☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2015 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from __________________ to _____________________________________________ |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report |
EUROSEAS LTD.
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(Exact name of Registrant as specified in its charter)
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(Translation of Registrant's name into English)
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Marshall Islands
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(Jurisdiction of incorporation or organization)
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4 Messogiou & Evropis Street, 151 24 Maroussi Greece
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(Address of principal executive offices)
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Tasos Aslidis, Tel: (908) 301-9091,
euroseas@euroseas.gr
, Euroseas Ltd. c/o Tasos Aslidis,
11 Canterbury Lane, Watchung, NJ 07069
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(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
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Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report
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||
8,195,760 common shares, $0.03 par value
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||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
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☐ Yes ☒ No
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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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☐ Yes ☒ No
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Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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☒ Yes ☐ No
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒ Yes ☐ No
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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☐ | ☐ | ☒ |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☒ U.S. GAAP
☐ International Financial Reporting Standards as issued by the International Accounting Standards Board.
☐ Other
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow
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☐ Item 17 ☐ Item 18
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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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☐ Yes ☒ No
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(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
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Indicate by check mark whether the registrant has filed all documents and reports to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
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☐ Yes ☐ No
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Forward-Looking Statements
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1
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|
Part I
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||
Item 1.
|
Identity of Directors, Senior Management and Advisers
|
2
|
Item 2.
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Offer Statistics and Expected Timetable
|
2
|
Item 3.
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Key Information
|
2
|
Item 4.
|
Information on the Company
|
35
|
Item 4A.
|
Unresolved Staff Comments
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52
|
Item 5.
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Operating and Financial Review and Prospects
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52
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Item 6.
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Directors, Senior Management and Employees
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65
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Item 7.
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Major Shareholders and Related Party Transactions
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70
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Item 8.
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Financial Information
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73
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Item 9.
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The Offer and Listing
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74
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Item 10.
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Additional Information
|
75
|
Item 11.
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Quantitative and Qualitative Disclosures About Market Risk
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87
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Item 12.
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Description of Securities Other than Equity Securities
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88
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Part II
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||
Item 13.
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Defaults, Dividend Arrearages and Delinquencies
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89
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Item 14.
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Material Modifications to the Rights of Security Holders and Use of Proceeds
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89
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Item 15.
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Controls and Procedures
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89
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Item 16A.
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Audit Committee Financial Expert
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91
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Item 16B.
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Code of Ethics
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91
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Item 16C.
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Principal Accountant Fees and Services
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91
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Item 16D.
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Exemptions from the Listing Standards for Audit Committees
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92
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Item 16E.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
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92
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Item 16F.
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Change in Registrant's Certifying Accountant
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92
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Item 16G.
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Corporate Governance
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92
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Item 16H.
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Mine Safety Disclosure
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93
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Part III
|
||
Item 17.
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Financial Statements
|
94
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Item 18.
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Financial Statements
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94
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Item 19.
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Exhibits
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94
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· | our future operating or financial results; |
· | future, pending or recent acquisitions, joint ventures, business strategy, areas of possible expansion, and expected capital spending or operating expenses; |
· | drybulk and container shipping industry trends, including charter rates and factors affecting vessel supply and demand; |
· | our financial condition and liquidity, including our ability to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities; |
· | availability of crew, number of off-hire days, drydocking requirements and insurance costs; |
· | our expectations about the availability of vessels to purchase or the useful lives of our vessels; |
· | our expectations relating to dividend payments and our ability to make such payments; |
· | our ability to leverage to our advantage our manager's relationships and reputations in the drybulk and container shipping industry; |
· | changes in seaborne and other transportation patterns; |
· | changes in governmental rules and regulations or actions taken by regulatory authorities; |
· | potential liability from future litigation; |
· | global and regional political conditions; |
· | acts of terrorism and other hostilities, including piracy; and |
· | other factors discussed in the section titled "Risk Factors." |
Item 1. | Identity of Directors, Senior Management and Advisers |
Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
A. | Selected Financial Data |
Euroseas Ltd. – Summary of Selected Historical Financials
(in US Dollars except for Fleet Data and number of shares)
|
||||||||||||||||||||
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||||||||
Income Statement Data
|
||||||||||||||||||||
Voyage revenues
|
64,129,511
|
54,921,697
|
40,850,051
|
42,586,963
|
39,656,670
|
|||||||||||||||
Related party revenue
|
240,000
|
240,000
|
240,000
|
240,000
|
240,000
|
|||||||||||||||
Commissions
|
(2,972,967
|
)
|
(2,673,703
|
)
|
(1,936,381
|
)
|
(2,192,626
|
)
|
(2,216,836
|
)
|
||||||||||
Net revenue
|
61,396,544
|
52,487,994
|
39,153,670
|
40,634,337
|
37,679,834
|
|||||||||||||||
Voyage expenses
|
(777,902
|
)
|
(1,329,668
|
)
|
(1,537,898
|
)
|
(3,963,181
|
)
|
(2,312,513
|
)
|
||||||||||
Vessel operating expenses
|
(26,249,339
|
)
|
(25,075,139
|
)
|
(25,191,250
|
)
|
(25,279,087
|
)
|
(25,204,593
|
)
|
||||||||||
Drydocking expenses
|
(3,148,111
|
)
|
(1,616,425
|
)
|
(3,816,699
|
)
|
(1,975,590
|
)
|
(1,912,407
|
)
|
||||||||||
Vessel depreciation
|
(18,348,556
|
)
|
(17,385,608
|
)
|
(19,983,772
|
)
|
(12,137,445
|
)
|
(10,995,023
|
)
|
||||||||||
Related party management fees
|
(5,810,095
|
)
|
(4,984,098
|
)
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(4,891,024
|
)
|
(4,894,559
|
)
|
(4,151,335
|
)
|
||||||||||
Other general and administration expenses
|
(2,986,507
|
)
|
(3,661,426
|
)
|
(3,542,619
|
)
|
(3,514,636
|
)
|
(3,327,061
|
)
|
||||||||||
Impairment loss and loss on write-down of vessel held for sale
|
-
|
-
|
(78,207,462
|
)
|
(3,500,000
|
)
|
(1,641,885
|
)
|
||||||||||||
Net (loss) / gain on sale of vessels
|
-
|
(8,568,234
|
)
|
(1,935,019
|
)
|
-
|
461,586
|
|||||||||||||
Other operating income
|
735,707
|
254,604
|
-
|
-
|
-
|
|||||||||||||||
Operating income / (loss)
|
4,811,741
|
(9,878,000
|
)
|
(99,952,073
|
)
|
(14,630,161
|
)
|
(11,403,397
|
)
|
|||||||||||
Interest and other financing costs
|
(2,191,235
|
)
|
(1,977,226
|
)
|
(1,845,776
|
)
|
(2,152,187
|
)
|
(1,486,534
|
)
|
||||||||||
Interest income
|
248,892
|
484,886
|
387,292
|
422,240
|
26,656
|
|||||||||||||||
Equity loss in joint venture
|
(2,415
|
)
|
(1,219,692
|
)
|
(2,023,191
|
)
|
(2,541,775
|
)
|
(2,158,393
|
)
|
||||||||||
Other (loss) / income
|
(1,750,994
|
)
|
(608,709
|
)
|
8,921
|
982,978
|
973,685
|
|||||||||||||
Dividend Series B preferred shares
|
-
|
-
|
-
|
(1,440,100
|
)
|
(1,639,149
|
)
|
|||||||||||||
Net income / (loss) attributable to common shareholders
|
1,115,989
|
(13,198,741
|
)
|
(103,424,827
|
)
|
(19,359,005
|
)
|
(15,687,132
|
)
|
|||||||||||
As of December 31,
|
||||||||||||||||||||
Balance Sheet Data
|
2011
|
2012
|
2013
|
2014
|
2015
|
|||||||||||||||
Current assets
|
38,877,587
|
45,070,412
|
16,951,998
|
30,847,380
|
21,584,299
|
|||||||||||||||
Vessels, net
|
237,063,878
|
206,934,746
|
105,463,737
|
111,150,227
|
88,957,752
|
|||||||||||||||
Deferred assets and other long term assets
|
5,747,951
|
9,318,578
|
7,572,753
|
8,035,621
|
5,250,606
|
|||||||||||||||
Investment in joint venture
|
14,458,752
|
16,989,061
|
21,215,870
|
18,674,094
|
16,515,701
|
|||||||||||||||
Total assets
|
296,148,168
|
278,312,797
|
156,616,354
|
190,578,612
|
172,406,963
|
|||||||||||||||
Current liabilities including current portion of long term debt
|
21,101,011
|
27,367,521
|
18,812,413
|
25,190,229
|
19,365,381
|
|||||||||||||||
Long term debt, including current portion
|
74,913,000
|
61,581,000
|
45,644,000
|
54,257,000
|
40,521,040
|
|||||||||||||||
Total liabilities
|
84,226,420
|
68,686,651
|
51,914,272
|
59,936,008
|
45,279,121
|
|||||||||||||||
Preferred shares
|
-
|
-
|
-
|
30,440,100
|
32,079,249
|
|||||||||||||||
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||||||||
Common shares outstanding
(1)
|
3,116,721
|
4,531,960
|
4,572,325
|
5,715,731
|
8,195,760
|
|||||||||||||||
Share capital
|
93,502
|
135,958
|
137,169
|
171,472
|
245,873
|
|||||||||||||||
Total shareholders' equity
|
211,921,748
|
209,626,146
|
104,702,082
|
100,202,504
|
95,048,593
|
|||||||||||||||
Net cash provided by / (used in) investing activities
|
1,896,435
|
(3,505,057
|
)
|
(7,879,468
|
)
|
(37,092,981
|
)
|
(10,633,989
|
)
|
|||||||||||
Net cash (used in) / provided by financing activities
|
(22,282,763
|
)
|
(2,837,952
|
)
|
(18,127,144
|
)
|
51,834,441
|
(4,034,223
|
)
|
Earnings / (loss) per share, basic and diluted
(1)
|
0.36
|
(3.42
|
)
|
(22.76
|
)
|
(3.53
|
)
|
(2.45
|
)
|
|||||||||||
Common stock dividends declared
|
8,457,722
|
4,437,984
|
2,067,570
|
-
|
-
|
|||||||||||||||
Cash dividends declared per common share
(1)
|
2.71
|
0.98
|
0.45
|
-
|
-
|
|||||||||||||||
Preferred stock dividends declared
|
-
|
-
|
-
|
1,440,100
|
1,639,149
|
|||||||||||||||
Preferred dividends declared per preferred share
|
-
|
-
|
-
|
44.81
|
48.53
|
|||||||||||||||
Weighted average number of shares outstanding during period, basic
(1)
|
3,179,438
|
3,895,010
|
4,544,284
|
5,479,418
|
6,410,794
|
|||||||||||||||
Weighted average number of shares outstanding during period, diluted
(1)
|
3,184,608
|
3,895,010
|
4,544,284
|
5,479,418
|
6,410,794
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||||||||
Fleet Data
(2)
|
||||||||||||||||||||
Number of vessels
|
16.00
|
15.21
|
14.56
|
14.60
|
14.74
|
|||||||||||||||
Calendar days
|
5,840
|
5,566
|
5,313
|
5,330
|
5,380
|
|||||||||||||||
Available days
|
5,700
|
5,521
|
5,185
|
5,245
|
5,290
|
|||||||||||||||
Voyage days
|
5,497
|
5,280
|
4,961
|
5,126
|
4,933
|
|||||||||||||||
Utilization Rate (percent)
|
96.4
|
%
|
95.6
|
%
|
95.7
|
%
|
97.7
|
%
|
93.3
|
%
|
||||||||||
(In U.S. dollars per day per vessel)
|
||||||||||||||||||||
Average TCE rate
(3)
|
11,525
|
10,155
|
7,924
|
7,534
|
7,570
|
|||||||||||||||
Vessel Operating Expenses
|
4,495
|
4,507
|
4,741
|
4,740
|
4,685
|
|||||||||||||||
Management Fees
|
995
|
895
|
921
|
919
|
772
|
|||||||||||||||
G&A Expenses
|
511
|
657
|
639
|
663
|
615
|
|||||||||||||||
Total Operating Expenses excluding drydocking expenses
|
6,001
|
6,058
|
6,301
|
6,322
|
6,072
|
|||||||||||||||
Drydocking expenses
|
539
|
290
|
718
|
372
|
355
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||||||||
(In U.S. dollars, except for voyage days and TCE rates which are expressed in U.S. dollars per day)
|
||||||||||||||||||||
Voyage revenues
|
64,129,511
|
54,921,697
|
40,850,051
|
42,586,963
|
39,656,670
|
|||||||||||||||
Voyage expenses
|
(777,902
|
)
|
(1,329,668
|
)
|
(1,537,898
|
)
|
(3,963,181
|
)
|
(2,312,513
|
)
|
||||||||||
Time Charter Equivalent or TCE Revenues
|
63,351,609
|
53,592,029
|
39,312,153
|
38,623,782
|
37,344,157
|
|||||||||||||||
Voyage days
|
5,497
|
5,280
|
4,961
|
5,126
|
4,933
|
|||||||||||||||
Average TCE rate
|
11,525
|
10,155
|
7,924
|
7,534
|
7,570
|
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
· | supply of, and demand for, drybulk commodities and containerized cargo; |
· | changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products, and the resulting changes in the international pattern of trade; |
· | global and regional economic and political conditions, including armed conflicts and terrorist activities; |
· | embargoes and strikes; |
· | the location of regional and global exploration, production and manufacturing facilities; |
· | availability of credit to finance international trade; |
· | the location of consuming regions for energy resources, commodities, semi-finished and finished consumer and industrial products; |
· | the distance drybulk and containerized commodities are to be moved by sea; |
· | environmental and other regulatory developments; |
· | currency exchange rates; |
· | changes in global production and manufacturing distribution patterns of finished goods that utilize drybulk and other containerized commodities; |
· | changes in seaborne and other transportation patterns; and |
· | weather and other natural phenomena. |
· | the number of newbuilding deliveries; |
· | the scrapping rate of older vessels; |
· | the price of steel and other materials; |
· | port and canal congestion; |
· | changes in environmental and other regulations that may limit the useful life of vessels; |
· | vessel casualties; |
· | the number of vessels that are out of service; and |
· | changes in global commodity production. |
· | general economic and market conditions affecting the shipping industry in general; |
· | supply of drybulk and container vessels, including newbuildings; |
· | demand for drybulk and container vessels; |
· | types and sizes of vessels; |
· | scrap values; |
· | other modes of transportation; |
· | cost of newbuildings; |
· | technological advances; |
· | new regulatory requirements from governments or self-regulated organizations; |
· | competition from other shipping companies; and |
· | prevailing level of charter rates. |
· | locating and acquiring suitable vessels; |
· | identifying and consummating acquisitions or joint ventures; |
· | integrating any acquired business successfully with our existing operations; |
· | enhancing our customer base; |
· | managing our expansion; and |
· | obtaining required financing on acceptable terms. |
· | incur additional indebtedness; |
· | create liens on our assets; |
· | sell capital stock of our subsidiaries; |
· | make investments; |
· | engage in mergers or acquisitions; |
· | pay dividends; |
· | make capital expenditures; |
· | change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and |
· | sell our vessels. |
· | work stoppages or other hostilities, political or economic disturbances that disrupt the operations of the shipyard; |
· | quality or engineering problems; |
· | bankruptcy or other financial crisis of the shipyard; |
· | a backlog of orders at the shipyard; |
· | disputes between us and the shipyard regarding contractual obligations; |
· | weather interference or catastrophic events, such as major earthquakes or fires; |
· | our requests for changes to the original vessel specifications or disputes with the shipyard; or |
· | shortages of or delays in the receipt of necessary construction materials, such as steel, or equipment, such as main engines, electricity generators and propellers. |
· | marine disaster; |
· | piracy; |
· | environmental accidents; |
· | grounding, fire, explosions and collisions; |
· | cargo and property losses or damage; |
· | business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions; and |
· | work stoppages or other labor problems with crew members serving on our vessels including crew strikes and/or boycotts. |
· | actual or anticipated fluctuations in quarterly and annual variations in our results of operations; |
· | changes in market valuations or sales or earnings estimates or publication of research reports by analysts; |
· | changes in earnings estimates or shortfalls in our operating results from levels forecasted by securities analysts; |
· | speculation in the press or investment community about our business or the shipping industry; |
· | changes in market valuations of similar companies and stock market price and volume fluctuations generally; |
· | payment of dividends; |
· | strategic actions by us or our competitors such as mergers, acquisitions, joint ventures, strategic alliances or restructurings; |
· | changes in government and other regulatory developments; |
· | additions or departures of key personnel; |
· | general market conditions and the state of the securities markets; and |
· | domestic and international economic, market and currency factors unrelated to our performance. |
Item 4. | Information on the Company |
A. | History and Development of the Company |
B. | Business Overview |
Name
|
Type
|
Dwt
|
TEU
|
Year Built (*)
|
Employment (**)
|
TCE Rate ($/day)
|
Dry Bulk Vessels
|
||||||
XENIA
|
Kamsarmax
|
82,000
|
2016
|
TC until Jan-20
+1 year in charterer's option
|
$14,100
Option @ $14,350
|
|
EIRINI P
|
Panamax
|
76,466
|
2004
|
TC until Jan-17
|
Hire 104% of Average BPI 4TC
|
|
PANTELIS
|
Panamax
|
74,020
|
2000
|
TC until Jun-16
|
100.5% of average BPI 4TC
|
|
ELENI P
|
Panamax
|
72,119
|
1997
|
TC until Apr-16
|
Hire 97% of Average BPI 4TC
|
|
MONICA P
|
Handymax
|
46,667
|
1998
|
TC until May-16
|
$7,500
|
|
Vessels under construction (*)
|
||||||
ALEXANDROS P (ex-Hull Number DY 160)
|
Ultramax
|
63,500
|
2016
|
N/A
|
||
Hull Number DY 161
|
Ultramax
|
63,500
|
2016
|
N/A
|
||
Hull Number YZJ 1153
|
Kamsarmax
|
82,000
|
2018
|
N/A
|
||
Total Dry Bulk Vessels
|
8
|
560,272
|
||||
Container Carriers
|
||||||
EVRIDIKI G (ex-MAERSK NOUMEA)
|
Intermediate
|
34,677
|
2,556
|
2001
|
TC until Mar-18
|
$11,000
|
AGGELIKI P
|
Intermediate
|
30,360
|
2,008
|
1998
|
TC until Jan-17 plus
6 months' option
|
$7,000
$9,000
|
CAPTAIN COSTAS(***)
(ex-OEL TRANSWORLD)
|
Handy size
|
30,007
|
1,742
|
1992
|
TC until Apr-16
|
$6,500
|
VENTO DI GRECALE (ex-JOANNA)
|
Handy size
|
22,301
|
1,732
|
1999
|
TC until Aug. - 16
|
$7,250
|
MANOLIS P
|
Handy size
|
20,346
|
1,452
|
1995
|
TC until Apr-16 then
TC until Feb-17
|
$7,500
$6,800
|
NINOS
|
Feeder
|
18,253
|
1,169
|
1990
|
TC until Jul-16
|
$11,500
|
KUO HSIUNG
|
Feeder
|
18,154
|
1,169
|
1993
|
TC until Oct-16
|
$6,900
|
Total Container Carriers
|
7
|
174,098
|
11,828
|
|||
Fleet Grand Total
|
15
|
734,370
|
11,828
|
(*) | For newbuilding contracts, the information represents the expected year of delivery. |
(**) | TC denotes time charter. All dates listed are the earliest redelivery dates under each TC. |
(***) | The Company has signed a memorandum of agreement to sell this vessel. The sale is expected to occur in May 2016 and to result in gross proceeds of $2.77 million. |
· | reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values; |
· | news and industry reports of similar vessel sales; |
· | news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates; |
· | approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated; |
· | offers that we may have received from potential purchasers of our vessels; and |
· | vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers. |
Name
|
Capacity
|
Purchase Date
|
Carrying Value as of December 31, 2014
|
Carrying Value as of December 31, 2015
|
Dry Bulk Vessels
|
(dwt)
|
(million USD)
|
(million USD)
|
|
PANTELIS
|
74,020
|
Jul-2009
|
$18.73
(1)
|
$17.10
(3)
|
ELENI P
|
72,119
|
Mar-2009
|
$11.18
(1)
|
$9.94
(3)
|
EIRINI P
|
76,466
|
May-2014
|
$20.60
(1)
|
$19.33
(3)
|
ARISTIDES N.P.
