering with the Vessel's normal course of trading that the Lender might consider to be necessary or useful, have the Vessel inspected and/or surveyed at the expense of the Borrower by surveyors and/or inspectors appointed by the Lender and the Borrower hereby duly authorise the Lender to review the insurance and operating records of the Borrower; and |
(q) | Compliance with Covenants : duly and punctually perform all obligations under this Agreement and the other Security Documents; and |
(r) | Application of FATCA: The Borrower shall procure that, unless otherwise agreed by the Lender, no Security Party shall become a FATCA FFI or a US Tax Obligor. |
8.2 | Negative undertakings. The Borrower undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under the Security Documents and while all or any part of the Loan remains outstanding, it will not, without the prior written consent of the Lender: |
(a) | Negative pledge : permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of its present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of the Borrower or any other person; |
(b) | No further Indebtedness : incur no further Indebtedness nor authorise or accept any capital commitments (other than that normally associated with the day to day operations of the Vessel) nor enter into any agreement for payment on deferred terms or hire agreement; |
(c) | No merger : merge or consolidate with any other person; |
(d) | Disposals : sell, transfer, abandon, lend or otherwise dispose of or cease to exercise direct control over any part (being either alone or when aggregated with all other disposals falling to be taken into account pursuant to this Clause 8.2(d) material in the opinion of the Lender in relation to the undertakings, assets, rights and revenues of the Borrower) of its present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not; |
(e) | Other business : undertake any type of business other than the ownership and operation of the Vessel and the chartering of the Vessel to third parties; |
(f) | Acquisitions : acquire any further assets other than the Vessel and rights arising under contracts entered into by or on behalf of the Borrower in the ordinary course of its business of owning, operating and chartering the Vessel; |
(g) | Other obligations : incur any obligations except for obligations arising under the Security Documents or contracts entered into in the ordinary course of its business of owning, operating and chartering the Vessel (and for the purposes of this Clause 8.2(g) fees to be paid pursuant to the Management Agreement in respect of the Vessel shall be considered as permitted obligations under the Security Documents); |
(h) | No borrowing : incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents; |
(i) | Repayment of borrowings : repay the principal of, or pay interest on or any other sum in connection with, any of its Borrowed Money except for Borrowed Money pursuant to the Security Documents; |
(j) | No Payments : except pursuant to this Agreement and the Security Documents (or as expressly permitted by the same) not pay out any funds to any company or person except in connection with the administration of the Borrower, the operation, trade, charter, maintain and/or repair of the Vessel; |
(k) | Guarantees : issue any guarantees or indemnities or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for, in the case of the Borrower, guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which the Vessel is entered, guarantees required to procure the release of the Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of the Vessel; |
(l) | No Loans : make any loans or advances to, or any investments in any person, firm, corporation, joint venture or other entity including (without limitation) any loan or advance or grant any credit (save for liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining and repairing the Vessel owned by it including, without limitation, any shareholder loan subject to the Borrower ensuring, on or prior to the date of the first advance of that loan, that the rights of the shareholder which is the provider of that loan are fully subordinated to the rights of the Lender under this Agreement and the other Security Documents in writing and upon such terms and conditions as shall be required by the Lender and save for normal trade credit in the ordinary course of business) to any officer, director, stockholder or employee or any other company managed by the relevant Manager(s); |
(m) | Securities : permit any Indebtedness of the Borrower to any person (other than the Lender) to be guaranteed by any person (save, in the case of the Borrower, for guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which the Vessel is entered, guarantees required to procure the release of the Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of the Vessel); |
(n) | Dividends : declare or pay any dividends or distribute any of its present or future assets, undertakings, rights or revenues to any of its shareholders save as hereinafter provided: |
(i) | the Borrower may declare or pay such dividends subject to no Continuing Event of Default having occurred; and |
(ii) | the Guarantor may declare or pay such dividends subject to (aa) no Event of Default having occurred and being continuing, (bb) there is no breach of any of the Financial Covenants set forth in Clause 8.6 ( Additional Financial Covenants - Compliance Certificate ) and Clause 5.3 ( Additional Financial Covenants - Compliance Certificate ) of the Guarantee and (cc) the amount of the dividends so declared shall not exceed 50% of its Net Income except in case the Cash and Marketable Securities are equal or greater than the amount required to meet the Guarantor's Debt Service for the following eighteen-month period. |
(o) | Subsidiaries : form or acquire any Subsidiaries. |
(p) | Maintenance of Business Structure : change the nature, organisation and conduct of the business of the Borrower or the Guarantor as owner of the Vessel or carry on any business other than the business carried on at the date of this Agreement; |
(q) | Maintenance of Legal Structure : (such consent not be unreasonably withheld) ensure that none of the documents defining the constitution of any of the Borrower and the Guarantor shall be materially (in the Lender's opinion) altered in any manner whatsoever; and |
(r) | No Encumbrance of Assets : allow any part of its undertaking, property, assets or rights, whether present or future, to be mortgaged, charged, pledged, used as a lien or otherwise encumbered without the prior written consent of the Lender; and |
(s) | Control : throughout the Security Period permit: |
(i) | any change to be made after the date of this Agreement directly or indirectly in the ownership, beneficial ownership or control of the Borrower or any share therein or of the Vessel (especially concerning class or flag) as a result of which less than the majority of the shares and voting rights in the Borrower remain in the ultimate legal and beneficial ownership of the person(s) disclosed to the Lender at the negotiation of this Agreement and/or the Vessel ceases to remain fully (100%) owned by the Borrower; and |
(ii) | any change to be made after the date of this Agreement directly or indirectly in the beneficial ownership of of any of the shares in the Guarantor or in the ultimate control of the voting rights attaching to any of those shares from that existing on the date of this Agreement, which results in the person(s) disclosed to the Lender at the negotiation of this Agreement not having at least 51% of the shares issued and outstanding in the share capital in the Guarantor and the voting rights attaching to those shares . |
8.3 | Undertakings concerning the Vessel. The Borrower hereby undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under the Security Documents that it will: |
(a) | Chartering : not without the prior written consent of the Lender (such consent not to be unreasonable withheld) let or agree to let the Vessel: |
(i) | on demise charter for any period; or |
(ii) | by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained may exceed twelve (12) months' duration; or |
(iii) | on terms whereby more than two months' hire (or the equivalent) is payable in advance; or |
(iv) | other than on an arm's length basis; |
(b) | Manager : not without the prior written consent of the Lender (and then only subject to such conditions as the Lender may impose) appoint a manager of the Vessel other than the relevant Manager; |
(c) | Ownership/Management/Control : ensure that the Vessel remains registered on the Drawdown Date in the ownership of the Owner thereof under the laws of the Flag State and thereafter ensure that the Vessel will maintain her present ownership, management, control and beneficial ownership; |
(d) | Class : ensure that the Vessel will remain in class free of recommendations or average damage affecting class or permitted by the Classification Society and provide the Lender on demand with copies of all class and trading certificates of the Vessel; |
(e) | Insurances : ensure that all Insurances (as defined in the relevant Mortgage/General Assignment) of the Vessel are maintained and comply with all insurance requirements specified in this Agreement and in the relevant Mortgage and in case of failure to maintain the Vessel so insured, authorise the Lender (and such authorisation is hereby expressly given to the Lender) to have the right but not the obligation to effect such Insurances on behalf of the Owner thereof (and in case that the Vessel remains in port for an extended period) to effect port risks insurances at the cost of the Borrower which, if paid by the Lender, shall be Expenses; |
(f) | Transfer/Encumbrances : not without the prior written consent of the Lender sell or otherwise dispose of the Vessel or any share therein or create or agree to create or permit to subsist any Encumbrance over the Vessel (or any share or interest therein other than Permitted Encumbrances); |
(g) | Not imperil Flag, Ownership, Insurances : ensure that the Vessel is maintained and trades in conformity with the laws of the Flag State, of its owning company or of the nationality of the officers, the requirements of the Insurances and nothing is done or permitted to be done which could endanger the flag of the Vessel or its unencumbered (other than Encumbrances in favour of the Lender and Encumbrances permitted by this Agreement) ownership or its Insurances; |
(h) | Mortgage Covenants : always comply with all the covenants provided for in the Mortgages; |
(i) | Assignment of Earnings : not assign or agree to assign otherwise than to the Lender the Earnings or any part thereof. |
(j) | Chartering : ensure and procure that in the event of the Vessel being employed under a Charterparty of a duration longer than 12 months, (a) the Borrower shall execute and deliver to the Lender within fifteen (15) days of signing thereof a specific Charterparty Assignment in favour of the Lender of the benefit of such Charterparty and a notice of any such assignment addressed to the relevant charterer and endorsed with an acknowledgement of receipt by the relevant charterer, all in form and substance satisfactory to the Lender or (b) alternatively at the discretion of the Lender, a copy of irrevocable instructions of the Owner of the respective Vessel to the charterer for the payment of the hire to the Lender and/or a copy of the charterparty with appropriate irrevocable notation; |
(k) | Compliance with Environmental Laws : comply with, and procure that all Environmental Affiliates comply with, all Environmental Laws including without limitation, requirements relating to manning and establishment of financial responsibility and to obtain and comply with all Environmental Approvals and to notify the Lender forthwith: |
(i) | of any Environmental Claim for an amount or amounts in aggregate exceeding Five hundred thousand Dollars ($500,000) made against the Vessel, any Relevant Ship and/or her respective owner; and |
(ii) | upon becoming aware of any incident which may give rise to an Environmental Claim and to keep the Lender advised in writing of the Borrower's response to such Environmental Claim on such regular basis and in such detail as the Lender shall require. |
8.4 | Validity of Securities - Earnings - Taxes etc. The Borrower hereby undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under the Security Documents and while all or any part of the Commitment remains outstanding, they will: |