|
69,268
|
Sep-2006
|
$5.09
(2)
|
-
|
MONICA P
|
46,667
|
Jan-2009
|
$11.35
(1)
|
$10.22
(3)
|
Total Dry Bulk Vessels
|
338,540
|
$66.95
|
$56.59
|
|
Container Carriers
|
(teu)
|
|||
EVRIDIKI
|
2,556
|
May-2008
|
$12.18
(1)
|
$11.35
|
TIGER BRIDGE
|
2,228
|
Oct-2007
|
$2.87
|
-
|
AGGELIKI P
|
2,008
|
Jun-2010
|
$6.94
|
$6.37
(3)
|
DESPINA P
|
1,932
|
Aug-2007
|
$3.02
|
-
|
CAPTAIN COSTAS
(4)
|
1,742
|
Jun-2007
|
$3.28
|
$2.81
|
MARINOS
|
1,599
|
Nov-2006
|
$2.64
|
-
|
MANOLIS P
|
1,452
|
Apr-2007
|
$3.42
|
$3.10
|
NINOS
|
1,169
|
Feb-2001
|
$1.96
|
$1.51
|
VENTO DI GRECALE
|
1,732
|
Jul-2013
|
$5.41
|
$5.01
|
KUO HSIUNG
|
1,169
|
May-2002
|
$2.48
|
$2.21
|
Total Container Carriers
|
17,587
|
$44.20
|
$32.36
|
|
Fleet Total
|
$111.15
|
$88.95
|
· | Experienced Management Team . Our management team has significant experience in all aspects of commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from the Massachusetts Institute of Technology. He has worked in various technical, shipyard and ship management capacities and since 1991 has focused on the ownership and operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 20 years of experience, primarily as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry. |
· | Cost Effective Vessel Operations . We believe that because of the efficiencies afforded to us through Eurobulk, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Despite the average age of our fleet being approximately 17.2 years during 2015, our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses were $6,071 per day for the year ended December 31, 2015. We consider this amount to be among the lowest of the publicly listed drybulk or containerships shipping companies in the United States. Our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize off-hire days. Our professional, well-trained masters, officers and on board crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2015, our operational fleet utilization was 99.4%, down from 99.7% in 2014, while our commercial utilization rate decreased from 98.0% in 2014 to 93.9% in 2015. Our total fleet utilization rate in 2015 was 93.3%. |
· | Strong Relationships with Customers and Financial Institutions . We believe ourselves, Eurobulk and the Pittas family to have developed strong industry relationships and to have gained acceptance with charterers, lenders and insurers because of long-standing reputation for safe and reliable service and financial responsibility through various shipping cycles. Through Eurobulk, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of ourselves, Eurobulk and the Pittas family help us to secure favorable employment for our vessels with well-known charterers. |
· | Renew and Expand our Fleet . We expect to grow our fleet in a disciplined manner through timely and selective acquisitions of quality vessels. We perform in-depth technical review and financial analysis of each potential acquisition and only purchase vessels as market opportunities present themselves. We focus on purchasing well-maintained secondhand vessels, newbuildings or newbuilding resales based on the evaluation of each investment option at the time it is made. During 2014, we ordered or acquired the contracts of four drybulk carrier newbuildings and acquired one secondhand drybulk carrier. |
· | Maintain Balanced Employment . We intend to employ our fleet on either longer term time charters, i.e. charters with duration of more than a year, or shorter term time/spot charters. We seek longer term time charter employment to obtain adequate cash flow to cover as much as possible of our fleet's recurring costs, consisting of vessel operating expenses, management fees, general and administrative expenses, interest expense and drydocking costs for the upcoming 12-month period. We also may use forward freight agreements ("FFA" or "FFAs") – as a substitute for time charter employment – to partly provide coverage for our drybulk vessels in order to increase the predictability of our revenues. We look to deploy the remainder of our fleet on spot charters, shipping pools or contracts of affreightment depending on our view of the direction of the markets and other tactical or strategic considerations. When we expect charter rates to improve we try to increase the percentage of our fleet employed in shorter term contracts (allowing us to take advantage of higher rates in the future), while when we expect the market to weaken we try to increase the percentage of our fleet employed in longer term contracts (allowing us to take advantage of higher current rates). We believe this balanced employment strategy will provide us with more predictable operating cash flows and sufficient downside protection, while allowing us to participate in the potential upside of the spot market during periods of rising charter rates. As of April 1, 2016, on the basis of our existing time charters, approximately 60% of our vessel capacity in the remainder of 2016 and approximately 18% in 2017 are under time charter contracts, which will ensure employment of a portion of our fleet, partly protect us from market fluctuations and increase our ability us to make principal and interest payments on our debt and pay dividends to our shareholders. |
· | Operate a Fleet in Two Sectors . While remaining focused on the dry cargo segment of the shipping industry, we intend to continue to develop a diversified fleet of drybulk carriers and containerships of up to Kamsarmax size vessels. A diversified drybulk fleet profile will allow us to better serve our customers in both major and minor drybulk trades, and to reduce any dependency on any one cargo, trade route or customer. We will remain focused on the smaller size ship segment of the container market, which has not experienced the same level of expansion in vessel supply as has occurred with larger containerships. A diversified fleet, in addition to enhancing the stability of our cash flows, will also help us to reduce our exposure to unfavorable developments in any one shipping sector and to benefit from upswings in any one shipping sector experiencing rising charter rates. |
· | Optimize Use of Financial Leverage . We will use bank debt to partly fund our vessel acquisitions and increase financial returns for our shareholders. We actively assess the level of debt we incur in light of our ability to repay that debt based on the level of cash flow generated from our balanced chartering strategy and efficient operating cost structure. Our debt repayment schedule as of December 31, 2015 calls for a reduction of more than 35% of our debt by the end of 2016 and an additional reduction of about 19% by the end of 2017 for a total of 54% reduction over the two years, excluding any new debt that we assumed or may assume. As our debt is being repaid we expect that our ability to raise or borrow additional funds more cheaply in order to grow our fleet and generate better returns for our shareholders will increase. In February 2016, we refinanced $13.13 million of our debt outstanding as of December 31, 2015 with a new facility of $14.50 million with a three year tenor and drew a loan of $13.80 million to partly finance the delivery of the first of our newbuildings, M/V Xenia. |
(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. |
Vessel
|
Next
|
Type
|
||
NINOS
|
July 2018
|
Drydocking
|
||
KUO HSIUNG
|
July 2016
|
Drydocking
|
||
MANOLIS P
|
May 2018
|
Special Survey
|
||
CAPTAIN COSTAS (*)
|
July 2017
|
Special Survey
|
||
EVRIDIKI
|
June 2016
|
Special Survey
|
||
MONICA P
|
May 2016
|
Drydocking
|
||
ELENI P
|
March 2017
|
Special Survey
|
||
PANTELIS
|
January 2018
|
Drydocking
|
||
VENTO DI GRECALE
|
June 2017
|
Drydocking
|
||
EIRINI P
|
June 2017
|
Drydocking
|
||
XENIA
|
February 2021
|
Special Survey
|
||
AGGELIKI P
|
October 2017
|
Drydocking
|
C. | Organizational structure |
D. | Property, plants and equipment |
Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
A. | Operating results |
B. | Liquidity and Capital Resources |
C. | Research and development, patents and licenses, etc. |
D. | Trend information |
E. | Off-balance Sheet Arrangements |
F. | Tabular Disclosure of Contractual Obligations |
In U.S. dollars
|
Total
|
Less Than
One Year
|
One to
Three Years |
Three to
Five Years
|
More Than
Five Years
|
Bank debt
|
$40,521,040
|
$14,810,000
|
$10,282,706
|
$15,428,334
|
—
|
Interest Payments (1)
|
$3,518,896
|
$1,423,530
|
$1,831,490
|
$263,876
|
—
|
Vessel Management fees (2)
|
$22,896,849
|
$4,138,195
|
$9,220,327
|
$9,538,327
|
—
|
Other Management fees
(3)
|
$10,724,932
|
$2,000,000
|
$4,212,450
|
$4,512,482
|
—
|
Payments for newbuildings (4)
|
$84,346,000
|
$62,186,000
|
$22,160,000
|
—
|
—
|
Total
|
$162,007,717
|
$84,557,725
|
$47,706,973
|
$29,743,019
|
—
|
G. | Safe Harbor |
Item 6. | Directors, Senior Management and Employees |
A. | Directors and Senior Management |
Name
|
Age
|
Position
|
Aristides J. Pittas
|
56
|
Chairman, President and CEO; Class A Director
|
Dr. Anastasios Aslidis
|
56
|
CFO and Treasurer; Class A Director
|
Aristides P. Pittas
|
64
|
Vice Chairman; Class A Director
|
Stephania Karmiri
|
48
|
Secretary
|
Panagiotis Kyriakopoulos
|
55
|
Class B Director
|
George Skarvelis
|
55
|
Class B Director
|
George Taniskidis
|
55
|
Class C Director
|
Apostolos Tamvakakis
|
64
|
Class C Director (since June 25, 2013)
|
Tim Gravely
|
38
|
Series B Director (since January 31, 2014)
|
B. | Compensation |
C. | Board Practices |
· | We are not required under Marshall Islands law to maintain a Board of Directors with a majority of independent directors, and we may not be able to maintain a Board of Directors with a majority of independent directors in the future. |
· | In lieu of a compensation committee comprised of independent directors, our Board of Directors will be responsible for establishing the executive officers' compensation and benefits. Under Marshall Islands law, compensation of the executive officers is not required to be determined by an independent committee. |
· | In lieu of a nomination committee comprised of independent directors, our Board of Directors will be responsible for identifying and recommending potential candidates to become board members and recommending directors for appointment to board committees. Shareholders may also identify and recommend potential candidates to become candidates to become board members in writing. No formal written charter has been prepared or adopted because this process is outlined in our bylaws. |
· | In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Marshall Islands law requirements, a related party transaction will be permitted if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors and the Board of Directors in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board of Directors as defined in Section 55 of the Marshall Islands Business Corporations Act, by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest are disclosed and the shareholders are entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a simple majority vote of the shareholders; or (iii) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. |
· | As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bylaws also provide that shareholders may designate in writing a proxy to act on their behalf. |
· | In lieu of holding regular meetings at which only independent directors are present, our entire Board of Directors, a majority of whom are independent, will hold regular meetings as is consistent with the laws of the Republic of the Marshall Islands. |
· | The Board of Directors adopted a new Equity Incentive Plan in July 2014. Shareholder approval was not necessary since Marshall Islands law permits the Board of Directors to take such actions. |
· | As a foreign private issuer, we are not required to obtain shareholder approval if any of our directors, officers, or 5% or greater shareholders has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company, or assets to be acquired, or in the consideration to be paid in the transaction(s) and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common stock or voting power of 5% or more. |
· | In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company will comply with provisions of the Marshall Islands Business Corporations Act, providing that the Board of Directors approves share issuances. |
D. | Employees |
E. | Share Ownership |
Item 7. | Major Shareholders and Related Party Transactions |
A. | Major Stockholders |
Name of Beneficial Owner(1)
|
Number of Shares
of Voting Common Stock Beneficially Owned |
Percent of
Voting of
Common Stock
(15)
|
Number of Shares
of Voting Series B Preferred Stock Beneficially Owned |
Percent of
Voting of Series B Preferred Shares(16) |
Number of Shares of Voting Common Stock Beneficially Owned Upon Conversion; 50% Voting Before Conversion
|
Percent of Total Voting Securities
|
||||||||||||||||||
Friends Investment Company Inc.(2)
|
2,851,088
|
34.8
|
%
|
-
|
-
|
25.9
|
%
|
|||||||||||||||||
Tennenbaum Opportunities Fund VI, LLC (3, 4)
|
-
|
-
|
26,850
|
81.4
|
%
|
2,245,551
|
20.7
|
%
|
||||||||||||||||
12 West Capital Fund L.P. (5) (**)
|
759,211
|
9.3
|
%
|
-
|
-
|
-
|
6.9
|
%
|
||||||||||||||||
Fred H Brenner (***)
|
1,122,360
|
13.7
|
%
|
-
|
-
|
-
|
10.2
|
%
|
||||||||||||||||
12 West Capital Offshore Fund L.P. (5) (**)
|
357,276
|
4.4
|
%
|
-
|
-
|
-
|
3.3
|
%
|
||||||||||||||||
Family United Navigation Co.
|
400,000
|
4.9
|
%
|
-
|
-
|
-
|
3.6
|
%
|
||||||||||||||||
Preferred Friends Investment Company Inc.(4)
|
-
|
-
|
6,352
|
18.6
|
%
|
512,000
|
4.7
|
%
|
||||||||||||||||
Aristides J. Pittas(6)
|
127,488
|
1.6
|
%
|
-
|
-
|
-
|
1.2
|
%
|
||||||||||||||||
George Skarvelis(7)
|
3,829
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
George Taniskidis(8)
|
9,379
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
Panagiotis Kyriakopoulos(9)
|
41,602
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
Aristides P. Pittas(10)
|
5,400
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
Anastasios Aslidis(11)
|
68,835
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
Apostolos Tamvakakis(12)
|
3,680
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
Timothy Gravely
|
-
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
Stephania Karmiri(13)
|
-
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
Symeon Pariaros(14)
|
2,105
|
*
|
-
|
-
|
-
|
*
|
||||||||||||||||||
All directors and officers and 5% owners as a group
|
5,756,463
|
70.2
|
%
|
34,200
|
100
|
%
|
2,757,551
|
77.8
|
%
|
(1) | Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him/her. |
(2) | Represents 2,851,088 shares of common stock held of record by Friends. A majority of the shareholders of Friends are members of the Pittas family. Investment power and voting control by Friends resides in its Board of Directors which consists of five directors, a majority of whom are members of the Pittas family. Actions by Friends may be taken by a majority of the members on its Board of Directors. |
(3) | Tennenbaum Capital Partners, LLC serves as investment advisor to, inter alia, Tennenbaum Opportunities Fund VI, LLC, and has sole voting and investment power with respect to all securities owned of record by Tennenbaum Opportunities Fund VI, LLC. The address for each of Tennenbaum Capital Partners, LLC and Tennenbaum Opportunities Fund VI, LLC is 2951 28th Street, Suite 1000, Santa Monica, CA 90405. |
(4) | Common shares are issuable upon conversion of Series B Preferred Shares (or any convertible notes into which the Series B Preferred Shares may convert) owned by this shareholder (based on the current conversion ratio). |
(5) | 12 West Capital Management LP ("12 West Management") serves as the investment manager to 12 West Capital Fund LP, a Delaware limited partnership ("12 West Onshore Fund"), and 12 West Capital Offshore Fund LP, a Cayman Islands exempted limited partnership ("12 West Offshore Fund"), and possesses the sole power to vote and the sole power to direct the disposition of all securities of the Company held by 12 West Onshore Fund and 12 West Offshore Fund. Joel Ramin, as the sole member of 12 West Capital Management, LLC, the general partner of 12 West Management, possesses the voting and dispositive power with respect to the securities beneficially owned by 12 West Management. The address for each of 12 West Capital Fund LP and 12 West Capital Offshore Fund LP is c/o 12 West Capital Management LP, 90 Park Avenue, 41st Floor, New York, NY 10016. |
(6) | Does not include 359,408 shares of common stock held of record by Friends, by virtue of ownership interest in Friends by Mr. Pittas. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 1,694 shares of Series B Preferred stock held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc. by Mr. Pittas. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 4,950 shares vesting on November 16, 2016, 7,425 shares vesting on July 1, 2016, and 7,425 shares vesting on July 1, 2017. |
(7) | Does not include 96,787 shares of common stock held of record by Friends, by virtue of Mr. Skarvelis' ownership interest in Friends. Mr. Skarvelis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 525 shares vesting on November 16, 2015, 790 shares vesting on July 1, 2016, and 790 shares vesting on July 1, 2017. |
(8) | Does not include 13,568 shares of common stock held of record by Friends, by virtue of Mr. Taniskidis' ownership in Friends. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 899 shares of Series B Preferred stock held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc.by Mr. Taniskidis and members of his family. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 525 shares vesting on November 16, 2015, 790 shares vesting on July 1, 2016, and 790 shares vesting on July 1, 2017. |
(9) | Includes 525 shares vesting on November 16, 2015, 790 shares vesting on July 1, 2016, and 790 shares vesting on July 1, 2017. |
(10) | Does not include 496,985 shares of common stock held of record by Friends and Family United Navigation Co., by virtue of ownership interest in Friends of Mr. Pittas and members of his family. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 870 shares of Series B Preferred stock held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc.by Mr. Pittas and members of his family. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 1,350 shares vesting on November 16, 2015, 2,025 shares vesting on July 1, 2016, and 2,025 shares vesting on July 1, 2017. |
(11) | Includes 3,375 shares vesting on November 16, 2015, 5,040 shares vesting on July 1, 2016, and 5,040 shares vesting on July 1, 2017. |
(12) | Includes 525 shares vesting on November 16, 2015, 790 shares vesting on July 1, 2016 and 790 shares vesting on July 1, 2017. |
(13) | Does not include 371 shares of common stock held of records by Friends, by virtue of Mrs. Karmiri's ownership in Friends. Mrs. Karmiri disclaims beneficial ownership except to the extent of her pecuniary interest. |
(14) | Includes 525 shares vesting on November 16, 2015, 790 shares vesting on July 1, 2016, and 790 shares vesting on July 1, 2017. |
(15) | Voting stock includes 90,900 unvested shares for a total of 8,195,760 issued and outstanding shares of the Company as of April 29, 2016. |
(16) | Series B Preferred Shares vote on an as-converted basis weighted by 50%. |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
Item 8. | Financial Information |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
Item 9. | The Offer and Listing |
A. | Offer and Listing Details |
Period
|
Low
|
High
|
||
Year Ended Dec. 31, 2011
|
22.60
|
48.50
|
||
Year Ended Dec. 31, 2012
|
8.60
|
30.50
|
||
Year Ended Dec. 31, 2013
|
9.30
|
17.90
|
||
Year Ended Dec. 31, 2014
|
7.50
|
14.20
|
||
Year Ended Dec. 31, 2015
|
2.55
|
8.40
|
||
1
st
quarter 2015
|
7.10
|
8.10
|
||
2
nd
quarter 2015
|
6.60
|
8.40
|
||
3
rd
quarter 2015
|
4.18
|
7.60
|
||
4
th
quarter 2015
|
2.55
|
4.81
|
||
October 2015
|
4.35
|
4.81
|
||
November 2015
|
2.88
|
4.63
|
||
December 2015
|
2.55
|
2.97
|
||
January 2016
|
1.88
|
2.68
|
||
February 2016
|
1.85
|
2.19
|
||
March 2016
|
1.75
|
2.11
|
||
April 2016
|
1.79
|
3.09
|
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
Item 10. | Additional Information |
A. | Share Capital |
B. | Memorandum and Articles of Association |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
· | we are organized in a foreign country, or 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," individuals who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, which we refer to as the "50% Ownership Test," or |
· | our stock is "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test." |
· | We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and |
· | substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States. |
· | at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or |
· | at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income, which we refer to as "passive assets". |
· | such gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States, if the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or |
· | the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met. |
· | fails to provide an accurate taxpayer identification number; |
· | is notified by the IRS that he failed to report all interest or dividends required to be shown on your United States federal income tax returns; or |
· | in certain circumstances, fails to comply with applicable certification requirements. |
F. | Dividends and paying agents |
G. | Statement by experts |
H. | Documents on display |
I. | Subsidiary Information |
Item 11. | Quantitative and Qualitative Disclosures about Market Risk |
Year Ended December 31,
|
Amount in $ (loans)
|
Amount in $ (swap)
|
||||||
2016
|
246,510
|
(205,479
|
)
|
|||||
2017
|
141,315
|
(100,000
|
)
|
|||||
2018
|
97,000
|
(100,000
|
)
|
|||||
2019
|
32,875
|
(40,548
|
)
|
|||||
2020 and thereafter
|
0
|
0
|
Year Ended December 31,
|
Amount in $ (revenues)
|
|||
2016
|
2,112,256
|
|||
2017
|
3,560,030
|
|||
2018 and thereafter
|
3,911,644
|
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 |
(a) | Evaluation of Disclosure Controls and Procedures |
(b) | Management's Annual Report on Internal Control over Financial Reporting |
(c) | Attestation Report of the Registered Public Accounting Firm |
(d) | Changes in Internal Control over Financial Reporting |
Item 16A. | Audit committee financial expert |
Item 16B. | Code of Ethics |
Item 16C. | Principal Accountant Fees and Services |
2014
(dollars in thousands) |
2015
(dollars in thousands) |
|||||||
Audit Fees
|
$
|
340
|
$
|
325
|
||||
Audit related fees
|
_
|
_
|
||||||
Tax fees
|
_
|
_
|
||||||
All other fees / expenses
|
_
|
_
|
||||||
Total
|
$
|
340
|
$
|
325
|
Item 16D. | Exemptions from the Listing Standards for Audit Committees |
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Item 16F. | Change in Registrant's Certifying Accountant |
Item 16G. | Corporate Governance |
Item 16H. | Mine Safety Disclosure |
Item 17. | Financial Statements |
Item 18. | Financial Statements |
Item 19. | Exhibits |
1.1
|
Amended and Restated Articles of Incorporation of Euroseas Ltd.(12)
|
|
1.2
|
Bylaws of Euroseas Ltd.(11)
|
|
1.3
|
Amendment to Bylaws of Euroseas Ltd.(11)
|
|
2.1
|
Specimen Common Stock Certificate(7)
|
|
2.2
|
Form of Securities Purchase Agreement(1)
|
|
2.3
|
Form of Registration Rights Agreement(1)
|
|
2.4
|
Form of Warrant(1)
|
|
2.5
|
Registration Rights Agreement between Euroseas Ltd. and Friends Investment Company Inc., dated November 2, 2005(2)
|
|
2.6
|
Registration Rights Agreement among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd. and All Seas Investors III LP dated March 25, 2010(11)
|
|
2.7
|
Form of Subscription Rights Certificate(13)
|
|
3.1
|
Shareholder Voting Agreement among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd., All Seas Investors III LP, Friends Investment Company Inc. and Aristides J. Pittas dated March 25, 2010(11)
|
|
4.1
|
Form of Lock-up Agreement(1)
|
|
4.2
|
Form of Standard Ship Management Agreement(1)
|
|
4.3
|
Agreement between Eurobulk Ltd. and Eurochart S.A., for the provision of exclusive brokerage services, dated December 20, 2004(1)
|
|
4.4
|
Form of Current Time Charter(1)
|
|
4.5
|
Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of July 17, 2007, as amended February 7, 2008 (6)
|
|
4.6
|
Addendum No. 1 to Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of February 7, 2009 (9)
|
|
4.7
|
Loan Agreement between Xenia International Corp., as borrower, and Fortis Bank N.V./S.A., Athens Branch and others, as lenders, for the amount of US$8,250,000 dated June 30, 2006(3)
|
|
4.8
|
Loan Agreement between Prospero Maritime Inc., as borrower, and Calyon, as lender, for the amount of US$15,500,000 dated August 30, 2006(3)
|
|
4.9
|
Euroseas 2007 Equity Incentive Plan(8)
|
|
4.10
|
Loan Agreement among Xingang Shipping Ltd., as borrower, and HSBC Bank plc, as lender, and Diana Trading Ltd. and Euroseas Ltd., as corporate guarantors, for the amount of US$20,000,000 dated November 14, 2006(4)
|
|
4.11
|
Amendment to Loan Agreement among Xingang Shipping Ltd, as borrower, HSBC Bank plc, as lender, and Diana Trading Ltd. and Euroseas Ltd., as corporate guarantors, dated April 14, 2010(11)
|
|
4.12
|
Form of Right of First Refusal(5)
|
|
4.13
|
Form of Advisory Agreement(5)
|
|
4.14
|
Loan Agreement between Manolis Shipping Limited, as borrower, and EFG Eurobank Ergasias S.A., as lender, for the amount of US$10,000,000 dated June 7, 2007(6)
|
|
4.15
|
Supplemental Agreement to Loan Agreement between Manolis Shipping Limited, as borrower, and EFG Eurobank Ergasias S.A., as lender, dated August 5, 2009(11)
|
|
4.16
|
Loan Agreement between Trust Navigation Corp., as borrower, and EFG Eurobank Ergasias S.A., as lender, for the amount of US$15,000,000 dated October 29, 2007 (6)
|
|
4.17
|
Amendment to Loan Agreement between Trust Navigation Corp., as borrower and EFG Eurobank Ergasias S.A., as lender, dated December 30, 2008(9)
|
|
4.18
|
Amendment to Loan Agreement between Trust Navigation Corp., as borrower, and EFG Eurobank Ergasias S.A., as lender, dated October 26, 2010(12)
|
|
4.19
|
Form of Senior Security Debt Indenture(7)
|
4.20
|
Form of Subordinated Debt Security Indenture(7)
|
|
4.21
|
Loan Agreement between Saf-Concord Shipping Ltd., as borrower, and EFG Eurobank Ergasias S.A., as lender, for the amount of US$10,000,000 dated January 9, 2009(9)
|
|
4.22
|
Loan Agreement between Eleni Shipping Ltd., as borrower, and Calyon, as lender, for the amount of US$10,000,000 dated April 30, 2009(9)
|
|
4.23
|
Shareholders Rights Agreement between Euroseas Ltd. and American Stock Transfer and Trust Company, LLC dated May 18, 2009(10)
|
|
4.24
|
Amendment to Shareholders Rights Agreement between Euroseas Ltd. and American Stock Transfer and Trust Company, LLC dated March 25, 2010(11)
|
|
4.25
|
Loan Agreement between Pantelis Shipping Corp., as borrower, and HSBC Bank plc, as lender, for the amount of US$13,000,000 dated December 14, 2009(11)
|
|
4.26
|
Amendment to Loan Agreement between Pantelis Shipping Corp., as borrower, and HSBC Bank plc, as lender, dated April 14, 2010 (11)
|
|
4.27
|
Limited Liability Company Agreement for Euromar LLC, among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd. and All Seas Investors III LP dated March 25, 2010(11)
|
|
4.28
|
First Amendment to Limited Liability Company Agreement for Euromar LLC, among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd. and All Seas Investors III LP dated April 26, 2012 (14)
|
|
4.29
|
Management Agreement among Euromar LLC, the vessel owning subsidiaries of Euromar LLC, Euroseas Ltd., Eurobulk Ltd. and Eurochart S.A. dated March 25, 2010(11)
|
|
4.30
|
Agreement Regarding Vessel Opportunities among Euroseas Ltd., Eurobulk Ltd., Eurochart S.A., Aristides J. Pittas and Euromar LLC dated March 25, 2010(11)
|
|
4.31
|
First Amendment to Agreement Regarding Vessel Opportunities among Euroseas Ltd., Eurobulk Ltd., Eurochart S.A., Aristides J. Pittas and Euromar LLC dated April 26, 2012 (14)
|
|
4.32
|
Euroseas 2010 Equity Incentive Plan(11)
|
|
4.33
|
Loan Agreement between Noumea Shipping Ltd, as borrower, and Crédit Agricole Corporate and Investment Bank, as lender, for the amount of US$20,000,000 dated December 28, 2010(12)
|
|
4.34
|
Loan Agreement between Aggeliki Shipping Ltd, as borrower, and DVB Bank SE, as lender, for the amount of US$8,500,000 dated November 5, 2010(12)
|
|
4.35
|
Amendment to Loan Agreement between SAF Concord Shipping Ltd., as borrower, and EFG Eurobank Ergasias S.A., as lender, dated October 29, 2012 (previously filed as Exhibit 4.35 to Euroseas Ltd. Registration Statement on Form 20-F (File No.
001-33283
) on April 30, 2013 and incorporated by reference herein)
|
|
4.36
|
Amendment to Loan Agreement between Tiger Navigation Corp., as borrower, and EFG Eurobank Ergasias S.A., as lender, dated October 29, 2012 (previously filed as Exhibit 4.35 to Euroseas Ltd. Registration Statement on Form 20-F (File No.
001-33283
) on April 30, 2013 and incorporated by reference herein)
|
|
4.37
|
Amendment to Loan Agreement between Manolis Shipping Ltd., SAF Concord Shipping Ltd, Tiger Navigation Corp. and Alterwall Business Inc., as borrowers, and EFG Eurobank Ergasias S.A., as lender, dated October 29, 2012 (previously filed as Exhibit 4.35 to Euroseas Ltd. Registration Statement on Form 20-F (File No.
001-33283
) on April 30, 2013 and incorporated by reference herein)
|
|
4.38
|
Amendment to Loan Agreement between Xingang Shipping Ltd. and Diana Shipping Ltd., as borrowers, and HSBC Bank plc, as lender, dated April 5, 2013 (previously filed as Exhibit 4.35 to Euroseas Ltd. Registration Statement on Form 20-F (File No.