(a) | Validity : ensure and procure that all governmental or other consents required by law and/or any other steps required for the validity, enforceability and legality of this Agreement and the other Security Documents are maintained in full force and effect and/or appropriately taken; |
(b) | Earnings : ensure and procure that, unless and until directed by the Lender otherwise (i) all the Earnings of the Vessel shall be paid to the Earnings Account and (ii) the persons from whom the Earnings are from time to time due are irrevocably instructed to pay them to the said Earnings Account or to such account in the name of the Borrower as shall be from time to time determined by the Lender in accordance with the provisions hereof and of the relevant Security Documents; |
(c) | Taxes : pay all Taxes, assessments and other governmental charges when the same fall due, except to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves have been set aside for their payment if such proceedings fail; and |
(d) | Additional Documents : from time to time at the request of the Lender execute and deliver to the Lender or procure the execution and delivery to the Lender of all such documents as shall be deemed desirable at the reasonable discretion of the Lender for giving full effect to this Agreement, and for perfecting, protecting the value of or enforcing any rights or securities granted to the Lender under any one or more of this Agreement, the other Security Documents and any other documents executed pursuant hereto or thereto and in case that any conditions precedent (with the Lender's consent) have not been fulfilled prior to the relevant Drawdown Date, such conditions shall be complied with within five (5) Banking Days after the Lender's written request (unless the Lender agrees otherwise in writing) and failure to comply with this covenant shall be an Event of Default. |
8.5 | Market Value to Debt Ratio-Additional Security - Valuation of the Vessel. |
(a) | Security shortfall : If at any time during the Security Period, the Security Value shall be less than the Security Requirement, the Lender may give notice to the Borrower requiring that such deficiency be remedied and then the Borrower shall (unless if the sole cause of such deficiency is the Total Loss of the Vessel and the Borrower is in full compliance with his obligations in relation to such Total Loss) either; |
(i) | prepay (in accordance with Clause 4.2 (but without regard to the requirement for ten (10) days notice) within a period of thirty (30) days of the date of receipt by the Borrower of the Lender's said notice such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being at least equal to the Security Value; or |
(ii) | within thirty (30) days of the date of receipt by the Borrower of the Lender's said notice constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in its absolute discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date. Such additional security shall be constituted by: |
a) | additional pledged cash deposits in favor of the Lender in an amount equal to such shortfall with the Lender and in an account and manner to be determined by the Lender; and/or |
b) | any other security acceptable to the Lender at its absolute discretion to be provided in a manner determined by the Lender. |
(b) | Valuation of Vessel : The Vessel shall, for the purposes of this Clause 8.5, be valued in Dollars (at least once a year) as and when the Lender shall reasonably require by any of the following shipbrokers (i) H. Clarkson & Company Limited and (ii) S.S.Y and (iii) Golden Destiny and (iv) Allied Shipbroking Inc. and (v) Arrow Shipbroking Group, appointed by the Lender in its sole discretion (such valuation to be made without, unless required by the Lender, physical inspection, and on the basis of a sale for prompt delivery for cash at arms length on normal commercial terms as between a willing buyer and a willing seller, without taking into account the benefit of any Charterparty or other engagement concerning the Vessel). The Lender and the Borrower agree to accept such valuation made by the shipbroker appointed as aforesaid as conclusive evidence of the Market Value of the Vessel at the date of such valuation and such valuation shall constitute the Market Value of the Vessel for the purposes of this Clause 8.5. |
(c) | Information : The Borrower undertakes to the Lender to supply to the Lender and to any such shipbrokers such information concerning the Vessel and its condition as such shipbrokers may reasonably require for the purpose of making any such valuation. |
(d) | Costs : All costs in connection with the Lender obtaining any valuation of the Vessel referred to in Clause 8.5(b), and any valuation of any additional security for the purposes of ascertaining the Security Value at any time or necessitated by the Borrower electing to constitute additional security pursuant to Clause 8.5(a)(ii) shall be borne by the Borrower, provided that not more than four valuations will be obtained in each calendar year during the Security Period. |
(e) | Valuation of additional security : For the purpose of this Clause 8.5, the market value of any additional security provided or to be provided to the Lender shall be determined by the Lender in its absolute discretion without any necessity for the Lender assigning any reason thereto and if such security consists of a vessel shall be that shown by a valuation complying with the requirements of Clause 8.5(b) (whereas the costs shall be borne by the Borrower in accordance with Clause 8.5(d)) or if the additional security is in the form of a cash deposit full credit shall be given for such cash deposit on a Dollar for Dollar basis and if such security consists of a vessel shall be that shown by a valuation complying with the requirements of Clause 8.5(b) (whereas the costs shall be borne by the Borrower in accordance with Clause 8.5 (d)) or if the additional security is in the form of a cash deposit full credit shall be given for such cash deposit on a Dollar for Dollar basis. |
(f) | Documents and evidence : In connection with any additional security provided in accordance with this Clause 8.5, the Lender shall be entitled to receive such evidence and documents of the kind referred to in Schedule 2 as may in the Lender's opinion be appropriate and such favourable legal opinions as the Lender shall in its absolute discretion require. |
8.6 | Additional Financial Covenants - Compliance Certificate . The Borrower shall ensure that for the duration of the Security Period: |
(a) | Liquidity : the Guarantor shall maintain minimum free liquidity in an amount equal to Guarantor's Debt Service of the next semester as free deposits, such obligation to be complied with prior to the Drawdown Date. |
(b) | Leverage : the Corporate Leverage Ratio of the Guarantor will not be, at the end of any Accounting Period or at any other time, higher than 0.75:1.0; |
(c) | EBITDA : the consolidated interest cover ratio for the Accounting Period (EBITDA to Interest Expense) shall not be lower than 2:1; |
(d) | Compliance Certificate : ensure that at the end of each semester to be delivered to the Lender a Compliance Certificate in the form provided in Schedule 3 of this Agreement, duly completed and supported by calculations setting out in reasonable detail the materials underling the statements made in such Compliance Certificate to be delivered to the Lender; such Compliance Certificate to be provided as follows: (i) with respect to each Financial Year as soon as practicable but not later than 120 days after the end of the financial period to which it relates and (ii) with respect to each semester ending June of each Financial Year as soon as practicable but not later than 90 days after the end of such semester, and provided that the first Compliance Certificate to be delivered by the Borrower to the Lender will be with respect to the six month period ending 31 December 2015. |
(e) | The expressions used in this Clause 8.6. shall be construed in accordance with the law and the Applicable Accounting Principles as used in the Accounting Information produced in accordance with sub-Clause 8.1(e) and for the purposes of this Agreement: |
(f) | Determination of defined terms : All the terms defined in this Clause 8.6 and used in this Clause 8.6, and other accounting terms used in this Clause 8.6, are to be determined on a consolidated basis and (except as items are expressly included or excluded in the relevant definition or provision) are used and shall be construed in accordance with the Applicable Accounting Principles and as determined from any relevant Accounting Information. |
(g) | Compliance : The compliance of the Guarantor with the undertakings set out in Clause 8.6 shall be determined by the Lender in accordance with the Applicable Accounting Principles (and such determination shall, in the absence of manifest error, be conclusive on the Guarantor) on the basis of calculations made by the Lender by reference to the relevant Accounting Information delivered to the Lender pursuant to Clause 8.1(e). Without prejudice to the other terms of this Clause 8.6 and, in particular, the time when compliance with the financial covenants and ratios of this Clause 8.6 is to be measured by the Lender, the Borrower hereby undertakes that the financial covenants and ratios of this Clause 8.6 will be complied with at all times during the whole term of each Accounting Period. |
(h) | Calculations : For the purposes of this Clause 8.6: (aa) no item shall be deducted or credited more than once in any calculation; and (bb) any amount expressed in a currency other than Dollars shall be converted into Dollars in accordance with the Applicable Accounting Principles. |
8.7 | Covenants for the Securities Parties. The Borrower hereby undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under the Security Documents and while all or any part of the Commitment remains outstanding, they will ensure and procure that all other Security Parties and each of them duly and punctually comply, with the covenants in Clauses 8.1, 8.4 and 8.5 which are applicable to them mutatis mutandis. |
8.8 | Know your customer and money laundering compliance. The Borrower hereby undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under the Security Documents and while all or any part of the Commitment remains outstanding, it will provide the Lender with such documents and evidence as the Lender shall from time to time require, based on applicable law and regulations from time to time and the Lender's own internal guidelines from time to time to identify the Borrower and the other Security Parties, including the disclosure in writing of the ultimate legal and beneficial owner or owners of such entities, and any other persons involved or affected by the transaction(s) contemplated by this Agreement. |
9. | EVENTS OF DEFAULT |
9.1 | Events. There shall be an Event of Default if: |
(a) | Non‑payment : any Security Party fails to pay any sum payable by it under any of the Security Documents at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable on demand shall be treated as having been paid at the stipulated time if paid within five (5) Banking Days of demand and other sums due shall be treated as having been paid at the stipulated time if paid within two (2) Banking Days of its falling due); or |
(b) | Breach of Insurance and certain other obligations : the Borrower fails to obtain and/or maintain the Insurances (as defined in, and in accordance with the requirements of, the Security Documents) or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis‑statement in any proposal for the Insurances or for any other failure or default on the part of the Borrower or any other person or the Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under Clause 8; or |
(c) | Breach of other obligations : any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in Clauses 9.l(a) and 9.1 (b) above) and, in respect of any such breach or omission which in the opinion of the Lender is capable of remedy, such action as the Lender may require shall not have been taken within fifteen (15) days of the Lender notifying in writing the relevant Security Party of such default and of such required action; or |
(d) | Misrepresentation : any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or |