001-33283
) on April 30, 2013 and incorporated by reference herein)
|
|
4.39
|
Second Amendment to Limited Liability Company Agreement for Euromar LLC, among Euroseas Ltd., Paros Ltd., All Seas Investors I Ltd., All Seas Investors II Ltd. and All Seas Investors III LP dated March 18, 2013 (previously filed as Exhibit 4.35 to Euroseas Ltd. Registration Statement on Form 20-F (File No.
001-33283
) on April 30, 2013 and incorporated by reference herein)
|
|
4.40
|
Securities Purchase Agreement dated as of March 10, 2014 among Euroseas Ltd., 12 West Capital Fund LP and 12 West Capital Offshore Fund LP (previously filed as Exhibit 99.2 on Form 6-K (File No.
001-33283
) on March 18, 2014 and incorporated by reference herein).
|
|
4.41
|
Registration Rights Agreement dated March 14, 2014 among Euroseas Ltd., 12 West Capital Fund LP and 12 West Capital Offshore Fund LP (previously filed as Exhibit 99.3 on Form 6-K (File No.
001-33283
) on March 18, 2014 and incorporated by reference herein)
|
|
4.42
|
Amendment to Registration Rights Agreement, dated as of March 14, 2014 to the Registration Rights Agreement, dated as of January 26, 2014, as amended by and among Euroseas Ltd., Tennenbaum Opportunities Fund VI, LLC, and Friends Investment Company, Inc. (previously filed as Exhibit 99.4 on Form 6-K (File No.
001-33283
) on March 18, 2014 and incorporated by reference herein)
|
4.43
|
Third Amendment to Shareholders Rights Agreement dated as of March 14, 2014 between Euroseas Ltd. and American Stock Transfer and Trust Company, LLC. (previously filed as Exhibit 99.5 on Form 6-K (File No.
001-33283
) on March 18, 2014 and incorporated by reference herein)
|
|
4.44
|
Amended and Restated Statement of Designation of the Rights, Preferences and Privileges of Series B Convertible Perpetual Preferred Shares of Euroseas Ltd. (previously filed as Exhibit 99.1 on Form 6-K/A (File No.
001-33283
) on March 4, 2016 and incorporated by reference herein)
|
|
4.45
|
Specimen Certificate for the Series B Preferred Shares (previously filed as Exhibit 99.3 on Form 6-K (File No.
001-33283
) on January 29, 2014 and incorporated by reference herein)
|
|
4.46
|
Form of Securities Purchase Agreement in connection with the sale of the Series B Preferred Shares (previously filed as Exhibit 99.4 on Form 6-K (File No.
001-33283
) on January 29, 2014 and incorporated by reference herein)
|
|
4.47
|
Form of Registration Rights Agreement in connection with the sale of the Series B Preferred Shares (previously filed as Exhibit 99.5 on Form 6-K (File No.
001-33283
) on January 29, 2014 and incorporated by reference herein)
|
|
4.48
|
Form of Second Amendment to Shareholders Rights Agreement dated January 27, 2014 between Euroseas Ltd. and American Stock Transfer and Trust Company LLC (previously filed as Exhibit 99.6 on Form 6-K (File No.
001-33283
) on January 29, 2014 and incorporated by reference herein).
|
|
4.49
|
Addendum No. 6 to Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of February 4, 2014 (previously filed as Exhibit 4.49 to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 30, 2015 and incorporated by reference herein)
|
|
4.50
|
Euroseas 2014 Equity Incentive Plan (previously filed as Exhibit 4.50 to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 30, 2015 and incorporated by reference herein)
|
|
4.51
|
Financial Agreement between Ultra Two Shipping Ltd, as borrower, and HSBC Bank Plc, as lender, relating to a term loan facility of up to US$19,950,000 dated January 12, 2015 (previously filed as Exhibit 4.51 to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 30, 2015 and incorporated by reference herein)
|
|
4.52
|
Loan Agreement between Ultra One Shipping Ltd, as borrower, and HSH Nordbank AG, as lead arranger, for a term loan facility of up to US$19,000,000 dated March 20, 2015 (previously filed as Exhibit 4.52 to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 30, 2015 and incorporated by reference herein)
|
|
4.53
|
Loan Agreement between Kamsarmax One Shipping Ltd, as borrower, and Nord LB, as lead arranger, for a term loan facility of up to US$16,560,000 dated February 17, 2016
|
|
4.54
|
Loan Agreement between Saf-Concord Shipping Ltd et al., as borrowers, and Eurobank Ergasias S.a., as lead arranger, relating to a secured term loan of up to US$14,500,000 dated as of February 12, 2016
|
|
8.1
|
Subsidiaries of the Registrant
|
|
12.1
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
12.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
|
13.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
13.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
15.1
|
Consent of Deloitte, Hadjipavlou, Sofianos & Cambanis S.A.
|
|
101.INS*
|
XBRL Instance Document
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
* | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
(1) | Filed as an Exhibit to the Company's Registration Statement (File No. 333-129145) on October 20, 2005. |
(2) | Filed as an Exhibit to the Company's Amendment No.1 to Registration Statement (File No. 333-129145) on December 5, 2005. |
(3) | Filed as an Exhibit to the Company's Post-Effective Amendment No. 1 to Registration Statement (File No. 333-12945) on September 12, 2006. |
(4) | Filed as an Exhibit to the Company's Registration Statement (File No. 333-138780) on November 17, 2006. |
(5) | Filed as an Exhibit to the Company's Amendment No. 4 to Registration Statement (File No. 333-138780) on January 29, 2007. |
(6) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 13, 2008. |
(7) | Filed as an Exhibit to the Company's Registration Statement (File No. 333-152089) on July 2, 2008. |
(8) | Filed as an Exhibit to the Company's Post-Effective Amendment No. 1 to Registration Statement (File No. 333-148124) on July 17, 2008. |
(9) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 18, 2009. |
(10) | Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on May 18, 2009. |
(11) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 28, 2010. |
(12) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 27, 2011. |
(13) | Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on May 25, 2012. |
(14) | Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 27, 2012. |
EUROSEAS LTD.
(Registrant) |
||
By:
|
/s/ Aristides J. Pittas
|
|
Aristides J. Pittas
Chairman, President and CEO |
Pages
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets as of December 31, 2014 and 2015
|
F-3
|
Consolidated Statements of Operations for the Years Ended
|
|
December 31, 2013, 2014 and 2015
|
F-5
|
Consolidated Statements of Shareholders' Equity for the Years Ended
|
|
December 31, 2013, 2014 and 2015
|
F-6
|
Consolidated Statements of Cash Flows for the Years Ended
|
|
December 31, 2013, 2014 and 2015
|
F-7
|
Notes to the Consolidated Financial Statements
|
F-9
|
Notes
|
2014
|
2015
|
||||||||||
Assets
|
||||||||||||
Current assets
|
||||||||||||
Cash and cash equivalents
|
25,411,420
|
8,715,636
|
||||||||||
Trade accounts receivable, net
|
2,189,986
|
1,408,272
|
||||||||||
Other receivables
|
844,720
|
1,231,391
|
||||||||||
Inventories
|
3
|
1,758,930
|
1,464,940
|
|||||||||
Restricted cash
|
9
|
294,093
|
5,916,743
|
|||||||||
Prepaid expenses
|
348,231
|
175,506
|
||||||||||
Vessel held for sale
|
5
|
-
|
2,671,811
|
|||||||||
Total current assets
|
30,847,380
|
21,584,299
|
||||||||||
Fixed assets
|
||||||||||||
Vessels, net
|
5
|
111,150,227
|
88,957,752
|
|||||||||
Advances for vessels under construction
|
4
|
15,687,490
|
32,701,867
|
|||||||||
Long-term assets
|
||||||||||||
Restricted cash
|
9
|
7,700,000
|
4,550,000
|
|||||||||
Deferred charges, net
|
6
|
335,621
|
700,606
|
|||||||||
Other investments
|
17
|
6,183,800
|
7,396,738
|
|||||||||
Investment in joint venture
|
17
|
18,674,094
|
16,515,701
|
|||||||||
Total long-term assets
|
159,731,232
|
150,822,664
|
||||||||||
Total assets
|
190,578,612
|
172,406,963
|
||||||||||
Liabilities and shareholders' equity
|
||||||||||||
Current liabilities
|
||||||||||||
Long-term debt, current portion
|
9
|
19,512,000
|
14,810,000
|
|||||||||
Trade accounts payable
|
2,369,983
|
1,394,874
|
||||||||||
Accrued expenses
|
7
|
1,060,797
|
1,203,070
|
|||||||||
Liabilities from assets held for sale
|
5
|
-
|
1,122,208
|
|||||||||
Deferred revenues
|
803,649
|
462,124
|
||||||||||
Due to related company
|
8
|
1,145,808
|
322,703
|
|||||||||
Derivatives
|
15, 16
|
297,992
|
50,402
|
|||||||||
Total current liabilities
|
25,190,229
|
19,365,381
|
Notes
|
December 31,
2014
|
December 31,
2015
|
||||||||||
Long-term liabilities
|
||||||||||||
Long-term debt, net of current portion
|
9
|
34,745,000
|
25,711,040
|
|||||||||
Derivatives
|
15, 16
|
779
|
202,700
|
|||||||||
Total long-term liabilities
|
34,745,779
|
25,913,740
|
||||||||||
Total liabilities
|
59,936,008
|
45,279,121
|
||||||||||
Commitments and contingencies
|
11
|
|||||||||||
Mezzanine Equity
|
||||||||||||
Preferred shares (par value $0.01, 20,000,000 shares authorized, 32,140 and 33,779 issued and outstanding, respectively)
|
18
|
30,440,100
|
32,079,249
|
|||||||||
Shareholders' equity
|
||||||||||||
Common stock (par value $0.03, 200,000,000 shares authorized, 5,715,731 and 8,195,760 issued and outstanding)
|
171,472
|
245,873
|
||||||||||
Additional paid-in capital
|
268,374,336
|
278,833,156
|
||||||||||
Accumulated deficit
|
(168,343,304
|
)
|
(184,030,436
|
)
|
||||||||
Total shareholders' equity
|
100,202,504
|
95,048,593
|
||||||||||
Total liabilities and shareholders' equity
|
190,578,612
|
172,406,963
|
Notes
|
2013
|
2014
|
2015
|
|||||||||||||
Revenues
|
||||||||||||||||
Voyage revenue
|
40,850,051
|
42,586,963
|
39,656,670
|
|||||||||||||
Related party revenue
|
17
|
240,000
|
240,000
|
240,000
|
||||||||||||
Commissions
(including, $474,466 $517,828 and $475,792, respectively, to related party)
|
8, 14
|
(1,936,381
|
)
|
(2,192,626
|
)
|
(2,216,836
|
)
|
|||||||||
Net revenue
|
39,153,670
|
40,634,337
|
37,679,834
|
|||||||||||||
Operating expenses
|
||||||||||||||||
Voyage expenses
|
14
|
1,537,898
|
3,963,181
|
2,312,513
|
||||||||||||
Vessel operating expenses
(including, $399,665, $347,363 and $305,150, respectively, to related party)
|
8, 14
|
25,191,250
|
25,279,087
|
25,204,593
|
||||||||||||
Dry-docking expenses
|
3,816,699
|
1,975,590
|
1,912,407
|
|||||||||||||
Vessel depreciation
|
5
|
19,983,772
|
12,137,445
|
10,995,023
|
||||||||||||
Related party management fees
|
8
|
4,891,024
|
4,894,559
|
4,151,335
|
||||||||||||
Other general and administrative expenses
(including $1,900,000, $2,000,000 and $2,000,000, respectively, to related party)
|
8, 12
|
3,542,619
|
3,514,636
|
3,327,061
|
||||||||||||
Net loss/(gain) on sale of vessels
(including $76,183 and $77,022 to related party)
|
5
|
1,935,019
|
-
|
(461,586
|
)
|
|||||||||||
Impairment loss and loss on write-down of vessel held for sale
|
5
|
78,207,462
|
3,500,000
|
1,641,885
|
||||||||||||
Total operating expenses
|
139,105,743
|
55,264,498
|
49,083,231
|
|||||||||||||
Operating loss
|
(99,952,073
|
)
|
(14,630,161
|
)
|
(11,403,397
|
)
|
||||||||||
Other income/(expenses)
|
||||||||||||||||
Interest and other financing costs
|
(1,845,776
|
)
|
(2,152,187
|
)
|
(1,486,534
|
)
|
||||||||||
Loss on derivatives, net
|
16
|
(177,132
|
)
|
(44,648
|
)
|
(261,674
|
)
|
|||||||||
Foreign exchange gain / (loss)
|
(10,143
|
)
|
40,022
|
22,421
|
||||||||||||
Investment income
|
17
|
196,196
|
987,604
|
1,212,938
|
||||||||||||
Interest income
|
387,292
|
422,240
|
26,656
|
|||||||||||||
Other expenses, net
|
(1,449,563
|
)
|
(746,969
|
)
|
(486,193
|
)
|
||||||||||
Equity loss in joint venture
|
17
|
(2,023,191
|
)
|
(2,541,775
|
)
|
(2,158,393
|
)
|
|||||||||
Net loss
|
(103,424,827
|
)
|
(17,918,905
|
)
|
(14,047,983
|
)
|
||||||||||
Dividends to Series B preferred shares
|
18
|
-
|
(1,440,100
|
)
|
(1,639,149
|
)
|
||||||||||
Net loss attributable to common shareholders
|
(103,424,827
|
)
|
(19,359,005
|
)
|
(15,687,132
|
)
|
||||||||||
Loss per share attributable to common shareholders - basic and diluted
|
13
|
(22.76
|
)
|
(3.53
|
)
|
(2.45
|
)
|
|||||||||
Weighted average number of shares outstanding during the year, basic and diluted
|
13
|
4,544,284
|
5,479,418
|
6,410,794
|
Number of
Shares
|
Common Stock
Amount
|
Additional Paid - in
Capital
|
Accumulated Deficit
|
Total
|
||||||||||||||||
Balance,
January 1, 2013
|
4,531,961
|
135,959
|
252,982,089
|
(43,491,902
|
)
|
209,626,146
|
||||||||||||||
Net loss
|
(103,424,827
|
)
|
(103,424,827
|
)
|
||||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation
|
40,365
|
1,211
|
567,122
|
-
|
568,333
|
|||||||||||||||
Dividends declared ($0.45 per share)
|
-
|
(2,067,570
|
)
|
(2,067,570
|
)
|
|||||||||||||||
Balance,
December 31, 2013
|
4,572,326
|
137,170
|
253,549,211
|
(148,984,299
|
)
|
104,702,082
|
||||||||||||||
Net loss
|
(19,359,005
|
)
|
(19,359,005
|
)
|
||||||||||||||||
Issuance of shares from private placement, net of issuance costs
|
1,116,487
|
33,495
|
14,466,505
|
-
|
14,500,000
|
|||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation
|
43,724
|
1,312
|
508,802
|
-
|
510,114
|
|||||||||||||||
Canceled shares due to repurchase program
|
(16,806
|
)
|
(505
|
)
|
(150,182
|
)
|
-
|
(150,687
|
)
|
|||||||||||
Balance,
December 31, 2014
|
5,715,731
|
171,472
|
268,374,336
|
(168,343,304
|
)
|
100,202,504
|
||||||||||||||
Net loss
|
(15,687,132
|
)
|
(15,687,132
|
)
|
||||||||||||||||
Issuance of shares from rights offering, net of issuance costs
|
2,343,335
|
70,300
|
10,156,810
|
-
|
10,227,110
|
|||||||||||||||
Rounding of stock split
|
794
|
24
|
(24
|
)
|
-
|
-
|
||||||||||||||
Issuance of restricted shares for stock incentive award and share-based compensation
|
135,900
|
4,077
|
302,034
|
-
|
306,111
|
|||||||||||||||
Balance December 31, 2015
|
8,195,760
|
245,873
|
278,833,156
|
(184,030,436
|
)
|
95,048,593
|
2013
|
2014
|
2015
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net loss
|
(103,424,827
|
)
|
(17,918,905
|
)
|
(14,047,983
|
)
|
||||||
Adjustments to reconcile net loss to net cash provided by / (used in) operating activities:
|
||||||||||||
Depreciation of vessels
|
19,983,772
|
12,137,445
|
10,995,023
|
|||||||||
Impairment loss and loss on write-down of vessel held for sale
|
78,207,462
|
3,500,000
|
1,641,885
|
|||||||||
Amortization of deferred charges
|
145,825
|
137,032
|
150,189
|
|||||||||
Loss / (gain) on sale of vessels
|
1,935,019
|
-
|
(461,586
|
)
|
||||||||
Share-based compensation
|
568,334
|
510,114
|
306,111
|
|||||||||
Unrealized gain on derivatives
|
(1,375,820
|
)
|
(718,977
|
)
|
(45,669
|
)
|
||||||
Other income accrued
|
(196,196
|
)
|
(987,604
|
)
|
(1,212,938
|
)
|
||||||
Loss in investment in joint venture
|
2,023,191
|
2,541,775
|
2,158,393
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
(Increase) / decrease in:
|
||||||||||||
Trade accounts receivable
|
(453,980
|
)
|
(316,841
|
)
|
781,714
|
|||||||
Prepaid expenses
|
(22,168
|
)
|
(52,983
|
)
|
172,725
|
|||||||
Other receivables
|
869,278
|
596,113
|
(386,671
|
)
|
||||||||
Inventories
|
338,522
|
(284,816
|
)
|
293,990
|
||||||||
Due from related company
|
4,948,443
|
-
|
-
|
|||||||||
Increase / (decrease) in:
|
||||||||||||
Due to related company
|
903,478
|
242,330
|
(823,105
|
)
|
||||||||
Trade accounts payable
|
(101,764
|
)
|
466,139
|
(1,262,798
|
)
|
|||||||
Accrued expenses
|
(219,962
|
)
|
(394,155
|
)
|
54,673
|
|||||||
Deferred revenue
|
(96,718
|
)
|
(186,944
|
)
|
(341,525
|
)
|
||||||
Net cash provided by / (used in) operating activities
|
4,031,889
|
(730,277
|
)
|
(2,027,572
|
)
|
|||||||
Cash flows from investing activities:
|
||||||||||||
Advances for vessels under construction
|
(37,820
|
)
|
(15,637,368
|
)
|
(16,628,889
|
)
|
||||||
Advance received for vessel held for sale
|
-
|
-
|
1,122,208
|
|||||||||
Contributions to joint venture
|
(6,250,000
|
)
|
-
|
-
|
||||||||
Purchase of a vessel
|
(5,978,062
|
)
|
(21,323,935
|
)
|
-
|
|||||||
Other investments
|
(5,000,000
|
)
|
-
|
-
|
||||||||
Release of Restricted Cash
|
2,063,596
|
168,322
|
4,102,364
|
|||||||||
Increase in restricted cash
|
-
|
(300,000
|
)
|
(6,575,014
|
)
|
|||||||
Proceeds from sale of vessels
|
7,322,818
|
-
|
7,345,342
|
|||||||||
Net cash used in investing activities
|
(7,879,468
|
)
|
(37,092,981
|
)
|
(10,633,989
|
)
|
||||||
2013
|
2014
|
2015
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from issuance of preferred stock, net of commissions paid
|
-
|
29,700,000
|
-
|
|||||||||
Proceeds from issuance of common stock, net of commissions paid
|
-
|
14,550,000
|
10,545,007
|
|||||||||
Funds used for common stock buyback
|
-
|
(150,687
|
)
|
-
|
||||||||
Offering expenses paid
|
(99,200
|
)
|
(564,922
|
)
|
(400,696
|
)
|
||||||
Dividends paid
|
(2,090,944
|
)
|
(13,050
|
)
|
-
|
|||||||
Loan arrangement fees paid
|
-
|
(299,900
|
)
|
(442,574
|
)
|
|||||||
Proceeds from long-term debt
|
-
|
23,300,000
|
8,400,000
|
|||||||||
Repayment of long-term debt
|
(15,937,000
|
)
|
(14,687,000
|
)
|
(22,135,960
|
)
|
||||||
Net cash (used in) / provided by financing activities
|
(18,127,144
|
)
|
51,834,441
|
(4,034,223
|
)
|
|||||||
Net (decrease) / increase in cash and cash equivalents
|
(21,974,723
|
)
|
14,011,183
|
(16,695,784
|
)
|
|||||||
Cash and cash equivalents at beginning of year
|
33,374,960
|
11,400,237
|
25,411,420
|
|||||||||
Cash and cash equivalents at end of year
|
11,400,237
|
25,411,420
|
8,715,636
|
|||||||||
Supplemental cash flow information
Cash paid for interest, net of capitalized expenses
|
1,734,967
|
2,000,850
|
1,352,737
|
|||||||||
Financing and investing activities fees:
|
||||||||||||
Loan arrangement fees accrued
|
-
|
-
|
72,600
|
|||||||||
Offering expenses accrued
|
66,478
|
86,078
|
3,279
|
|||||||||
Payment-in-kind dividends
|
-
|
1,440,100
|
1,639,149
|
|||||||||
Capital expenditures included in liabilities
|
-
|
-
|
385,488
|
· | Allendale Investment S.A. incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 deadweight tons ("DWT") / 1,169 twenty-foot equivalent ("TEU" – a measure of carrying capacity in containers) container carrier M/V "Kuo Hsiung", which was built in 1993 and acquired on May 13, 2002. |
· | Alterwall Business Inc. incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 DWT / 1,169 TEU container carrier M/V "Ninos" (previously named M/V "Quingdao I") which was built in 1990 and acquired on February 16, 2001. |
· | Diana Trading Ltd. incorporated in the Marshall Islands on September 25, 2002, owner of the Marshall Islands flag 69,734 DWT bulk carrier M/V "Irini", which was built in 1988 and acquired on October 15, 2002. M/V "Irini" was sold on July 10, 2013. |
· | Xenia International Corp., incorporated in the Marshall Islands on April 6, 2006, owner of the Marshall Islands flag 22,568 DWT / 950 TEU multipurpose M/V "Tasman Trader", which was built in 1990 and acquired on April 27, 2006. On March 7, 2012, the vessel was renamed M/V "Anking". On June 4, 2013 the vessel was sold. |
· | Prospero Maritime Inc., incorporated in the Marshall Islands on July 21, 2006, owner of the Marshall Islands flag 69,268 DWT dry bulk M/V "Aristides N.P.", which was built in 1993 and acquired on September 21, 2006. The vessel was sold on January 15, 2016. |
· | Xingang Shipping Ltd., incorporated in Liberia on October 16, 2006, owner of the Liberian flag 23,596 DWT / 1,599 TEU container carrier M/V "YM Xingang I" , which was built in February 1993 and acquired on November 15, 2006. On July 11, 2009, the vessel was renamed M/V "Mastro Nicos" and on November 5, 2009, it was renamed M/V "YM Port Kelang". On October 25, 2011 the vessel was renamed M/V "Marinos". The vessel was sold on November 26, 2015. |
· | Manolis Shipping Ltd., incorporated in the Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container carrier M/V "Manolis P", which was built in 1995 and acquired on April 12, 2007. |
· | Eternity Shipping Company, incorporated in the Marshall Islands on May 17, 2007, owner of the Marshall Islands flag 30,007 DWT / 1,742 TEU container carrier M/V "Clan Gladiator", which was built in 1992 and acquired on June 13, 2007. On May 9, 2008, M/V "Clan Gladiator" was renamed M/V "OEL Transworld" and on August 31, 2009 the vessel was renamed M/V "Captain Costas". |
· | Pilory Associates Corp., incorporated in Panama on July 4, 2007, owner of the Panamanian flag 33,667 DWT / 1,932 TEU container carrier M/V "Despina P", which was built in 1990 and acquired on August 13, 2007. The vessel was sold in December 28, 2015. |
· | Tiger Navigation Corp., incorporated in Marshall Islands on August 29, 2007, owner of the Marshall Islands flag 31,627 DWT / 2,228 TEU container carrier M/V "Tiger Bridge", which was built in 1990 and acquired on October 4, 2007. The vessel was sold in November 9, 2015 |
· | Noumea Shipping Ltd, incorporated in Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 DWT / 2,556 TEU container carrier M/V "Maersk Noumea", renamed "Evridiki G", which was built in 2001 and acquired on May 22, 2008. |
· | Saf-Concord Shipping Ltd., incorporated in Liberia on June 8, 2008, owner of the Liberian flag 46,667 DWT bulk carrier M/V "Monica P", which was built in 1998 and acquired on January 19, 2009. |
· | Eleni Shipping Ltd., incorporated in Liberia on February 11, 2009, owner of the Liberian flag 72,119 DWT bulk carrier M/V "Eleni P", which was built in 1997 and acquired on March 6, 2009. |
· | Pantelis Shipping Ltd., incorporated in the Republic of Malta on July 2, 2009, owner of the Maltese flag 74,020 DWT bulk carrier M/V "Pantelis" which was built in 2000 and acquired on July 23, 2009. On December 15, 2009, ownership of the vessel was transferred to Pantelis Shipping Corp., incorporated in Liberia, and the vessel changed its flag to the Liberian flag. |
· | Aggeliki Shipping Ltd., incorporated in the Republic of Liberia on May 21, 2010, owner of the Liberian flag 30,306 DWT / 2008 TEU container carrier M/V "Aggeliki P" which was built in 1998 and acquired on June 21, 2010. |
· | Joanna Maritime Ltd., incorporated in Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V "Joanna" which was built in 1999 and acquired on July 4, 2013. The vessel has been renamed Vento di Grecale. |
· | Eirini Shipping Ltd., incorporated in the Republic of Liberia on February 2, 2014, owner of the Liberian flag 76,466 DWT bulk carrier M/V "Eirini P" which was built in 2004 and acquired on May 26, 2014. |
· | Ultra One Shipping Ltd., incorporated in the Republic of Liberia on November 21, 2013, entered on November 29, 2013, into a shipbuilding contract with Yangzhou Dayang Shipbuilding Co., Ltd. and Sumec Marine Co., Ltd., for the construction of a 63,500 DWT bulk carrier (Hull No. DY160, to be renamed 'Alexandros'). The vessel is expected to be delivered within the second quarter of 2016. |
· | Ultra Two Shipping Ltd., incorporated in the Republic of Liberia on November 21, 2013, entered on November 29, 2013, into a shipbuilding contract with Yangzhou Dayang Shipbuilding Co., Ltd. and Sumec Marine Co., Ltd., for the construction of a 63,500 DWT bulk carrier (Hull No. DY161). The vessel is expected to be delivered within the third quarter of 2016. |
· | Kamsarmax One Shipping Ltd., incorporated in the Republic of the Marshall Islands on April 4, 2014, agreed to acquire from Klaveness Bulk AS, the 82,000 DWT bulk carrier Hull No. YZJ2013-1116 (renamed 'Xenia'). The vessel is a new-building and was delivered on February 25, 2016. |
· | Kamsarmax Two Shipping Ltd., incorporated in the Republic of the Marshall Islands on April 4, 2014, entered on April 4, 2014, into a shipbuilding contract with Jiangsu Tianyuan Marine Import & Export Co., Ltd., and Jiangsu Yangzijiang Shipbuilding Co., Ltd. and Jiangsu New Yangzi Shipbuilding Co., Ltd., for the construction of a 82,000 DWT bulk carrier (Hull No. YZJ2013-1153). The vessel is expected to be delivered within 2018. |
Year ended December 31,
|
||||||||||||
Charterer
|
2013
|
2014
|
2015
|
|||||||||
CMA
|
7.13
|
%
|
12.61
|
%
|
17.41
|
%
|
||||||
GSS
|
2.21
|
%
|
3.84
|
%
|
16.14
|
%
|
||||||
MSC
|
10.16
|
%
|
10.62
|
%
|
12.92
|
%
|
2. | Significant Accounting Policies - Continued |
2. | Significant Accounting Policies - Continued |
2. | Significant Accounting Policies - Continued |
2. | Significant Accounting Policies - Continued |
3. | Inventories |
2014
|
2015
|
|||||||
Lubricants
|
1,226,172
|
990,440
|
||||||
Victualing
|
186,188
|
105,369
|
||||||
Bunkers
|
346,570
|
369,131
|
||||||
Total
|
1,758,930
|
1,464,940
|
5. | Vessels, net |
5. | Vessels, net - continued |
6. | Deferred Charges, net |
2014
|
2015
|
|||||||
Balance, beginning of year
|
338,431
|
335,621
|
||||||
Amortization of loan arrangement fees
|
(137,032
|
)
|
(150,189
|
)
|
||||
Deferred offering expenses
|
(165,678
|
)
|
-
|
|||||
Loan arrangement fees
|
299,900
|
515,174
|
||||||
Balance, end of year
|
335,621
|
700,606
|
As of December 31,
2014
|
As of December 31,
2015
|
|||||||
Accrued payroll expenses
|
218,887
|
319,443
|
||||||
Accrued interest
|
96,894
|
153,102
|
||||||
Accrued general and administrative expenses
|
181,593
|
112,570
|
||||||
Accrued commissions
|
94,778
|
36,189
|
||||||
Other accrued expenses
|
468,645
|
581,766
|
||||||
Total
|
1,060,797
|
1,203,070
|
8. | Related Party Transactions |
8. | Related Party Transactions - Continued |
9. | Long-Term Debt |
Borrower
|
December 31,
2014 |
December 31,
2015 |
|||||||
Joanna Maritime Ltd
|
(a)
|
4,200,000
|
1,276,040
|
||||||
Manolis Shipping Ltd.
|
(b)
|
5,200,000
|
4,500,000
|
||||||
Saf-Concord Shipping Ltd.
|
(c)
|
4,250,000
|
3,250,000
|
||||||
Pantelis Shipping Corp.
|
(d)
|
6,240,000
|
5,120,000
|
||||||
Aggeliki Shipping Ltd.
|
(e)
|
3,652,000
|
-
|
||||||
Noumea Shipping Ltd.
|
(f)
|
9,240,000
|
7,800,000
|
||||||
Eirini Shipping Ltd. / Eleni Shipping Ltd.
|
(g)
|
14,600,000
|
13,200,000
|
||||||
Euroseas Ltd.
|
(h)
|
6,875,000
|
5,375,000
|
||||||
54,257,000
|
40,521,040
|
||||||||
Less: Current portion
|
(19,512,000
|
)
|
(14,810,000
|
)
|
|||||
Long-term portion
|
34,745,000
|
25,711,040
|
To December 31:
|
||||
2016
|
14,810,000
|
|||
2017
|
7,629,373
|
|||
2018
|
2,653,333
|
|||
2019
|
15,428,334
|
|||
Total
|
$
|
40,521,040
|
(a) |
This is a $20,000,000 loan drawn by Xingang Shipping Ltd. on November 15, 2006; Joanna Maritime Ltd, owner of M/V "Vento di Grecale" is a guarantor to this loan. The loan is payable in eight consecutive quarterly installments of $1.0 million each, the first of which was due in February 2007, followed by four consecutive quarterly installments of $750,000 each, followed by sixteen consecutive installments of $250,000 each and a balloon payment of $5.0 million payable with the final quarterly installment due in November 2013. The interest was based on LIBOR plus a margin of 0.935% initially; after Alcinoe Shipping Ltd. became a guarantor the rate became 0.90%.