(e) | Cross‑default : any Indebtedness of any of the Borrower and the Guarantor relating to an amount exceeding Seven hundred fifty Dollars ($750,000) is not paid when due (unless contested in good faith) or any Indebtedness of any of the Borrower and the Guarantor 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 such Security Party of a voluntary right of prepayment), or the Lender of any of the Borrower and the Guarantor becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to any of the Borrower and the Guarantor relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned unless the relevant Security Party shall have satisfied the Lender that such withdrawal, suspension or cancellation will not affect or prejudice in any way the relevant Security Party's ability to pay its debts as they fall due, or any guarantee given by any of the Borrower and the Guarantor in respect of Indebtedness relating to an amount exceeding Seven hundred fifty Dollars ($750,000) is not honoured when due and called upon; or |
(f) | Legal process : any judgment or order made or commenced in good faith by a person against any of the Borrower and the Guarantor relating to an amount exceeding Five hundred thousand Dollars ($500,000) is not stayed or complied with within fifteen (15) days or a good faith creditor attaches or takes possession of, or a distress, execution, sequestration or other bonafide process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any of the Borrower and the Guarantor and is not discharged within fifteen (15) days; or |
(g) | Insolvency : any Security Party becomes insolvent or stops or suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or |
(h) | Reduction or loss of capital : a meeting is convened by any of the Borrower and the Guarantor for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital; or |
(i) | Winding up : any petition is presented or other step is taken for the purpose of winding up any Security Party or an order is made or resolution passed for the winding up of any Security Party or a notice is issued convening a meeting for the purpose of passing any such resolution; or |
(j) | Administration : any petition is presented or other step is taken for the purpose of the appointment of an administrator of any Security Party or the Lender believes that any such petition or other step is imminent or an administration order is made in relation to any Security Party; or |
(k) | Appointment of receivers and managers : any administrative or other receiver is appointed of any Security Party or any part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any part of the assets of any Security Party; or |
(l) | Compositions : any steps are taken, or negotiations commenced, by any Security Party or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors provided, however, that if the Borrower are able to provide such evidence as is satisfactory in all respects to the Lender that such rescheduling will not relate to any payment default or anticipated default the same shall not constitute an Event of Default; or |
(m) | Analogous proceedings : there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in Clauses 9.1(f) to (l) (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or |
(n) | Cessation of business : any Security Party suspends or ceases or threatens to suspend or cease to carry on its business; or |
(o) | Seizure : all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; or |
(p) | Invalidity : any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or |
(q) | Unlawfulness : it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for the Lender to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or |
(r) | Repudiation : any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or |
(s) | Encumbrances enforceable : any Encumbrance (other than Permitted Liens) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or |
(t) | Material adverse change : there occurs, in the reasonable opinion of the Lender, a material adverse change in the financial condition of any of the Borrower and the Guarantor as described by the Borrower or any other Security Party to the Lender in the negotiation of this Agreement, which might, in the opinion of the Lender, materially impair the ability of the above Security Parties (or any of them) to perform their respective obligations under this Agreement and the Security Documents to which is or is to be a party; or |
(u) | Arrest : the Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Owner thereof and the Owner shall fail to procure the release of the Vessel within a period of forty five (45) days thereafter; or |
(v) | Registration : the registration of the Vessel under the laws and flag of the Flag State is cancelled or terminated without the prior written consent of the Lender or, if the Vessel is only provisionally registered on the relevant Drawdown Date and is not permanently registered under the laws and flag of the Flag State at least thirty (30) days prior to the deadline for completing such permanent registration; or |
(w) | Unrest : the Flag State of the Vessel becomes involved in hostilities or civil war or there is a seizure of power in such Flag State by unconstitutional means if, in any such case, such event could in the opinion of the Lender reasonably be expected to have a material adverse effect on the security constituted by any of the Security Documents, unless the Ship is re-registered within thirty (30) days from the occurrence of such event on a Flag State which is not affected by hostilities or civil war or a seizure of power by unconstitutional means; or |
(x) | Environment : the Borrower or a Manager and/or any of their respective Environmental Affiliates fails to comply with any Environmental Law or any Environmental Approval or the Vessel or any Relevant Ship is involved in any incident which gives rise or which may give rise to any Environmental Claim, if in any such case, such non compliance or incident or the consequences thereof could (in the reasonable opinion of the Lender) be expected to have a material adverse effect on the business assets, operations, property or financial condition of the Borrower or any other Security Party or on the security created by any of the Security Documents; or |
(y) | P&I : any Security Party or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which the Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover in relation to the said Vessel (including without limitation, liability for Environmental Claims arising in jurisdictions where the Vessel operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or |
(z) | Change of Management : the Vessel ceases to be managed by the relevant Manager(s) (for any reason other than the reason of a Total Loss or sale of the Vessel) without the approval of the Lender and the Borrower fails to appoint another Manager prior to the termination of the mandate with the previous Manager(s); or |
(aa) | Deviation of Earnings : any Earnings of the Vessel are not paid to the Earnings Account for any reason whatsoever (other than with the Lender's prior written consent); or |
(bb) | ISM Code and ISPS Code : (without prejudice to the generality of sub-Clause 9.1(c)) for any reason whatsoever the provisions of Clause 8.1(n) and (o) are not complied with and the Vessel ceases to comply with the ISM Code or, as the case may be, the ISPS Code; or |
(cc) | Material events : any other event or events (whether related or not) occurs or circumstance arises which constitutes a material (in the opinion of the Lender) adverse change, from the position applicable as at the date of this Agreement, in the business, affairs or condition (financial or otherwise) of any Security Party) (including any such material adverse change resulting from an Environmental Incident) the effect of which is likely, in the opinion of the Lender, to impair, delay or prevent the due fulfilment by any Security Party of any of its respective obligations or undertakings contained in this Agreement or any of the other Security Documents and/or materially and adversely to affect the security created by any of the Security Documents ; or |
(dd) | Security Documents : any other event of default (as howsoever described or defined therein) occurs under the Security Documents (or any of them). |
9.2 | Consequences of Default – Acceleration. The Lender may without prejudice to any other rights of the Lender (which will continue to be in force concurrently with the following), at any time after the happening of an Event of Default, which is continuing: |
(a) | by notice to the Borrower declare that the obligation of the Lender to make the Commitment (or any part thereof) available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or |
(b) | by notice to the Borrower declare that the Loan and all interest accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable without any further diligence, presentment, demand of payment, protest or notice or any other procedure from the Lender which are expressly waived by the Borrower; and/or |
(c) | put into force and exercise all or any of the rights, powers and remedies possessed by the Lender under this Agreement and/or under the Guarantee and/or under any other Security Document and/or as mortgagee of the Vessel, mortgagee, chargee or assignee or as the beneficiary of any other property right or any other security (as the case may be) of the assets charged or assigned to it under the Security Documents or otherwise (whether at law, by virtue of any of the Security Documents or otherwise). |
9.3 | Multiple notices; action without notice. The Lender may serve notices under Clause 9.2(a) and (b) simultaneously or on different dates and it may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after service of both or either of such notices. |
9.4 | Demand basis. If, pursuant to Clause 9.2(b), the Lender declares the Loan to be due and payable on demand, the Lender may by written notice to the Borrower (a) call for repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice. |
9.5 | Proof of Default. It is agreed that (i) the non-payment of any sum of money in time will be proved conclusively by mere passage of time and (ii) the occurrence of this (non payment) shall be proved conclusively by a mere written statement of the Lender (save for manifest error). |
9.6 | Exclusion of Lender's liability. Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrower or a Security Party: |
(a) | for any loss caused by an exercise of rights under, or enforcement of an Encumbrance created by, a Security Document or by any failure or delay to exercise such a right or to enforce such an Encumbrance; 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 an Encumbrance or for any reduction (however caused) in the value of such an asset, |
except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been caused by the wilful misconduct of the Lender's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees. |
10. | INDEMNITIES - EXPENSES – FEES |
10.1 | Indemnity. The Borrower shall on demand (and it is hereby expressly undertaken by the Borrower to) indemnify the Lender, without prejudice to any of the other rights of the Lender under any of the Security Documents, against any loss or expense which the Lender shall certify as sustained or incurred as a consequence of: |
(a) | any default in payment by any of the Security Parties of any sum under any of the Security Documents when due; |
(b) | the occurrence of any Event of Default which is continuing; |
(c) | any prepayment of the Loan or part thereof being made under Clauses 4.2(b) and 4.3, 8.5(a) or 12 or any other repayment of the Loan or part thereof being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; or |
(d) | the Commitment not being advanced for any reason (excluding any default by the Lender) after the Drawdown Notice has been given, including, in any such case, but not limited to, any loss or expense sustained or incurred in maintaining or funding the Loan or any part thereof or in liquidating or re-employing deposits from third parties acquired to effect or maintain the Loan or any part thereof. |
10.2 | Expenses. The Borrower shall (and it is hereby expressly undertaken by the Borrower to) pay to the Lender on demand: |
(a) | Initial and Amendment expenses : all expenses (including reasonable legal, printing and out-of-pocket expenses) reasonably incurred by the Lender in connection with the negotiation, preparation and execution of this Agreement and the other Security Documents and of any amendment or extension of or the granting of any waiver or consent under this Agreement and/or any of the Security Documents and/or in connection with any proposal by the Borrower to constitute additional security pursuant to sub-Clause 8.5(a), whether any such security shall in fact be constituted or not; |