On April 5, 2013, an Addendum was signed by which the balloon payment of $5.0 million will be repaid by eight consecutive quarterly instalments of $200,000 each starting in February 2014 plus a balloon payment of $3,400,000 payable with the final quarterly instalment in November 15, 2015. The interest is based on LIBOR plus a margin of 5.30%. As of the November 1, 2013 and thereafter at any time throughout the repayment of the loan a minimum deposit of $400,000 is to be maintained with the bank. The loan is secured with the following: (i) first priority mortgage over M/V "Marinos" owned by Xingang Shipping Ltd, (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a mortgage on M/V "Vento di Grecale". |
(b) | This is a $10,000,000 loan drawn by Manolis Shipping Ltd. on June 11, 2007. The loan is payable in thirty-two consecutive quarterly instalments of $160,000 each, the first of which was due in September 2007, plus a balloon payment of $4,880,000 payable with the final quarterly instalment in June 2015. The interest is based on LIBOR plus a margin of 0.80% if the ratio of the outstanding loan to the vessel value is below 55%, otherwise the margin is 0.90%. The loan is secured with the following: (i) first priority mortgage over M/V "Manolis P", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account Manolis Shipping Ltd. maintains with the bank. |
(c) | This loan is a $10,000,000 loan drawn by SAF-Concord Shipping Ltd. on January 19, 2009. The loan was payable in twenty consecutive quarterly instalments of $250,000 each, the first of which was due in April 2009, plus a balloon payment of $5,000,000 payable with the final quarterly instalment in January 2014. The interest was based on LIBOR plus a margin of 2.50%. The loan was secured wi th the following: (i) first priority mortgage over M/V "Moni ca P", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account SAF-Concord Shipping Ltd. maintains with the bank. |
(d) | This loan is a $13,000,000 loan drawn by Pantelis Shipping Corp. on December 15, 2009. The loan is payable in 32 consecutive quarterly instalments, four in the amount of $500,000 and twenty-eight in the amount of $280,000, with a $3.16 million balloon payment to be paid together with the last instalment in December 2017. The margin of the loan is 2.70% above LIBOR. The loan is secured with the following: (i) first priority mortgage over M/V "Pantelis", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. and (iv) a minimum cash balance equal to an amount of no less than $300,000 in an account Pantelis Shipping Corp. maintains with the bank. |
(e) | This loan was an $8,500,000 loan drawn by Aggeliki Shipping Ltd. on November 5, 2010. The loan was repaid in 20 equal consecutive quarterly instalments of $303,000 each, with a $2.44 million balloon payment paid together with the last instalment in November 2015. The margin of the loan was 2.85% above LIBOR. The loan was secured with the following: (i) first priority mortgage over M/V "Aggeliki P.", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. |
(f) | This loan is a $20,000,000 loan drawn by Noumea Shipping Ltd. on December 28, 2010. The loan consists of two tranches: Tranche A of $15,000,000 payable in 12 equal consecutive six-monthly instalments of $720,000 each with a $6.36 million balloon payment to be paid together with the last instalment in December 2016; and, Tranche B of $5,000,000 payable in 8 equal consecutive six-monthly instalments of $625,000 each running in parallel with Tranche A. The margin of both tranches is 2.65% above LIBOR, however, if the collateral vessel, M/V "Maersk Noumea", does not have a charter, the margin of Tranche B becomes 4% above LIBOR and any balance remaining thereof, to be repaid not later that the original Tranche B Maturity, as an Interim Balloon. The loan is secured with the following: (i) first priority mortgage over M/V "Maersk Noumea", (ii) first assignment of earnings and insurance, (iv)a corporate guarantee of Euroseas Ltd. |
(g) | This loan is a $15,300,000 loan drawn by Eirini Shipping Ltd. and Eleni Shipping Ltd. jointly, on June 25, 2014. The loan is payable in 20 equal consecutive quarterly instalments of $350,000 each, with an $8.3 million balloon payment to be paid together with the last instalment in June 2019. The margin of the loan is 3.75% above LIBOR. The loan is secured with the following: (i) first priority mortgage over M/V "Eirini P." and M/V "Eleni P.", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. |
(h) | This loan is an $8,000,000 loan drawn by Euroseas Ltd., on February 3, 2014. The loan is payable in 12 equal consecutive quarterly instalments of $375,000 each, with a $3.5 million balloon payment to be paid together with the last instalment in February 2017. The margin of the loan is 6.0% above LIBOR. The loan is secured with the following: (i) first priority mortgage over M/V "Kuo Hsiung.", M/V "Aristides N. P.", M/V "Captain Costas" and M/V "Despina P", (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd. The balance of this as of February 12, 2016 was repaid with the part of proceeds of a new loan (see Note 20-(b)). |
i. | On January 12, 2015, the Company signed a term loan facility with HSBC Bank plc of up to the maximum of $19.95 million or 70% of the vessel's market value upon delivery if the ship is under a time-charter contract with a charterer approved by the bank or 65% of the vessel's market value upon delivery otherwise. The facility will be used to partly finance the construction cost of Hull No DY 160 and will be repaid over 5 years following the delivery of the vessel. Hull No DY 160 will serve as collateral to the loan. The interest rate margin is 2.80% over LIBOR and the Company pays a 1% per annum commitment fee until the loan is drawn. |
ii. | On March 20, 2015, the Company signed a term loan facility with HSH Nordbank AG of up to the maximum of $19.00 million or 62.5% of the vessel's market value upon delivery (lesser of). The facility will be used to partly finance the construction cost of Hull No DY 161 and will be repaid over 4 years following the delivery of the vessel. Hull No DY 161 will serve as collateral to the loan. The interest rate margin is 3.00% over LIBOR and the Company pays a 0.9% per annum commitment fee until the loan is drawn. |
11. | Commitments and Contingencies |
(a) |
There are no material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation incidental to the Company's business. In the opinion of the management, the disposition of these lawsuits should not have a material impact on the consolidated results of operations, financial position and cash flows.
|
(b) | As of December 31, 2015, the Company had under construction four bulk carriers one of which was delivered on February 25, 2016 (see also Note 20(c)). The contracted amount paid for the delivery of that vessel was $21.35 million while the contracted amount remaining to be paid for the remaining three vessels amounts to $40.84 million in 2016, $2.77 million in 2017 and $19.39 in 2018 which has and will be funded from undrawn facilities available, cash, future loan facilities and proceeds from equity raisings. |
12. | Stock Incentive Plan |
a) |
On November 21, 2013 an award of 45,000 non-vested restricted shares under the 2010 Plan, was made to 19 key persons of which 50% vested on July 1, 2014 and July 1, 2015; awards to officers and directors amounted to 25,350 shares and the remaining 19,650 shares were awarded to employees of Eurobulk.
|
b) |
On November 3, 2014 an award of 45,000 non-vested restricted shares under the 2014 Plan, was made to 19 key persons of which 50% vested on November 16, 2015 and 50% will vest on November 16, 2016; awards to officers and directors amounted to 26,100 shares and the remaining 18,900 shares were awarded to employees of Eurobulk.
|
c) | On November 6, 2015 an award of 68,400 non-vested restricted shares under the 2014 Plan, was made to 19 key persons of which 50% will vest on July 1, 2016 and 50% on July 1, 2017; awards to officers and directors amounted to 40,040 shares and the remaining 28,360 shares were awarded to employees of Eurobulk. |
12. | Stock Incentive Plan - continued |
Non-vested Shares
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
||||||
Non-vested on January 1, 2015
|
67,500
|
10.57
|
||||||
Granted
|
68,400
|
4.18
|
||||||
Vested
|
(45,000
|
)
|
10.75
|
|||||
Non-vested on December 31, 2015
|
90,900
|
5.67
|
13. | Earnings / (Loss) Per Share |
2013
|
2014
|
2015
|
||||||||||
Income:
|
||||||||||||
Net loss attributable to common shareholders'
|
(103,424,827
|
)
|
(19,359,005
|
)
|
(15,687,132
|
)
|
||||||
Basic earnings per share:
|
||||||||||||
Weighted average common shares –
Outstanding
|
4,544,284
|
5,479,418
|
6,410,794
|
|||||||||
Basic loss per share
|
(22.76
|
)
|
(3.53
|
)
|
(2.45
|
)
|
||||||
Effect of dilutive securities
|
||||||||||||
Weighted average common shares –
Outstanding
|
4,544,284
|
5,479,418
|
6,410,794
|
|||||||||
Diluted loss per share
|
(22.76
|
)
|
(3.53
|
)
|
(2.45
|
)
|
Year ended December 31,
|
||||||||||||
2013
|
2014
|
2015
|
||||||||||
Voyage expenses
|
||||||||||||
Port charges and canal dues
|
364,091
|
1,214,856
|
832,917
|
|||||||||
Bunkers
|
1,173,807
|
2,748,325
|
1,479,596
|
|||||||||
Total
|
1,537,898
|
3,963,181
|
2,312,513
|
|||||||||
Vessel operating expenses
|
||||||||||||
Crew wages and related costs
|
13,921,033
|
13,985,377
|
14,164,355
|
|||||||||
Insurance
|
2,222,912
|
2,364,112
|
2,412,366
|
|||||||||
Repairs and maintenance
|
478,197
|
501,733
|
503,934
|
|||||||||
Lubricants
|
2,836,561
|
2,379,191
|
2,433,956
|
|||||||||
Spares and consumable stores
|
4,204,965
|
4,083,942
|
4,058,153
|
|||||||||
Professional and legal fees
|
158,978
|
498,240
|
492,852
|
|||||||||
Other
|
1,368,604
|
1,466,492
|
1,138,977
|
|||||||||
Total
|
25,191,250
|
25,279,087
|
25,204,593
|
Year ended December 31,
|
||||||||||||
2013
|
2014
|
2015
|
||||||||||
Third parties
|
1,461,915
|
1,674,798
|
1,741,044
|
|||||||||
Related parties (see Note 8)
|
474,466
|
517,828
|
475,792
|
|||||||||
1,936,381
|
2,192,626
|
2,216,836
|
Fair Value Measurement as of December 31, 2015
|
||||||||||||||||
Total |
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Liabilities
|
||||||||||||||||
Interest rate swap contracts, current and long-term portion
|
$
|
253,102
|
-
|
$
|
253,102
|
- |
Fair Value Measurement as of December 31, 2014
|
||||||||||||||||
Total |
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Liabilities
|
||||||||||||||||
Interest rate swap contracts, current and long-term portion
|
$
|
298,771
|
-
|
$
|
298,771
|
-
|
Vessel – M/V Aristides NP
|
Significant Other Observable Inputs (Level 2) (amounts in $million)
|
Loss
(amounts in $million)
|
December 31, 2014 –Impairment
|
$5.1
|
$3.5
|
December 31, 2015 – Write-down to fair value
|
$2.7
|
$1.6
|
Fair Value at December 31, 2015
|
Valuation Technique
|
Unobservable Input
|
Value
|
|
Other investment
|
7,396,738
|
Discounted cash flow
|
Rate of return
|
19%
|
Trade Date
|
Financial Institution
|
Notional Amount($m)
|
Interest rate (%)
|
End Date
|
||||||
21 Jan 2011
|
EFG Eurobank – Ergasias S.A.
|
10.0
|
2.29
|
21 Jan 2016
|
||||||
20 Sep 2013
|
EFG Eurobank – Ergasias S.A.
|
10.0
|
1.29
|
31 Dec 2016
|
||||||
17 Oct 2014
|
EFG Eurobank – Ergasias S.A.
|
10.0
|
1.97 (average)
*
|
28 May 2019
|
Derivatives not designated as hedging instruments
|
Balance Sheet Location
|
December 31, 2014
|
December 31, 2015
|
Interest rate swap contracts
|
Current liabilities – Derivatives
|
297,992
|
50,402
|
Interest rate contracts
|
Long-term liabilities – Derivatives
|
779
|
202,700
|
Total derivative liabilities
|
298,771
|
253,102
|
Derivatives not designated as hedging instruments
|
Location of gain (loss) recognized
|
Year Ended
December 31,
2013
|
Year Ended
December 31,
2014
|
Year Ended
December 31,
2015
|
Interest rate – Fair value
|
Change in fair value of derivatives
|
1,375,820
|
718,977
|
45,669
|
Interest rate contracts - Realized loss
|
Change in fair value of derivatives
|
(1,552,952)
|
(763,625)
|
(307,343)
|
Total loss on derivatives
|
(177,132)
|
(44,648)
|
(261,674)
|
17. | Investment in Joint Venture and Other Investment |
2013
|
2014
|
2015
|
||||||||||
Current assets
|
11,207,156
|
9,520,607
|
11,880,202
|
|||||||||
Non current assets
|
268,669,047
|
252,531,888
|
223,366,979
|
|||||||||
Current liabilities
|
4,079,748
|
16,194,148
|
116,207,106
|
|||||||||
Non current liabilities
|
127,350,355
|
115,181,837
|
3,495,007
|
|||||||||
Members' contributions
|
175,000,000
|
175,000,000
|
175,000,000
|
|||||||||
Voyage revenue
|
27,510,792
|
31,663,989
|
34,419,758
|
|||||||||
Net revenue
|
26,163,274
|
30,269,066
|
33,114,016
|
|||||||||
Operating loss
|
(7,313,783
|
)
|
(11,058,601
|
)
|
(7,912,039
|
)
|
||||||
Net loss
|
(14,106,082
|
)
|
(17,798,476
|
)
|
(15,108,751
|
)
|
17. | Investment in Joint Venture and Other Investment- continued |
In USD
|
Other Investment
|
Balance, January 1, 2014
|
5,196,196
|
Total gain for period included in Investment income
|
987,604
|
Balance, December 31, 2014
|
6,183,800
|
Total gain for period included in Investment income
|
1,212,938
|
Balance, December 31, 2015
|
7,396,738
|
Number
of
Shares
|
Preferred Shares
Amount
|
Dividends paid-in-kind
|
Total
|
|||||||||||||
Balance,
January 1, 2014
|
-
|
-
|
-
|
-
|
||||||||||||
Issuance of preferred shares from private placement net of issuance costs
|
30,700
|
29,000,000
|
29,000,000
|
|||||||||||||
Dividends declared
|
1,440
|
1,440,100
|
1,440,100
|
|||||||||||||
Balance,
December 31, 2014
|
32,140
|
29,000,000
|
1,400,100
|
30,440,100
|
||||||||||||
Dividends declared
|
1,639
|
1,639,149
|
1,639,149
|
|||||||||||||
Balance,
December 31, 2015
|
33,779
|
29,000,000
|
3,039,249
|
32,079,249
|
(a) | On January 5, 2016, the Company announced the sale of M/V Aristides N. P. The vessel was delivered to its buyers on January 16, 2016. |
(b) | On February 12, 2016, the Company signed and drew a term loan facility with Eurobank Ergasias S.A in order to refinance all existing facilities with the bank. This is a $14,500,000 loan drawn by Saf-Concord Shipping Ltd, Eternity Shipping Company, Allendale Investments S.A., Manolis Shipping Limited, Alterwall Business Inc. and Aggeliki Shipping Ltd as Borrowers. The loan is payable in 12 equal consecutive quarterly instalments of $460,000 each, with an $8.98 million balloon payment to be paid together with the last instalment in February 2019. The margin of the loan is 6.00% above LIBOR. The loan is secured with the following: (i) first priority mortgages over M/V Monica P, M/V Captain Costas, M/V Kuo Hsuing, M/V Manolis P, M/V Ninos and M/V Aggeliki P, (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd and other covenants and guarantees similar to the rest of the loans of the Company, and (iv) a $2,800,000 cash collateral deposit pledged in favor of the bank. |
(c) | On February 19, 2016, the Company signed a term loan facility with Nord LB and on February 25, 2016 a loan of $13,800,000 was drawn by Kamsarmax One Shipping Ltd. to partly finance the purchase of M/V Xenia. The loan is to be repaid in 14 consecutive equal semi-annual installments of $467,000 plus a balloon amount of $7,262,000. The margin of the loan is 2.95% above LIBOR. The loan is secured with (i) first priority mortgages over M/V Xenia, (ii) first assignment of earnings and insurance, (iii) a corporate guarantee of Euroseas Ltd and other covenants and guarantees similar to the rest of the loans of the Company. |
(d) |
On April 27, 2016, the Company signed a memorandum of agreement to sell M/V Captain Costas, one of the Company's containership vessels. The sale is expected to occur in May 2016 and to result in gross proceeds of approximately $2.77 million which is in excess of its carrying value.
|
Clause | Page | |
1
|
Purpose, Definitions, Construction & Majority Lenders
|
1
|
2
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The Available Commitment and Cancellation
|
16
|
3
|
Interest and Interest Periods
|
18
|
4
|
Repayment and prepayment
|
20
|
5
|
Fees and expenses
|
23
|
6
|
Payments and taxes; accounts and calculations
|
24
|
7
|
Representations and warranties
|
28
|
8
|
Undertakings
|
33
|
9
|
Conditions
|
45
|
10
|
Events of Default
|
46
|
11
|
Indemnities
|
50
|
12
|
Unlawfulness, increased costs and bail-in
|
51
|
13
|
Application of moneys, set off, pro-rata payments and miscellaneous
|
53
|
14
|
Accounts and retentions
|
56
|
15
|
Assignment, transfer and lending office
|
58
|
16
|
Agent and Security Trustee
|
62
|
17
|
Notices and other matters
|
73
|
18
|
Governing law
|
74
|
19
|
Jurisdiction
|
74
|
Schedule 1 The Lenders and their Commitments
|
77
|
|
Schedule 2 Form of Drawdown Notice
|
78
|
|
Schedule 3 Conditions precedent
|
79
|
|
Schedule 4 Form of Transfer Certificate
|
84
|
|
Schedule 5 Form of Trust Deed
|
88
|
|
Schedule 6 Form of Compliance Certificate
|
89
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(1) | KAMSARMAX ONE SHIPPING LTD | as Borrower; |
(2) | NORDDEUTSCHE LANDESBANK GIROZENTRALE as Lender; and |
(3) | NORDDEUTSCHE LANDESBANK GIROZENTRALE as Agent and Security Trustee; and |
(4) | NORDDEUTSCHE LANDESBANK GIROZENTRALE as Swap Bank . |
1 | PURPOSE, DEFINITIONS, CONSTRUCTION & MAJORITY LENDERS |
1.1 | Purpose |
1.2 | Definitions |
(a) | any repayment or prepayment of the Loan or any part thereof otherwise than (i) in accordance with clause 4.1 or (ii) on an Interest Payment Date whether on a voluntary or involuntary basis or otherwise howsoever; or |
(b) | as a result of the Borrower failing or being incapable of drawing the Loan after the Drawdown Notice has been given; |
(i) | sections 1471 to 1474 of the Code or any associated regulations or other official guidance; |
(ii) | 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 |
(iii) | 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. |
(i) | 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 July 2014; |
(ii) | 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 2017; or |
(iii) | 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 United States of America Government’s List of Specially Designated Nationals and Blocked Persons, Denied Persons List, Entities List, Debarred Parties List, Excluded Parties List and Terrorism Exclusion List; |
(b) | Her Majesty’s Treasury’s Consolidated List of Financial Sanctions Targets; |
(c) | the European Union Restricted Person Lists issued pursuant to Council Regulation (EC) No. 881/2002 of 27 May 2002, Council Regulation (EC) No. 2580/2001 of 27 December 2001 and Council Common Position 2005/725/CFSP of 17 October 2005; and |
(d) | the United Nations Consolidated List established and maintained by the 1267 Committee; |
(a) | one sixth (1/6 th ) of the repayment instalment falling due for payment pursuant to clause 4.1.1 (as the same may have been reduced by any prepayment) on the next Repayment Date after the relevant Retention Date; and |
(b) | the applicable fraction (as hereinafter defined) of the aggregate amount of interest falling due for payment in respect of each part of the Loan during and at the end of each Interest Period current at the relevant Retention Date and, for this purpose, the expression “ applicable fraction ” in relation to each Interest Period shall mean a fraction having a numerator of one and a denominator equal to the number of Retention Dates falling within the relevant Interest Period; |
(c) | actual, constructive, compromised or arranged total loss of the Vessel; or |
|
(d) | Compulsory Acquisition; or |
(e) | any hijacking, piracy, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Vessel not falling within the definition of Compulsory Acquisition, unless the Vessel be released and restored to the Borrower within sixty (60) days after such incident; |
1.3 | Construction |
1.3.1 | clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement; |
1.3.2 | references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules and any supplemental agreements executed pursuant hereto; |
1.3.3 | references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as duly amended and/or supplemented and/or novated; |
1.3.4 | references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority (including, without limitation, any regulation implementing or complying with (1) the “ International Convergence of Capital Measurement and Capital Standards, a Revised Framework ” published by the Basel Committee on Banking Supervision in June 2004, in the form existing on the date of this Agreement (“ Basel II ”), and/or (2) “ Basel III: International framework for liquidity risk measurement, standards and monitoring ” and “ Basel III: A global regulatory framework for more resilient banks and banking systems ”, published by the Basel Committee on Banking Supervision in December 2010, in the form existing on the date of this Agreement (“ Basel III ”) and (3) any other law or regulation which, at any time and from time to time, implements and/or amends and/or supplements and/or re-enacts and/or supersedes, whether in whole or in part, Basel II and/or Basel III, and whether such implementation, application or compliance is by a Government Entity, a lender or any company affiliated to it); |
1.3.5 | references to any person in or party to this Agreement shall include reference to such person’s lawful successors and assigns and references to a Lender shall also include a Transferee Lender; |
1.3.6 | words importing the plural shall include the singular and vice versa; |
1.3.7 | references to a time of day are, unless otherwise stated, to London time; |
1.3.8 | references to a person shall be construed as references to an individual, firm, company, corporation or unincorporated body of persons or any Government Entity; |
1.3.9 | references to a “guarantee” include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability 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; |
1.3.10 | references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re-enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision; |
1.3.11 | a certificate by the Agent or the Security Trustee as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrower except for manifest error; |
1.3.12 | if any document, term or other matter or thing is required to be approved, agreed or consented to by any of the Banks such approval, agreement or consent must be obtained in writing unless the contrary is stated; |
1.3.13 | time shall be of the essence in respect of all obligations whatsoever of the Borrower under this Agreement, howsoever and whensoever arising; |
1.3.14 | and the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible. |
1.4 | Accounting terms and references to currencies |
1.5 | Contracts (Rights of Third Parties Act) 1999 |
1.6 | Majority Lenders |
2 | THE AVAILABLE COMMITMENT AND CANCELLATION |
2.1 | Agreement to lend |
2.2 | Obligations several |
2.3 | Interests several |
2.4 | Drawdown |
2.4.1 | On the terms and subject to the conditions of this Agreement, the Loan shall be advanced to the Borrower on the Drawdown Date following receipt by the Agent from the Borrower of a Drawdown Notice not later than 11:00 a.m. Hannover time on the third Banking Day before the proposed Drawdown Date. |
2.4.2 | The Drawdown Notice shall be effective on actual receipt by the Agent and, once given, shall, subject as provided in clause 3.6, be irrevocable. |
2.5 | Limitation and application of the Loan |
2.5.1 | The amount of the Loan shall not exceed the lesser of (i) 69% of the Valuation Amount of the Vessel (to be determined no more than three weeks prior to the Drawdown Date) (the “ Maximum Loan Amount ”) and (ii) USD16,560,000. |
2.5.2 | If on the Drawdown Date the Maximum Loan Amount is less than USD16,560,000 the Total Commitment shall be reduced by an amount equal to the shortfall by reducing first the amount of Advance B and thereafter the amount of Advance A. |
2.6 | Availability |
2.7 | Cancellation in changed circumstances |
2.8 | Use of proceeds |
3 | INTEREST AND INTEREST PERIODS |
3.1 | Normal interest rate |
3.2 | Selection of Interest Periods |
(a) | 6 months as notified by the Borrower to the Agent not later than 11.00 a.m. (Hannover time) 2 Banking Days before the commencement of such Interest Period if no such other period is agreed by the Borrower and the Agent in accordance with paragraph (b); or |
(b) | such other period as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrower. |
3.3 | Determination of Interest Periods |
3.3.1 | the first Interest Period shall start on the Drawdown Date, and each subsequent Interest Period shall start on the last day of the previous Interest Period; |
3.3.3 | if any Interest Period would otherwise overrun a Repayment Date, then, in the case of the last Repayment Date, such Interest Period shall end on such Repayment Date, and in the case of any other Repayment Date the Loan shall be divided into parts so that there is one part in the amount of the repayment instalment due on such Repayment Date and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3. |
3.4
|
Default interest |
3.5 | Notification of Interest Periods and interest rate |
3.6 | Market disruption |
3.6.1 | If a Market Disruption Event occurs in relation to the Loan for any Interest Period, then the rate of interest on each Lender’s share of the Loan for the Interest Period shall be the rate per annum which is the sum of: |
(a) | the Margin; and |
(b) | the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the Loan from whatever source it may reasonably select. |
3.6.2 | In this Agreement “ Market Disruption Event ” means that: |
(a) | at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined and none of the Reference Banks supplies a rate to the Agent to determine LIBOR for dollars for the relevant Interest Period; or |
(b) | before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed thirty five per cent. of the Loan) that the cost to it or them of obtaining matching deposits in the London interbank market would be in excess of LIBOR. |
3.7 | Alternative basis of interest or funding |
3.7.1 | If a Market Disruption Event occurs and the Agent or Borrower so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest. |
3.7.2 | Any substitute or alternative basis agreed pursuant to Clause 3.7.1 above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties. |
3.7.3 | If a Market Disruption Event occurs before the Loan is made available, the Lenders’ obligation to make the Loan available shall be suspended while the circumstances giving rise to the Market Disruption Event continue. |
3.7.4 | If the Borrower does not agree with an interest rate set by the Agent under Clause 3.7.1 the Borrower may give the Agent not less than five (5) Banking Days’ notice of its intention to prepay the Loan or, as the case may be, the affected Lender’s Contribution, at the end of the next Interest Period. |
3.7.5 | A notice under Clause 3.7.4 shall be irrevocable. The Agent shall promptly notify the Lenders or (as the case may require) the affected Lender of the Borrower’s notice of intended prepayment; and: |
(a) | on the date on which the Agent serves that notice, the Total Commitment or (as the case may require) the Commitment of the affected Lender shall be cancelled; and |
(b) | at the end of the next Interest Period, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the affected Lender’s Contribution, together with accrued interest thereon at the rate certified by the Agent and notified to the Borrower as being a reasonable interest reflecting the cost to the Lenders or, as the case may be, the affected Lender, of funding the Loan during the period ending on the date of such prepayment, plus the Margin. |
4 | REPAYMENT AND PREPAYMENT |
4.1 | Repayment |
4.1.1 | Subject as otherwise provided in this Agreement, the Borrower must repay: |
(a) | Advance A by fourteen (14) semi-annual instalments of four hundred and sixty seven thousand Dollars (USD467,000) each, one such instalment to be repaid on each of the Repayment Dates, and a balloon instalment of seven million four hundred and sixty two thousand Dollars (USD7,462,000) (the “ Balloon Instalment ”) to be repaid on the final Repayment Date; and |
(b) | Advance B by eight (8) semi-annual instalments of three hundred and twenty thousand Dollars (USD320,000) each, one such instalment to be repaid on each of the Repayment Dates . |
4.1.2 | The Borrower shall on the Maturity Date also pay to the Agent and the Lenders all other amounts in respect of interest or otherwise then due and payable under this Agreement and the Security Documents. |
4.2 | Voluntary prepayment |
4.3 | Mandatory Prepayment on Total Loss |
4.3.1 | Interpretation |
(a) | in the case of an actual total loss of the Vessel, on the actual date and at the time the Vessel was lost or, if such date is not known, on the date on which the Vessel was last reported; |
(b) | in the case of a constructive total loss of the Vessel, upon the date and at the time notice of abandonment of the ship is given to the then insurers of the Vessel (provided a claim for total loss is admitted by such insurers) or, if such insurers do not immediately admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by such insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred; |
(c) | 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; |
(d) | in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and |
(e) | in the case of hijacking, piracy, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Vessel (other than within the definition of Compulsory Acquisition), which deprives the Borrower of the use of the Vessel for more than sixty (60) days, upon the expiry of such sixty (60) day period. |
4.4 | Mandatory prepayment on sale of the Vessel |
4.5 | Amounts payable on prepayment |
4.5.1 | accrued interest on the amount to be prepaid to the date of such prepayment; |
4.5.2 | any additional amount payable under clauses 3.5, 6.6 or 12.2; |
4.5.3 | if any prepayment of the Loan is made under clause 4.2 or 4.4 prior to the second anniversary of the Drawdown Date, a prepayment fee of 1% of the amount so prepaid; and |
4.5.4 | all other sums payable by the Borrower to the Banks under this Agreement or any of the other Security Documents including, without limitation any Break Costs. |
4.6 | Notice of prepayment; reduction of maximum loan amount |
4.6.1 | No prepayment may be effected under clause 4.2 unless the Borrower shall have given the Agent at least ten (10) Banking Days prior written notice of its intention to make such prepayment. Every notice of prepayment shall be effective only on actual receipt by the Agent, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrower to make such prepayment on the date specified. |
4.6.2 | Subject to the other provisions of this Agreement and in particular Clause 2.6, no amount repaid or prepaid under this Clause 4 in respect of the Loan may be reborrowed. |
4.6.3 | Any amounts prepaid pursuant to clause 4.2 shall be applied pro rata against the Advances in reducing the repayment instalments (a) in the case of Advance A, in inverse order of maturity, starting with the Balloon Instalment and (b) in the case of Advance B, pro rata. |
4.6.4 | The Borrower may not prepay any part of the Loan except as expressly provided in this Agreement. |
4.7 | Master Agreement, Repayments and Prepayments |
4.7.1 | If less than the full amount of the Loan remains outstanding following a prepayment and the Swap Bank agrees, following a written request of the Borrower, that the Borrower may maintain all or part of a Transaction in an amount not wholly matched with or linked to all or part of the Loan, the Borrower shall within fifteen (15) days of being notified by the Swap Bank of such requirement, provide the Swap Bank with such additional security as shall be adequate to secure the performance of such Transaction, which additional security shall take such form, be constituted by such documentation and be entered into between such parties, as the Swap Bank may approve or require, and each document comprising such additional security shall constitute a Credit Support Document. |
4.7.2 | The Borrower shall on the first written demand of the Swap Bank indemnify the Swap Bank in respect of all losses, costs and expenses (including, but not limited to, legal costs and expenses) incurred or sustained by the Swap Bank as a consequence of or in relation to the effecting of any matter or transactions referred to in this clause 4.7 . |
5 | FEES AND EXPENSES |
5.1 | Commission |
5.1.1 | The Borrower agrees to pay to the Agent for the account of the Lenders pro rata in accordance with their respective Commitments on the Execution Date and each of the dates falling at three (3) monthly intervals after the Execution Date until the end of the Drawdown Period and on the last day of the Drawdown Period commitment commission computed from 18 December 2015 at a rate of zero point seven five per cent (0.75%) per annum on the daily amount of the undrawn Loan Facility. |
5.1.2 | The commission referred to in clause 5.1.1 must be paid by the Borrower to the Agent, whether or not any part of the Total Commitment is ever advanced and shall be non-refundable. |
5.2 | Structuring Fee |
5.3 | Administration fee |
5.4 | Cancellation fee |
5.5 | Expenses |
5.5.1 | in connection with the negotiation, preparation, execution (even if the transactions contemplated hereby do not materialise for any reasons attributable to the Borrower) and, where relevant, registration of the Security Documents and of any actual amendment, or indulgence or the granting of any waiver or consent howsoever in connection with, any of the Security Documents (including legal fees); and |
5.5.2 | in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretions under any of the Security Documents, or in consideration of the Banks’ rights thereunder or any action proposed or taken following the occurrence of a Default which is continuing or otherwise in respect of the moneys owing under any of the Security Documents, |
5.6 | Value added tax |
5.7 | Stamp and other duties |
6 | PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS |
6.1 | No set-off or counterclaim |
6.2 | Payment by the Lenders |
6.3 | Non-Banking Days |
6.4 | Calculations |
6 .5 | Currency of account |
6.6 | Grossing-up for Taxes - by the Borrower |
6.7 | Grossing-up for Taxes - by the Lenders |
6.8 | Loan account |
6.9 | Agent may assume receipt |
6.10 | Partial payments |
6.10.1 | first, in or towards payment, on a pro-rata basis, of any unpaid costs and expenses of the Agent and the Security Trustee under any of the Security Documents; |
6.10.2 | secondly, in or towards payment of any fees payable to the Agent or any of the other Banks under, or in relation to, the Security Documents which remain unpaid; |
6.10.3 | thirdly, in or towards payment to the Lenders, on a pro rata basis, of any accrued interest and interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid; |
6.10.4 | fourthly, in or towards payment to the Lenders, on a pro rata basis, of any principal in respect of the Loan which shall have become due but remains unpaid and in or towards payment to the Swap Bank of any sum which shall have become due under the Master Agreement but remains unpaid; |
6.10.5 | fifthly, in or towards payment to the Lenders, on a pro rata basis, any Break Costs and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid; and |
6.10.6 | sixthly, in or towards payment to the relevant person of any other sum which shall have become due under any of the Security Documents but remains unpaid (and, if more than one such sum so remains unpaid, on a pro rata basis). |
6.11 | FATCA |
6.11.1 | FATCA Information |
(a) | Subject to subclause (c) below, each party to a Security Document shall, within ten (10) Banking Days of a reasonable request by another party to the Security Documents: |
(i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(ii) | supply to the requesting party such forms, documentation and other information relating to its status under FATCA (including its applicable “passthru percentage” or other information required under the regulations of the US Treasury Department or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purposes of such requesting party’s compliance with FATCA. |
(b) | If a party to any Security Document confirms to another party pursuant to subclause (a) 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 and the Agent reasonably promptly. |