(b) | Enforcement expenses : all expenses (including reasonable legal and out-of-pocket expenses) incurred by the Lender in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, this Agreement and/or any of the other Security Documents, or otherwise in respect of the moneys owing under this Agreement and/or any of the other Security Documents or the contemplation or preparation of the above, whether they have been effected or not; |
(c) | Legal costs : the legal costs of the Lender's appointed lawyers, in respect of the preparation of this Agreement and the other Security Documents as well as the legal costs of the foreign lawyers (if these are available) in respect of the registration of the Security Documents or any search or opinion given to the Lender in respect of the Security Parties or the Vessel or the Security Documents. The said legal costs shall be due and payable on the Drawdown Date; and |
(d) | Other expenses : any and all other Expenses. |
10.3 | Stamp duty. The Borrower shall pay any and all stamp, registration and similar taxes or charges (including those payable by the Lender) imposed by governmental authorities in relation to this Agreement and any of the other Security Documents, and shall indemnify the Lender against any and all liabilities with respect to, or resulting from delay or omission on the part of the Borrower to pay such stamp taxes or charges. |
10.4 | Environmental Indemnity. The Borrower shall indemnify the Lender on demand and hold the Lender harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal) penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be suffered, incurred or paid by, or made or asserted against the Lender at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason out of an Environmental Claim made or asserted against the Lender if such Environmental Claim would not have been, or been capable of being, made or asserted against the Lender if it had not entered into any of the Security Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Security Documents. |
10.5 | Currencies. If any sum due from the Borrower under any of the Security Documents or any order or judgement given or made in relation hereto has to be converted from the currency (the "first currency") in which the same is payable under the relevant Security Document or under such order or judgement into another currency (the "second currency") for the purpose of (i) making or filing a claim or proof against the Borrower or any other Security Party, as the case may be or (ii) obtaining an order or judgement in any court or other tribunal or (iii) enforcing any order or judgement given or made in relation to any of the Security Documents, the Borrower shall (and it is hereby expressly undertaken by the Borrower to) indemnify and hold harmless the Lender from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgement, claim or proof. The term "rate of exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. |
10.6 | Maintenance of the Indemnities. The indemnities contained in this Clause 10 shall apply irrespective of any indulgence granted to the Borrower or any other party from time to time and shall continue to be in full force and effect notwithstanding any payment in favour of the Lender and any sum due from the Borrower under this Clause 10 will be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under any one or more of this Agreement, the other Security Documents and any other documents executed pursuant hereto or thereto. |
10.7 | MII costs . The Borrower shall reimburse the Lender on demand for any and all costs incurred by the Lender (as conclusively certified by the Lender) in effecting and keeping effected a Mortgagee's Interest Insurance (herein " MII" ) which the Lender may at any time effect on such terms, for an amount not exceeding 110% of the Loan and with such insurers as shall from time to time be determined by the Lender, provided, however, that the Lender shall in its absolute discretion appoint and instruct in respect of any such MII policy the insurance brokers in respect of such Insurance and provided, further, that in the event that the Lender effects any such Insurance on the basis of any mortgagee's open cover, the Borrower shall pay on demand to the Lender its proportion of premium due in respect of the Vessel(s) for which such insurance cover has been effected by the Lender, and any certificate of the Lender in respect of any such premium due by the Borrower shall (save for manifest error) be conclusive and binding upon the Borrower. |
10.8 | Communications Indemnity. It is hereby agreed in connection with communications that: |
(a) | Express authority is hereby given by the Borrower to the Lender to accept all tested or untested communications given by facsimile, cable or otherwise, regarding any or all of the notices, requests, instructions or other communications under this Agreement, subject to any restrictions imposed by the Lender relating to such communications including, without limitation (if so required by the Lender), the obligation to confirm such communications by letter. |
(b) | The Borrower shall recognise any and all of the said notices, requests, instructions or other communications as legal, valid and binding, when these notices, requests, instructions or communications come from the fax number mentioned in Clause 16.1 or any other fax usually used by it or its managing company and are duly signed or in case of emails are duly sent by the person appearing to be sending such notice, request, instruction or other communication. |
(c) | The Borrower hereby assumes full responsibility for the execution of the said notices, requests, instructions or communications and promises and recognises that the Lender shall not be held responsible for any loss, liability or expense that may result from such notices, requests, instructions or other communications. It is hereby undertaken by the Borrower to indemnify in full the Lender from and against all actions, proceedings, damages, costs, claims, demands, expenses and any and all direct and/or indirect losses which the Lender may suffer, incur or sustain by reason of the Lender following such notices, requests, instructions or communications. |
(d) | With regard to notices, requests, instructions or communications issued by electronic and/or mechanical processes (e.g. by facsimile), the risk of equipment malfunction, including, without limitation, paper shortage, transmission errors, omissions and distortions is assumed fully and accepted by the Borrower, save in case of the Lender's gross misconduct. |
(e) | The risks of misunderstandings and errors resulting from notices, requests, instructions or communications being given as mentioned above, are for the Borrower and the Lender will be indemnified in full pursuant to this Clause save in case of the Lender's gross misconduct. |
(f) | The Lender shall have the right to ask the Borrower to furnish any information the Lender may require to establish the authority of any person purporting to act on behalf of the Borrower for these notices, requests, instructions or communications but it is expressly agreed that there is no obligation for the Lender to do so. The Lender shall be fully protected in, and the Lender shall incur no liability to the Borrower for acting upon the said notices, requests, instructions or communications which were believed by the Lender in good faith to have been given by the Borrower or by any of its authorised representative(s). |
(g) | It is undertaken by the Borrower to use its best endeavours to safeguard the function and the security of the electronic and mechanical appliance(s) such as fax(es) etc., as well as the code word list, if any, and to take adequate precautions to protect such code word list from loss and to prevent its terms becoming known to any persons not directly concerned with its use. The Borrower shall hold the Lender harmless and indemnified from all claims, losses, damages and expenses which the Lender may incur by reason of the failure of the Borrower to comply with the obligations under this Clause. |
10.9 | Fee s. The Borrower shall pay to the Lender an arrangement fee in the amount equal to 1.50% of the amount of the Commitment (i.e. $131,250) payable on the date hereof. |
10.10 | Gross-up in the event of a FATCA Deduction – Borrower |
(a) | If the Borrower is required to make a FATCA Deduction, the Borrower shall make that FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
(b) | If a FATCA Deduction is required to be made by the Borrower, the amount of the payment due from the Borrower shall be increased to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
(c) | The Borrower shall promptly upon becoming aware that they/it must make a FATCA Deduction (or that there is any change in the rate or the basis of a FATCA Deduction) notify the Lender accordingly. |
(d) | Within thirty days of making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Borrower shall deliver to the Lender evidence reasonably satisfactory to the Lender that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
10.11 | FATCA status |
(a) | Subject to Clause 10.11(c) below, each party shall, within ten (10) Business Days of a reasonable request by another party: |
(i) | confirm to that other party whether it is: |
(ii) | supply to that other party such forms, documentation and other information relating to its status under FATCA (including its applicable passthru percentage or other information required under the Treasury Regulations or other official guidance including intergovernmental agreements) as that other party reasonably requests for the purposes of that other party's compliance with FATCA. |
(b) | If a party confirms to another party pursuant to Clause 10.11(a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify that other party reasonably promptly. |
(c) | Clause 10.11(a)(i) above shall not oblige the Lender to do anything which would or might in its reasonable opinion constitute a breach of: |
(i) | any law or regulation; |
(ii) | any policy of the Lender; |
(iii) | any fiduciary duty; or |
(iv) | any duty of confidentiality. |
(d) | If a party fails to confirm its status or to supply forms, documentation or other information requested in accordance with Clause 10.11(a) above (including, for the avoidance of doubt, where Clause 10.11(c) above applies), then: |
(i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of the Security Documents as if it is not a FATCA Exempt Party; and |
(ii) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of the Security Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
11. | SECURITY, APPLICATION, AND SET-OFF |
11.1 | Securities. As security for the due and punctual repayment of the Loan and payment of interest thereon as provided in this Agreement and of all other Outstanding Indebtedness, the Borrower shall ensure and procure that the following Security Documents are duly executed and, where required, registered in favour of the Lender in form and substance satisfactory to the Lender at the time specified herein or otherwise as required by the Lender and ensure that such security consists, on the Drawdown Date, of: |
(a) | the Mortgage duly registered over the Vessel through the Registry; |
(b) | the General Assignment; |
(c) | the Guarantee; |
(d) | the Accounts Pledge Agreement; |
(e) | any Charterparty Assignment; and |
(f) | the Manager's Undertaking(s). |
11.2 | Maintenance of Securities. It is hereby undertaken by the Borrower that the Security Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing and/or due under this Agreement or under the other Security Documents be valid and binding obligations of the respective Security Parties thereto and rights of the Lender enforceable in accordance with their respective terms and that they will, at the expense of the Borrower, execute, sign, perfect and do any and every such further assurance, document, act, omission or thing as in the opinion of the Lender may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents. |
11.3 | Application of funds. |
(a) | Order of application : All moneys received by the Lender under or pursuant to any of the Security Documents and expressed to be applicable in accordance with this Clause 11.3 shall be applied by the Lender in the following manner: |
(i) | Firstly, in or towards payment of Expenses and all sums other than principal or interest which may be due to the Lender under this Agreement and the other Security Documents or any of them at the time of application; |
(ii) | Secondly, in or towards payment of any default interest; |
(iii) | Thirdly, in or towards payment of any arrears of interest (other than default interest) due in respect of the Loan or any part thereof; |
(iv) | Fourthly , in or towards repayment of the Loan whether the same is due and payable or not; |
(v) | Fifthly , in or towards payment to the Lender for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid; and |
(vi) | Sixthly , the surplus (if any) shall be paid to the Borrower or to whomsoever else shall be entitled to receive such surplus. |
(b) | Notice of variation of order of application : The Lender may, by notice to the Borrower and the Security Parties, provide, at its sole discretion, for a different order of application from that set out in Clause 11.3 either as regards a specified sum or sums or as regards sums in a specified category or categories, without affecting the obligations of the Borrower to the Lender. |
(c) | Effect of variation notice : The Lender may give notices under Clause 11.3(b) from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Banking Day before the date on which the notice is served. |
11.4 | Set off. Express authority is hereby given by the Borrower to the Lender without prejudice to any of the rights of the Lender at law, contractually or otherwise, at any time after a Default has occurred and without prior notice to the Borrower: |
(a) | to apply any credit balance standing upon any account of the Borrower with any branch of the Lender (including, without limitation, the Earnings Account and in whatever currency in or towards satisfaction of any sum due to the Lender from the Borrower under this Agreement and/or any of the other Security Documents; |
(b) | in the name of the Borrower and/or the Lender to do all such acts and execute all such documents as may be necessary or expedient to effect such application; and |
(c) | to combine and/or consolidate all or any accounts in the name of the Borrower with the Lender. |
For all or any of the above purposes authority is hereby given to the Lender to purchase with the moneys standing to the credit of any such account or accounts such other currencies as may be necessary to effect such application. The Lender shall not be obliged to exercise any right given by this Clause. The Lender shall notify the Borrower forthwith upon the exercise of any right of set‑off giving full details in relation thereto. |
12. | UNLAWFULNESS, INCREASED COSTS |
12.1 | Unlawfulness. If any change in, or introduction of, any law, regulation or regulatory requirement or any request of any central bank, monetary, regulatory or other authority or any order of any court renders it unlawful or contrary to any such regulation, requirement, request or order for the Lender to advance the Commitment or the relevant part thereof (as the case may be) or to maintain or fund the Loan, notice shall be given promptly by the Lender to the Borrower whereupon the Commitment shall be reduced to zero and the Borrower shall be obliged to prepay the Loan in accordance with such notice, together with accrued interest thereon to the date of prepayment and all other sums payable by the Borrower under this Agreement. |
In any such event the Borrower and the Lender shall (as per the provisions of sub-Clause 3.6) negotiate in good faith (but without incurring any legal obligations) with a view to agreeing the terms for making the Loan available from another jurisdiction or providing the Loan from alternative sources. |
12.2 | Change of circumstances. If any change in or in the interpretation of any applicable law or regulation, by any government or governmental authority or agency, makes it unlawful for the Lender to maintain or give effect to its obligations or to claim or receive any amount payable to the Lender under this Agreement, then the Lender may serve written notice on the Borrower declaring its obligations under this Agreement terminated in whole or in part, whereupon the same shall terminate forthwith and the Borrower will immediately repay the Loan and accrued interest to the date of prepayment together with all other Outstanding Indebtedness to the Lender pursuant to the terms of the notice. |
12.3 | Mitigation. If circumstances arise which would result in a notification under Clause 12.1 or 12.2, then, without in any way limiting the rights of the Lender under this Clause, the Lender shall use reasonable endeavours to transfer all the Lender's obligations, liabilities and rights under this agreement and the Security Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do so would or might: (a) have an adverse effect on its business, operations or financial condition; or (b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage. |
12.4 | Increased Cost. If, as a result of (a) any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, bu t, i f not having the force of law, with which the Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits or other banking or monetary controls or r equi rements which affects the manner in which the Lender allocates capital resources to its obligations he reunder and those ( including, but not limited to, "Basel III") which shall replace, amend and/or supplement the provisions set out in the statement (as in effect as of the date of this Agreement) of the Basel II committee on banking supervision dated July 1988 and entitled "international convergence of capital measurement and capital structures" or any amendatory or substitute agreement thereof, or (b) compliance by the Lender with any request from any applicable fiscal or monetary authority (whether or not having the force of law but, if not having the force of law, with which the Lender habitually complies) or (c) any other set of circumstances affecting the Lender : |
(a) | the cost to the Lender of making the Commitment or any part thereof or maintaining or funding the Loan is increased or an additional cost on the Lender is imposed; and/or |
(b) | subject the Lender to Taxes or the basis of Taxation (other than Taxes or Taxation on the overall net income of the Lender) in respect of any payments to the Lender under this Agreement or any of the other Security Documents is changed; and/or |
(c) | the amount payable or the effective return to the Lender under any of the Security Documents is reduced; and/or |
(d) | the Lender's rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to the Lender's obligations under any of the Security Document is reduced; and/or |
(e) | require the Lender to make a payment or forgo a return on or calculated by references to any amount received or receivable by it under any of the Security Documents is required; and/or |
(f) | require the Lender to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loan from its capital for regulatory purposes, |
then and in each case (subject to Clause 12.8) the Borrower shall pay to the Lender, from time to time, upon demand, such additional moneys as shall indemnify the Lender for any increased or additional cost, reduction, payment, foregone return or loss whatsoever. |
12.5 | Claim for increased cost. The Lender will promptly notify the Borrower of any intention to claim indemnification pursuant to Clause 12.3 and such notification will be a conclusive and full evidence binding on the Borrower as to the amount of any increased cost or reduction and the method of calculating the same and the Borrower shall be allowed to rebut such evidence by any means of evidence save for witness. A claim under Clause 12.3 may be made at any time and must be discharged by the Borrower within seven (7) days of demand. It shall not be a defence to a claim by the Lender under this Clause 12.3 that any increased cost or reduction could have been avoided by the Lender. Any amount due from the Borrower under Clause 12.3 shall be due as a separate debt and shall not be affected by judgement being obtained for any other sums due under or in respect of this Agreement. |
12.6 | Option to prepay. If any additional amounts are required to be paid by the Borrower to the Lender by virtue of Clause 12.3, the Borrower shall be entitled, on giving the Lender not less than fourteen (14) days prior notice in writing, to prepay (without premium or penalty) the Loan and accrued interest thereon, together with all other Outstanding Indebtedness, on the next Repayment Date. Any such notice, once given, shall be irrevocable. |
12.7 | Exception. Nothing in Clause 12.3 shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is subject of an additional payment under Clause 5.3. |
12.8 | Central Bank or European Central Bank reserve requirements indemnity. The Borrower shall on demand promptly indemnify the Lender against any cost incurred or loss suffered by the Lender as a result of its complying with the minimum reserve requirements of the European Central Bank and/or with respect to maintaining required reserves with the relevant national Central Bank to the extent that such compliance relates to the Commitment or deposits obtained by it to fund the whole or part of the Loan and to the extent such cost or loss is not recoverable by the Lender under clause 12.2. |
13. | EARNINGS ACCOUNT |
13.1 | General. The Borrower undertakes with the Lender that it will: |
(a) | on or before the first Drawdown Date open the Earnings Account; and |
(b) | procure that all moneys payable to the Borrower in respect of the Earnings of the Vessel shall, unless and until the Lender directs to the contrary pursuant to the General Assignment, be paid to the Earnings Account, free from Encumbrances and rights of set off other than those created by or under the Security Documents. |
13.2 | Earnings Account. Unless and until an Event of Default shall occur (whereupon the provisions of Clause 11.3 shall be applicable) and subject to the terms and conditions of the Accounts Pledge Agreement no monies shall be withdrawn from the Earnings Account save as hereinafter provided. Subject to Clause 9, all monies paid to the Earnings Account after discharging the costs (if any) incurred by the Lender, in collecting such monies, shall be applied by the Lender as follows: |
(a) | firstly : in payment of any and all sums whatsoever due and payable to the Lender hereunder (such sums to be paid in such order as the Lender may in its sole discretion elect); and |
(b) | secondly : any credit balance shall be available to the Borrower to be used for any purpose not inconsistent with the Borrower's other obligations under this Agreement, including, without limitation, for the purpose of making any payments in connection with the operation and maintenance of the Vessel and for all other purposes permitted under this Agreement. |
13.3 | Interest. Any amounts for the time being standing to the credit of the Earnings Account shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts and for periods similar to those for which such amounts are likely to remain standing to the credit of the Earnings Account. Such interest shall, provided that (a) the foregoing provisions of this Clause 13.2 shall have been complied with and (b) no Event of Default (or event which, with the giving of notice and/or lapse of time or other applicable condition, might constitute an Event of Default) shall have occurred and is continuing , be released to the Borrower . |
13.4 | Drawings from Earnings Account . The Borrower shall not be entitled to draw from the Earnings Account if a Continuing Event of Default has occurred. |
13.5 | Sufficient monies. The Borrower hereby warrants that sufficient monies to meet the next Repayment Instalment plus interest thereon will be accumulated each and every month in the Earnings Account. |
13.6 | Obligations unaffected. Nothing herein contained shall be deemed to affect the absolute obligation of the Borrower to pay interest on and to repay the Loan as provided in Clauses 3 and 4 or shall constitute a manner or postponement thereof. |
13.7 | Relocation of Earnings Account. The Borrower, at its own costs and expenses, undertakes with the Lender to comply with or cause to be complied with any written requirement of the Lender from time to time as to the location or re-location of the Earnings Account and will from time to time enter into such documentation as the Lender may require in order to create or maintain a security interest in the Earnings Account. |
13.8 | Set-off. Upon the occurrence of an Event of Default or at any time thereafter the Lender shall be entitled to set off and apply all sums standing to the credit of the Earnings Account and accrued interest (if any) without notice to the Borrower in the manner specified in Clause 11.3 (and express and irrevocable authority is hereby given by the Borrower to the Lender so to set off and apply the same and the Lender shall be released to the extent of such set off and application). |
13.9 | No Encumbrances. The Borrower hereby covenants with the Lender that the Earnings Account and any moneys therein shall not be charged, assigned, transferred or pledged nor shall there be granted by the Borrower or suffered to arise any third party rights over or against the whole or any part of the Earnings Account other than in favour of the Lender. |
13.10 | Operation of Earnings Account. The Earnings Account shall be operated in accordance with the Lender's usual terms and conditions (full knowledge of which the Borrower hereby acknowledges) and subject to the Lender's usual charges levied on such accounts and/or transactions conducted on such accounts (as from time to time notified by the Lender to the Borrower). |
13.11 | Release. Upon payment in full of all principal, interest and all other amounts due to the Lender under the terms of this Agreement and the other Security Documents, any balance then standing to the credit of the Earnings Account shall be released and paid to the Borrower or to whomsoever else may be entitled to receive such balance. |
14. | ASSIGNMENT, TRANSFER, PARTICIPATION, LENDING OFFICE |
14.1 | Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Lender and the Borrower and their respective successors and permitted assigns. |
14.2 | No Assignment by the Borrower and other Security Parties. Neither the Borrower nor any other Security Parties may assign or transfer any of its rights and/or obligations under this Agreement or any of the other Security Documents or any documents executed pursuant to this Agreement and/or the other Security Documents. |
14.3 | Assignment by the Lender . The Lender may at any time without the consent of, or consultation with, but after giving 15-day notice to the Borrower, cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents to be assigned or transferred to (i) another branch, Subsidiary or affiliate of, or company controlled by, the Lender, (ii) another first class international bank or financial institution, insurer, social security fund, pension fund, capital investment company, financial intermediary or special purpose vehicle associated to any of them (iii) a trust corporation, fund or other person which regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets of which are managed or serviced by the Lender (in each case an " Assignee " or a " Transferee "). |
14.4 | Documenting assignments and transfers . If the Lender assigns, transfers or in any other manner grants participation in respect of all or any part of its rights or benefits or transfers all or any of its obligations as provided in this Clause 14.4 the Borrower undertakes, immediately on being requested to do so by the Lender, to enter at the expense of the Lender into and procure that each Security Party enters into such documents as may be necessary or desirable to transfer to the Assignee, Transferee or participant all or the relevant part of the interest of the Lender in the Security Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or assignee, transferee or participant of the Lender to the extent of their respective interests and, in the case of a transfer of all or part of the obligations of the Lender, the Borrower shall thereafter look only to the Assignee, Transferee or participant in respect of that proportion of the obligations of the Lender under this Agreement assumed by such assignee, transferee or participant. The Borrower hereby expressly consents to any subsequent transfer of the rights and obligations of the Lender and undertake that they shall join in and execute such supplemental or substitute agreements as may be necessary to enable the Lender to assign and/or transfer and/or grant participation in respect of its rights and obligations to another branch or to one or more banks or financial institutions in a syndicate or otherwise. The cost of any such assignment shall be borne by the Lender and/or the relevant Assignee or Transferee. |
14.5 | Disclosure of information. The Lender may disclose to a prospective assignee, substitute or transferee or to any other person who may propose entering into contractual relations with the Lender in relation to this Agreement such information about the Borrower as the Lender shall consider appropriate if the Lender first procures that the relevant prospective assignee, substitute or transferee or other person (such person together with any prospective assignee, substitute or transferee being hereinafter described as the " Prospective Assignee ") shall undertake to the Borrower to keep secret and confidential and, without the consent of the Borrower, disclose to any third party any of the information, reports or documents supplied by the Lender provided, however, that the Prospective Assignee shall be entitled to disclose such information, reports or documents in the following situations: |
(a) | in relation to any proceedings arising out of this Agreement or the other Security Documents to the extent considered necessary by the Prospective Assignee to protect its interest; or |
(b) | pursuant to a court order relating to discovery or otherwise; or |
(c) | pursuant to any law or regulation or to any fiscal, monetary, tax, governmental or other competent authority; or |
(d) | to its auditors, legal or other professional advisers. |
In addition the Prospective Assignee shall be entitled to disclose or use any such information, reports or documents if the information contained therein shall have emanated in conditions free from confidentiality, bona fide from some person other than the Lender or the Borrower. |
14.6 | Process of personal data. The Borrower hereby expressly gives its consent to the communication for process in the meaning of law 2472/97 by the Lender of its personal data contained in this Agreement, the Security Documents, in the Earnings Account for onwards communication thereof to an inter-banking database record called "Teiresias" kept and solely used by banks and financial institutions. The Borrower is entitled at any relevant time throughout the Security Period to revoke its consent given hereunder by written notice addressed to the Lender and the Registrar of "Teiresias A.E." at 2, Alamanas street, 15125 Maroussi, Athens, Greece. |
14.7 | Changes in constitution or reorganisation of the Lender. For the avoidance of doubt and without prejudice to the provisions of Clause 14.1, this Agreement shall remain binding on the Borrower and the other Security Parties notwithstanding any change in the constitution of the Lender or its absorption in, or amalgamation with, or the acquisition of all or part of its undertaking or assets by, any other person, or any reconstruction or reorganisation of any kind, to the intent that this Agreement shall remain valid and effective in all respects in favour of any Assignee, Transferee or other successor in title of the Lender in the same manner as if such Assignee, Transferee or other successor in title had been named in this Agreement as a party instead of, or in addition to, the Lender. |
14.8 | Securitisation. The Lender may include all or any part of the Loan in a securitisation (or similar transaction) without the consent of, or consultation with, but after giving 30-day notice to the Borrower. The Borrower will assist the Lender as necessary to achieve a successful securitisation (or similar transaction) provided that the Borrower shall not be required to bear any third party costs related to any such securitisation (or similar transaction) and need only provide any such information which any third parties may reasonably require. |
14.9 | Lending Office. The Lender shall lend through its office at the address specified in the preamble of this Agreement or through any other office of the Lender selected from time to time by it through which the Lender wishes to lend for the purposes of this Agreement. If the office through which the Lender is lending is changed pursuant to this Clause 14.9, the Lender shall notify the Borrower promptly of such change and upon notification of any such transfer, the word "Lender" in this Agreement and in the other Security Documents shall mean the Lender, acting through such branch or branches and the terms and provisions of this Agreement and of the other Security Documents shall be construed accordingly. |
15. | MISCELLANEOUS |
15.1 | Cumulative Remedies. The rights and remedies of the Lender contained in this Agreement and the other Security Documents are cumulative and not neither exclusive of each other nor of any other rights or remedies conferred by law. |
15.2 | No implied waivers. No failure, delay or omission by the Lender to exercise any right, remedy or power vested in the Lender under this Agreement and/or the other Security Documents or by law shall impair such right or power, or be construed as a waiver of, or as an acquiescence in any default by the Borrower, nor shall any single or partial exercise by the Lender of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. In the event of the Lender on any occasion agreeing to waive any such right, remedy or power, or consenting to any departure from the strict application of the provisions of this Agreement or of any other Security Document, such waiver shall not in any way prejudice or affect the powers conferred upon the Lender under this Agreement and the other Security Documents or the right of the Lender thereafter to act strictly in accordance with the terms of this Agreement and the other Security Documents. No modification or waiver by the Lender of any provision of this Agreement or of any of the other Security Documents nor any consent by the Lender to any departure therefrom by any Security Party shall be effective unless the same shall be in writing and then shall only be effective in the specific case and for the specific purpose for which given. No notice to or demand on any such party in any such case shall entitle such party to any other or further notice or demand in similar or other circumstances. |
15.3 | Integration of Terms. This Agreement contains the entire agreement of the parties and its provisions supersede the provisions of the Commitment Letter (save for the provisions thereof which relate to fees) any and all other prior correspondence and oral negotiation by the parties in respect of the matters regulated by this Agreement. |
15.4 | Amendments. This Agreement and any other Security Documents shall not be amended or varied in their respective terms by any oral agreement or representation or in any other manner other than by an instrument in writing of even date herewith or subsequent hereto executed by or on behalf of the parties hereto or thereto. |
15.5 | Invalidity of Terms. In the event of any provision contained in one or more of this Agreement, the other Security Documents and any other documents executed pursuant hereto or thereto being invalid, illegal or unenforceable in any respect under any applicable law in any jurisdiction whatsoever, such provision shall be ineffective as to that jurisdiction only without affecting the remaining provisions hereof or thereof. If, however, this event becomes known to the Lender prior to the drawdown of the Commitment or of any part thereof the Lender shall be entitled to refuse drawdown until this discrepancy is remedied. In case that the invalidity of a part results in the invalidity of the whole Agreement, it is hereby agreed that there will exist a separate obligation of the Borrower for the prompt payment to the Lender of all the Outstanding Indebtedness. Where, however, the provisions of any such applicable law may be waived, they are hereby waived by the parties hereto to the full extent permitted by the law to the intent that this Agreement, the other Security Documents and any other documents executed pursuant hereto or thereto shall be deemed to be valid binding and enforceable in accordance with their respective terms. |
15.6 | Inconsistency of Terms. In the event of any inconsistency between the provisions of this Agreement and the provisions of any other Security Document the provisions of this Agreement shall prevail. |
15.7 | Language and genuineness of documents |
(a) | Language : All certificates, instruments and other documents to be delivered under or supplied in connection with this Agreement or any of the other Security Documents shall be in the Greek or the English language (or such other language as the Lender shall agree) or shall be accompanied by a certified Greek translation upon which the Lender shall be entitled to rely. |
(b) | Certification of documents : Any copies of documents delivered to the Lender shall be duly certified as true, complete and accurate copies by appropriate authorities or legal counsel practising in Greece or otherwise as will be acceptable to the Lender at the sole discretion of the Lender. |
(c) | Certification of signature : Signatures on Board or shareholder resolutions, Secretary's certificates and any other documents are, at the discretion of the Lender, to be verified for their genuineness by appropriate Consul or other competent authority. |
15.8 | Recourse to other security. The Lender shall not be obliged to make any claim or demand or to resort to any Security Document or other means of payment now or hereafter held by or available to it for enforcing this Agreement or any of the Security Documents against the Security Parties (or any of them) or any other person liable and no action taken or omitted by the Lender in connection with any such Security Document or other means of payment will discharge, reduce, prejudice or affect the liability of any Security Party under this Agreement and the other Security Documents to which it is, or is to be, a party. |
15.9 | Further assurances. The Borrower undertakes that the Security Documents shall both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Security Documents be valid and binding obligations of the respective parties thereto and enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Lender may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents. |
15.10 | Process of personal data. The Borrower hereby expressly gives its consent to the communication for process in the meaning of law 2472/97 by the Lender of its personal data contained in this Agreement, the Security Documents, in the Earnings Accounts and the Retention Account for onwards communication thereof to an inter-banking database record called "Teiresias" kept and solely used by banks and financial institutions. The Borrower is entitled at any relevant time throughout the Security Period to revoke its consent given hereunder by written notice addressed to the Lender and the Registrar of "Teiresias A.E." at 2, Alamanas street, 15125 Maroussi, Athens, Greece. |
15.11 | Conflicts. In the event of any conflict between this Agreement and any of the other Security Documents and the provisions of this Agreement shall prevail. |
15.12 | Confidentiality |
(a) | Each of the parties hereto agrees and undertakes to keep confidential any documentation and any confidential information concerning the business, affairs, directors or employees of the other which comes into its possession in connection with this Agreement and not to use any such documentation, information for any purpose other than for which it was provided. |
(b) | The Borrower acknowledges and accepts that the Lender may be required by law, regulation or regulatory requirement or any request of any central bank or any court order to disclose information and deliver documentation relating to the Borrower and the transactions and matters in relation to this Agreement and/or the other Security Documents to governmental or regulatory agencies and authorities. |
(c) | The Borrower acknowledges and accepts that in case of occurrence of any of the Events of Default the Lender may disclose information and deliver documentation relating to the Borrower and the transactions and matters in relation to this Agreement and/or the other Security Documents to third parties to the extent that this is necessary for the enforcement or the contemplation of enforcement of the Lender's rights or for any other purpose for which in the opinion of the Lender, such disclosure would be useful or appropriate for the interests of the Lender or otherwise and the Borrower expressly authorises any such disclosure and delivery. |
(d) | The Borrower acknowledges and accepts that the Lender may be prohibited from disclosing information to the Borrower by reason of law or duties of confidentiality owed or to be owed to other persons. |
16. | NOTICES |
16.1 | Notices. Every notice, request, demand or other communication under the Agreement or, unless otherwise provided therein, under any of the other Security Documents shall: |
(a) | be in writing delivered personally or be first-class prepaid letter (airmail if available), or shall be served through a process server or subject to Clause 10.8 by fax; |
(b) | be deemed to have been received, subject as otherwise provided in this Agreement or the relevant Security Document, in the case of a fax, at the time of dispatch as per transmission report ( provided, in either case, that if the date of despatch is not a business day in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day), and in the case of a letter when delivered or served personally or five (5) days after it has been put into the post; and |
(c) | be sent: |
(i) | if to be sent to any Security Party, to: |
(ii) | in the case of the Lender at: |
or to such other person, address or fax number as is notified by the relevant Security Party or the Lender (as the case may be) to the other parties to this Agreement and, in the case of any such change of address or fax number notified to the Lender, the same shall not become effective until notice of such change is actually received by the Lender and a copy of the notice of such change is signed by the Lender. |
16.2 | Process Agent. Mrs. Theodora Mitropetrou, an Attorney-at-Law, presently of 1-3 Patriarchou Grigoriou Street , Glyfada, Greece (hereinafter called the " Process Agent for Greek Proceedings ") is hereby appointed by the Borrower as agent to accept service, upon whom any judicial process in respect of proceedings in Greece may be served and any process notice, judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement of claim, notice, request, demand or other communication under this Agreement or any of the Security Documents. |
In the event that the Process Agent for Greek Proceedings (or any substitute process agent notified to the Lender in accordance with the foregoing) cannot be found at the address specified above (or, as the case may be, notified to the Lender), which will be conclusively proved by a deed of a process server to the effect that the Process Agent for Greek Proceedings was not found at such address, any process notice, judicial or extra-judicial request, demand for payment, payment order, foreclosure proceedings, notarial announcement of claim or other communication to be sent to any Security Party may be validly served/notified in accordance with the relevant provisions of the Hellenic Code on Civil Procedure. |
17. | LAW AND JURISDICTION |
17.1 | Law |
(a) | This Agreement and any non-contractual obligations connected with it shall be governed by and construed in accordance with English Law. |
(b) | For the purposes of enforcement in Greece, it is hereby expressly agreed that English law as the governing law of this Agreement will be proved by an affidavit of a solicitor from an English law firm to be appointed by the Lender and the said affidavit shall constitute full and conclusive evidence binding on the Borrower but the Borrower shall be allowed to rebut such evidence save for witness. |
17.2 | Jurisdiction . |
(a) | The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with it (including a dispute regarding the existence, validity or termination of this Agreement) (a " Dispute "). The Borrower irrevocably and unconditionally submits to the jurisdiction of such courts. |
(b) | The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary and waives any objections to the inconvenience of England as a forum. |
(c) | This Clause 17.2 is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions. |
17.3 | Process Agent for English Proceedings. Without prejudice to any other mode of service allowed under any relevant law the Borrower irrevocably designates, appoints and empowers Messrs. E.J.C. Album, Solicitors , Landmark House, 190 Willifield Way, London, NW11 6YA, England (attention Mr. Edward Album, Fax: +44 (0) 20 8457 5558, E-mail: ejca@mitgr.com ) (hereinafter called the "Process Agent for English Proceedings") , to receive for it and on its behalf, service of process issued out of the English courts in relation to any proceedings before the English courts in connection with any Security Document, provided, however, that : |
(a) | the Borrower hereby agrees and undertakes to maintain a Process Agent for English Proceedings throughout the Security Period and hereby agrees that in the event that if any Process Agent for English Proceedings is unable for any reason to act as agent for service of process, the Borrower must immediately (and in any event within ten (10) days of such event taking place) appoint another agent on terms acceptable to the Lender. Failing this, the Lender may appoint for this purpose a substitute Process Agent for English Proceedings and the Lender is hereby irrevocably authorised to effect such appointment on Borrower's behalf. The appointment of such Process Agent for English Proceedings shall be valid and binding from the date notice of such appointment is given by the Lender to the Borrower in accordance with Clause 16.1 ; and |
(b) | the Borrower hereby agrees that failure by a Process Agent for English Proceedings to notify the Borrower of the process will not invalidate the proceedings concerned. |
17.4 | Proceedings in any other country. If it is decided by the Lender that any such proceedings should be commenced in any other country, then any objections as to the jurisdiction or any claim as to the inconvenience of the forum is hereby waived by the Borrower and it is agreed and undertaken by the Borrower to instruct lawyers in that country to accept service of legal process and not to contest the validity of such proceedings as far as the jurisdiction of the court or courts involved is concerned and the Borrower agrees that any judgment or order obtained in an English court shall be conclusive and binding on the Borrower and shall be enforceable without review in the courts of any other jurisdiction. |
17.5 | Third Party Rights. No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement. |
17.6 | Meaning of "proceedings". In this Clause 17 " proceedings " means proceedings of any kind, including an application for a provisional or protective measure. |
SIGNED by
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)
|
|
Mr. Stamatios Tsantanis
|
)
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for and on behalf of
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)
|
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LEADER SHIPPING CO.,
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)
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/s/ Stamatios Tsantanis
|
of the Marshall Islands, in the presence of:
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)
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Attorney-in-fact
|
Name: | Theodora Mitropetrou |
SIGNED by
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)
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Mr. Konstantinos Sotiriou and
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)
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/s/ Konstantinos Sotiriou
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Mrs. Christina Aroni
|
)
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Authorised Officer
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for and on behalf of
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)
|
|
ALPHA
BANK
A.E.,
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)
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/s/ Christina Aroni
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in the presence of:
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Authorised Officer
|
Name: | Charalampos Sioufas |
To: | ALPHA BANK A.E. |
Re: US$8,750,000 Loan Agreement dated [
l
] March, 2015 made between (A)
Leader Shipping Co.
(the "
Borrower
") and (B) the Lender (the "
Loan Agreement
").
|
(a) | no event or circumstance has occurred and is continuing which constitutes a Default; |
(b) | the representations and warranties contained in Clause 6 of the Loan Agreement and the representations and warranties contained in each of the other Security Documents are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date; |
(c) | the borrowing to be effected by the drawing down of the Commitment will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded; and |
(d) | to the best of our knowledge and belief there has been no material adverse change in our financial position or in the consolidated financial position of ourselves and the other Security Parties from that described by us to the Lender in the negotiation of the Loan Agreement. |
SIGNED by
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)
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Mr.
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)
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|
for and on behalf of
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)
|
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the Borrower
|
)
|
|
LEADER SHIPPING CO.
,
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)
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_______________________________
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of the Marshall Islands, in the presence of:
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)
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Attorney-in-fact
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Name: | Theodora Mitropetrou |
To: | [P&I Club] |
[ l ] |
[ l ] |
From: | Leader Shipping Co. |
Trust Company Complex, |
To: | ALPHA BANK A.E. |
From: | LEADER SHIPPING CO. , |
RE:
Loan Agreement dated [
l
] March, 2015 made between (1) the Borrower and (2) the Lender, in respect of a loan facility of up to US$8,750,000 (the "
Loan Agreement
").
|
1. | Financial Covenants: |
(a) | the Leverage Ratio has not been and at the date hereof is not higher than 0.75:1; and |
(b) | the consolidated interest cover ratio (EBITDA to Interest Expense) is not lower than 2:1; |
(c) | the Borrower maintains with the Lender minimum free liquidity in an amount not less than the Borrower's Debt Service of the next semester as free deposits; and |
(d) | the Guarantor shall maintain minimum free liquidity in an amount not less than the Guarantor's Debt Service of the next semester as free deposits. |
2. | Default: |
ARTICLE I
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PURCHASE AND SALE OF SHARES
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||
Section 1.01
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Authorization of Issuance and Sale of Shares
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1
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Section 1.02
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Sale and Purchase
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1
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Section 1.03
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Purchase Price
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1
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Section 1.04
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Time and Place of Closing
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1
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Section 1.05
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Closing Payments and Delivery of Securities
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2
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ARTICLE II
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CONDITIONS TO CLOSING
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||
Section 2.01
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Mutual Conditions
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2
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Section 2.02
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Company's Conditions
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2
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ARTICLE: III
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REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
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||
Section 3.01
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Organization
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3
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Section 3.02
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Authorization; Enforcement
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3
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Section 3.03
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No Conflicts
|
3
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ARTICLE IV
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REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PURCHASER
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||
Section 4.01
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Organization
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3
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Section 4.02
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Authorization; Enforcement
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4
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Section 4.03
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No Conflicts
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4
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Section 4.04
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Investment Representations
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||
ARTICLE V
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OTHER AGREEMENTS
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||
Section 5.01
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Legend
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6
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Section 5.02
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Indemnification by the Purchaser
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6
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Section 5.03
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Disclosure
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6
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Section 5.04
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Public Announcements
|
6
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Section 5.05
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Expenses
|
6
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Section 5.06
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Sales and Transfer Taxes
|
7
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ARTICLE VI
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MISCELLANEOUS
|
||
Section 6.01
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Notices
|
7
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Section 6.02
|
Further Assurances
|
7
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Section 6.03
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Successors and Assigns
|
8
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Section 6.4
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Entire Agreement
|
8
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Section 6.05
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Amendments and Waivers
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8
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Section 6.06
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Governing Law
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8
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Section 6.07
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Submission to Jurisdiction
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8
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Section 6.08
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Waiver of Jury Trial
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8
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Section 6.09
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Captions; Counterparts, Execution
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8
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SCHEDULE A
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SHARE AND PURCHASE PRICE ALLOCATION
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SCHEDULE B
|
FORM OF REGISTRATION RIGHTS AGREEMENT
|
SEANERGY MARITIME HOLDINGS CORP.
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||||
By:
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/s/ Elias Culucundis
|
|||
Name: Elias Culucundis
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||||
Title:Director
|
||||
STAMATIS TSANTANIS
|
||||
By:
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/s/
STAMATIS TSANTANIS
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|||
Purchaser
|
Shares
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Purchase Price
|
Stamatis Tsantanis
|
1,667,000
|
300,060
|
THE COMPANY:
|
||
SEANERGY MARITIME HOLDINGS CORP.
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||
By:
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/s/ Elias Culucundis | |
Name: Elias Culucundis
|
||
Title: Director
|
INVESTOR
:
|
||
By:
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/s/ Stamatis Tsantanis | |
Stamatis Tsantanis
|
||
· | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
· | one or more block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
· | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
· | an exchange distribution in accordance with the rules of the applicable exchange; |
· | public or privately negotiated transactions; |
· | on the New York Stock Exchange, American Stock Exchange, NASDAQ Global Market or NASDAQ Capital Market (or through the facilities of any national securities exchange or U.S. inter-dealer quotation system of a registered national securities association, on which the shares are then listed, admitted to unlisted trading privileges or included for quotation); |
· | through underwriters, brokers or dealers (who may act as agents or principals) or directly to one or more purchasers; |
· | to cover short sales; |
· | a combination of any such methods of sale; and |
· | any other method permitted pursuant to applicable law. |
· | enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares in the course of hedging the positions they assume; |
· | sell the shares short and redeliver the shares to close out such short positions; |
· | enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to them of shares offered by this prospectus, which they may in turn resell; and |
· | pledge shares to a broker-dealer or other financial institution, which, upon a default, they may in turn resell. |
Name
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Address
|
Citizenship
|
Stamatis Tsantanis
|
c/o Seanergy Maritime Holdings Corp.
1-3 Patriarchou Grigoriou
16674 Glyfada
Athens Greece
|
Greece
|
Subsidiary
|
Jurisdiction of Incorporation
|
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Seanergy Management Corp.
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Republic of the Marshall Islands
|
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Seanergy Shipmanagement Corp.
|
Republic of the Marshall Islands
|
|
Leader Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Glorius Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Genius Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Furious Shipping Co.
|
Republic of the Marshall Islands
|
|
Sea Olympius Shipping Co.
|
Republic of the Marshall Islands
|
|
Amazons Management Inc.
|
Republic of the Marshall Islands
|
|
Lagoon Shipholding Ltd.
|
Republic of the Marshall Islands
|
|
Cynthera Navigation Ltd.
|
Republic of the Marshall Islands
|
|
Martinique International Corp.
|
British Virgin Islands
|
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Harbour Business International Corp.
|
British Virgin Islands
|
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Waldeck Maritime Co.
|
Republic of the Marshall Islands
|
|
Maritime Capital Shipping Limited
|
Bermuda
|
|
Maritime Capital Shipping (HK) Limited
|
Hong Kong
|
|
Maritime Grace Shipping Limited
|
British Virgin Islands
|
|
Maritime Glory Shipping Limited
|
British Virgin Islands
|
|
Atlantic Grace Shipping Limited
|
British Virgin Islands
|
|
|
(1)
|
Registration Statement (Form F-3 No. 333-169813, as amended) of Seanergy Maritime Holdings Corp., and
|
|
(2)
|
Registration Statement (Form F-3 No. 333-166697, as amended) of Seanergy Maritime Holdings Corp.
|