(c) | Subclause (a) above shall not oblige any Lender to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any policy of that Lender, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such Lender for purposes of this subclause (c). |
(d) | If a party to any Security Document fails to confirm its status or to supply forms, documentation or other information requested in accordance with subclause (a) above (including, for the avoidance of doubt, where subclause (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%, |
6.11.2 | FATCA Deduction |
(a) | Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction. |
(b) | Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrower, the Agent and the other Banks. |
7 | REPRESENTATIONS AND WARRANTIES |
7.1 | Continuing representations and warranties |
7.1.1 | Due incorporation |
7.1.2 | Corporate power |
7.1.3 | Binding obligations |
7.1.4 | No conflict with other obligations |
7.1.5 | No default |
7.1.6 | No litigation or judgments |
7.1.7 | No filings required |
7.1.8 | Required Authorisations and legal compliance |
7.1.9 | Choice of law |
7.1.10 | No immunity |
7.1.11 | Financial statements correct and complete |
7.1.12 | Pari passu |
7.1.13 | Information/ Material Adverse Effect |
7.1.14 | No withholding Taxes |
7.1.15 | Use of proceeds |
(a) | in the absolute sole, legal and beneficial ownership of the Borrower; |
(b) | registered through the offices of the relevant Registry as a ship under the laws and flag of the relevant Flag State; |
(c) | in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service; |
(d) | classed with the relevant Classification free of any recommendations, qualifications or conditions of the Classification Society which have not been complied with in accordance with their terms; |
(e) | insured in accordance with the Ship Security Documents; and |
(f) | managed by the Managers in accordance with the terms of the Management Agreements; |
7.1.17 | Vessel’s employment |
7.1.18 | Freedom from Encumbrances |
7.1.19 | Environmental Matters |
(a) | the Borrower, the Corporate Guarantor, the Managers and the other Security Parties and, to the best of the Borrower’s knowledge and belief (having made due enquiry), their respective Environmental Affiliates, have complied with the provisions of all Environmental Laws; |
(b) | the Borrower, the Corporate Guarantor, the Managers and the other Security Parties and, to the best of the Borrower’s knowledge and belief (having made due enquiry), their respective Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals; |
(c) | no Environmental Claim has been made or threatened or pending against the Borrower, the Corporate Guarantor, any Managers or any other Security Party, or, to the best of the Borrower’s knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates; and |
(d) | there has been no Environmental Incident; |
7.1.20 | ISM and ISPS Code |
7.1.21 | Copies true and complete |
7.1.22 | the Borrower is the ultimate beneficiary of the Loan; |
7.1.23 | the Borrower has not incurred any Indebtedness save under this Agreement or as otherwise disclosed to the Agent in writing; |
7.1.24 | the Corporate Guarantor and the Borrower have filed all tax and other fiscal returns required to be filed by any tax authority to which they are subject; |
7.1.25 | the Borrower does not have an office in England; |
7.1.26 | Prohibited Persons, unlawful activity |
(a) | to the best of its knowledge, none of the shares in the Borrower nor in the Vessel are or will be at any time during the Facility Period legally owned and controlled by a Prohibited Person; |
(b) | to the best of its knowledge, no Prohibited Person has or will have at any time during the Facility Period any legal or beneficial interest of any nature whatsoever in any of the shares of any of the Security Parties (other than in relation to the Corporate Guarantor); and |
(c) | to the best of its knowledge, no title in any property or other assets subject to an Encumbrance created by a Security Document has been obtained in breach of any existing applicable law, statute, rule or regulation to which any Security Party is subject; |
7.1.27 | Insolvency |
7.1.28 | No business |
7.1.29 | Ownership of Borrower |
7.1.30 | Accounting reference date |
7.1.31 | Manager |
7.1.32 | Anti-bribery |
7.2 | Repetition of representations and warranties |
8 | UNDERTAKINGS |
8.1 | General |
8.1.1 | Notice of Default and Proceedings |
8.1.2 | Authorisation |
8.1.3 | Corporate Existence |
8.1.4 | Use of proceeds |
8.1.5 | Pari passu |
8.1.6 | Financial statements |
(a) | as soon as possible, but in no event later than 180 days after the end of each of its financial years, annual audited (prepared in accordance with US GAAP by a first class international firm of accountants) consolidated financial statements of the Corporate Guarantor (commencing with the financial year ending 31 December 2014), together with updated details (in a form acceptable to the Agent) of all off-balance sheet and time-charter hire commitments of the Vessel; |
(b) | as soon as possible, but in no event later than 120 days after the end of each 3 month period in each of its financial years, the unaudited consolidated financial statements of the Corporate Guarantor for that 3 month period; |
8.1.7 | Compliance Certificates |
8.1.8 | Financial Covenants |
(a) | the Net Worth of the Group will at all times exceed USD30,000,000; |
(b) | the Group maintains a market capitalisation of no less than USD15,000,000; |
(c) | the Total Liabilities divided by the Total Assets shall at all times be less than 75%; and |
(d) | the balance standing to the credit of the Earnings Account shall at no time fall below USD300,000; |
8.1.9 | Reimbursement of MII & MAP Policy premiums |
8.1.10 | Provision of further information |
8.1.11 | Obligations under Security Documents |
8.1.12 | Compliance with ISM Code |
8.1.13 | Withdrawal of DOC and SMC |
8.1.14 | Issuance of DOC and SMC |
8.1.15 | ISPS Code Compliance |
(a) | maintain at all times a valid and current ISSC in respect of the Vessel; |
(b) | immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of the Vessel; and |
(c) | procure that the Vessel will comply at all times with the ISPS Code; |
8.1.16 | Compliance with Laws and payment of taxes |
8.1.17 | Charters etc. |
8.1.18 | Inspection |
8.1.19 | Subordination |
8.1.20 | Classification Society undertaking |
(a) | to send to the Agent, following receipt of a written request from the Agent, certified true copies of all original class records held by the Classification Society in relation to the Vessel; |
(b) | to allow the Agent (or its agents), at any time and from time to time, to inspect the original class and related records of the Borrower and the Vessel at the offices of the Classification Society and to take copies of them; |
(c) | to notify the Agent immediately if the Classification Society: |
(i) | receives notification from the Borrower or the Manager that the Vessel’s Classification Society is to be changed; |
(ii) | becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of the Vessel’s class under the rules or terms and conditions of the Borrower’s or the Vessel’s membership of the classification society; or |
(iii) | has imposed any requirements or recommendations in respect of the Vessel which are not complied with in accordance with their terms; |
(d) | following receipt of a written request from the Agent: |
(i) | to confirm that the Borrower is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or |
(ii) | if the Borrower is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Agent in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society; |
8.1.21 | Insurance opinion |
8.1.22 | Sanctions |
(1) | ensure that the Vessel will not be employed, and will not suffer the Vessel to be employed, and will not and will ensure that no Group Member does, conduct or undertake any business: |
(a) | in breach of any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing) (“ Sanction Program ”): |
(i) | imposed by any law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America; or |
(ii) | otherwise imposed by any law or regulation, |
(b) | in any trade, carriage of goods or business which is forbidden by any Sanctions Program or the laws of the United Kingdom or the United States of America as they apply to any Security Party, or any law applicable to the Borrower, the Corporate Guarantor, any Operator of the Vessel or any country which the Vessel may visit; or |
(c) | in carrying illicit or prohibited goods; or |
(d) | in a way which may make it liable to be condemned by a prize court or destroyed, seized or confiscated; or |
(2) | ensure that if the Borrower finds out (i) that the Vessel has been chartered, leased or otherwise provided directly or indirectly to any Prohibited Person or (ii) that it has entered into an agreement to sell, but has not yet delivered, the Vessel to a Prohibited Person, it shall (a) terminate as soon as possible (and at the latest within 30 days of such discovery) the relationship with the Prohibited Person and (b) inform the Agent immediately; |
(3) | provide to the Agent upon its written request all documentation related to the Vessel, and goods transported at any time by it: |
(ii) | which a Security Party is required to disclose to any regulatory authority pursuant to a Sanction Program; |
(i) | the Borrower shall be obliged only to ensure that the provisions of this clause apply to each Group Member only to the extent that that Group Member is bound by the relevant law or regulation in respect of the matters set out in this clause; and |
(ii) | if (aa) a Bank is resident in Germany (“ Inländer ”) within the meaning of Section 2 Paragraph 15 of the German foreign trade and payments act ( Außenwirtschaftsgesetz and herein, “ AWG ”) and is (bb) therefore subject to Section 7 of the German foreign trade ordinance ( Außenwirtschaftsverordnung and herein , “ AWV ”) and would (cc) therefore not itself be permitted to give a representation or an undertaking that is given or is to be given by a Security Party with respect to sanctions under this Agreement or any other Security Document, then such Bank shall not, in the event of a breach by a Security Party of any such representation or undertaking, be entitled to invoke or declare an Event of Default or vote for a cancellation of the Total Commitments and/or repayment of the Loan in accordance with Clause 10.2 ( Acceleration ). |
8.1.23 | Delivery of reports |
8.1.24 | Vessel information |
8.1.25 | Insolvency |
8.1.26 | Transactions with associated companies |
8.1.27 | Technical reports |
8.1.28 | The Vessel |
(a) | in the absolute sole and legal beneficial ownership of the Borrower and not held on trust for any third party; |
(b) | registered through the offices of the Registry as a ship under the laws and flag of the Flag State; |
(c) | in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service; |
(d) | classed with the Classification free of any recommendations, qualifications or conditions of the Classification Society which have not been complied with in accordance with their terms; |
(e) | insured in accordance with the Ship Security Documents; and |
(f) | managed by the Managers in accordance with the terms of the Management Agreements; |
8.1.29 | Derivatives |
8.1.30 | Anti-bribery |
8.2 | Security value maintenance |
8.2.1 | Security shortfall |
(a) | prepay within a period of thirty (30) days of the date of receipt by the Borrower of the Agent’s said notice such part of the Loan as will result in the Security Value after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to or higher than the Required Security Amount; or |
(b) | within thirty (30) days of the date of receipt by the Borrower of the Agent’s said notice constitute to the satisfaction of the Agent such further security for the Loan as shall be acceptable to the Lenders in their discretion having a value for security purposes (as determined in accordance with Clause 8.2.5) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Required Security Amount as at such date. |
8.2.2 | Valuation of the Vessel |
(a) | on the date falling one year after the Drawdown Date and annually thereafter, at the Borrower’s expense; and |
(b) | (in addition to (a) above) at any other time as the Agent (acting on the instructions of the Majority Lenders shall additionally require (in its absolute discretion) at (save as provided in Clause 8.2.4) the cost of the Lenders. |
8.2.3 | Information |
8.2.4 | Costs |
8.2.5 | Valuation of additional security |
8.2.6 | Documents and evidence |
8.3 | Negative undertakings |
8.3.1 | Negative pledge |
8.3.2 | No merger or transfer |
8.3.3 | Disposals |
8.3.4 | Other business or manager |
8.3.5 | Acquisitions or investments |
8.3.6 | Other obligations |
8.3.7 | No borrowing |
8.3.8 | Repayment of borrowings |
8.3.9 | Guarantees |
8.3.10 | Loans |
8.3.11 | Dividends |
8.3.12 | Sureties |
8.3.13 | Subsidiaries |
8.3.14 | Change of name, flag or class |
8.3.15 | Extended Employment Contract/Management Agreement |
(a) | amend in any material respect, vary or terminate a Management Agreement, any Extended Employment Contract or the Required Charter; |
(b) | without the prior written consent of the Agent (acting on the instructions of the Lenders) and then, if such consent is given, only subject to such conditions as the Agent (acting on the instructions of the Lenders) may impose, 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 (2) months’ hire (or the equivalent) is payable in advance; or |
(iv) | otherwise than on bona fide arm’s length terms; |
8.3.16 | Nuclear waste |
8.3.17 | Prohibited Persons |
8.3.18 | Change in constitutional documents |
8.3.19 | Employees |
8.3.20 | MOA/Required Charter |
9 | CONDITIONS |
9.1 | Advance of the Loan |
9.1.1 | that, on or before the service of the Drawdown Notice, the Agent has received the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers; |
9.1.2 | that, on or before the Drawdown Date , the Agent has received the documents described in Part B of Schedule 3 in form and substance satisfactory to the Agent and its lawyers ; |
9.1.3 | that, on or before the Release Date but prior to or concurrently with paying the Loan to the Seller or, at the Borrower’s request, to the Builder , the Agent has received the documents described in Part C of Schedule 3 in form and substance satisfactory to the Agent and its lawyers; |
9.1.4 | the representations and warranties contained in clause 7 and clauses 4.1 and 4.2 of the Corporate Guarantee being then true and correct as if each was made with respect to the facts and circumstances existing at such time; and |
9.1.5 | no Default having occurred and there being no Default which would result from the making of the Loan. |
9.2 | Waiver of conditions precedent |
9.3 | Further conditions precedent |
10 | EVENTS OF DEFAULT |
10.1 | Events |
10.1.1 | Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents to which it is a party at the time, in the currency and in the manner stipulated in the Security Documents or the Underlying Documents (and so that, for this purpose, sums payable (i) under clauses 3.1 and 4.1 shall be treated as having been paid at the stipulated time if (aa) received by the Agent within two (2) Banking Days of the dates therein referred to and (bb) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within five (5) Banking Days of demand); or |
10.1.2 | Breach of Insurance and certain other obligations: the Borrower or, as the context may require, the Technical Manager or any other person fails to obtain and/or maintain the Insurances (in accordance with the requirements of, the Ship Security Documents) for the Vessel 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 them under clause 8; or |
10.1.3 | Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1 and 10.1.2 above) unless such breach or omission, in the opinion of the Agent (following consultation with the Banks) is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied to the satisfaction of the Agent within ten (10) days of the occurrence thereof; or |
10.1.4 | Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or |
10.1.5 | Cross-default: There shall occur a default (howsoever therein described) under any Indebtedness of the Borrower or under any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 or any Indebtedness of the Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of the Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the Borrower or the Corporate Guarantor of a voluntary right of prepayment), or any creditor of the Borrower or the Corporate Guarantor becomes entitled to declare any such Indebtedness due and payable by reason of any default (however described) of the person concerned and such Indebtedness of the Borrower or the Corporate Guarantor (as the case may be) is not paid within fourteen (14) Banking Days from the due date for payment; or |
10.1.6 | Execution: any uninsured judgment or order made against any Security Party is not stayed, appealed against or complied with within thirty (30) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged within thirty (30) days; or |
10.1.7 | Insolvency: the Borrower is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; or the Borrower has negative net worth (taking into account contingent liabilities); or suffers the declaration by any court, liquidator, receiver or administrator of a moratorium in respect of any of its Indebtedness; or |
10.1.8 | Reduction or loss of capital: a meeting is convened by any Security Party (other than the Corporate Guarantor) without the Agent’s prior written consent, for the purpose of passing any resolution to purchase, reduce or redeem any of its share capital without the Agent’s prior written consent; or |
10.1.9 | Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up any Security Party or an order is made or resolution passed for the dissolution or winding up of any Security Party or a notice is issued convening a meeting for such purpose; or |
10.1.10 | Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of any Security Party or the Agent reasonably believes that any such petition or other step is imminent or an administration order is made in relation to any Security Party; or |
10.1.11 | Appointment of receivers and managers: any administrative or other receiver is appointed anywhere 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 |
10.1.12 | Compositions: any corporate action, legal proceedings or other procedures or steps are taken, or negotiations commenced, by any Security Party or by any of its creditors (other than the Corporate Guarantor) or any legal proceedings are taken in respect of the Corporate Guarantor, 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; or |
10.1.13 | Analogous proceedings: there occurs, in relation to any Security Party, in any Pertinent Jurisdiction, any event which, in the opinion of the Agent, appears in that Pertinent Jurisdiction to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.12 (inclusive) or any Security Party otherwise becomes subject, in any such Pertinent Jurisdiction, to any corporate action, legal proceedings or other procedures or steps under any law relating to insolvency, bankruptcy or liquidation; or |
10.1.14 | Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business without the prior written consent of the Agent; or |
10.1.15 | 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 Entity; or |
10.1.16 | Invalidity: any of the Security Documents or the Required Charter 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 and the Required Charter 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 (unless, in respect of the Required Charter, the Vessel shall have been delivered to a new charterer and on terms and in a form acceptable to the Lenders pursuant to an Extended Employment Contract within 30 days of such invalidity or other event set out in this clause); or |
10.1.17 | Unlawfulness: any Unlawfulness occurs or it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for a Bank to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or |
10.1.18 | Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or |
10.1.19 | Encumbrances enforceable: any Encumbrance (other than Permitted Liens) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or |
10.1.20 | 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 Borrower and the Borrower shall fail to procure the release of the Vessel within a period of ten (10) days thereafter; or |
10.1.21 | 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 Majority Lenders; or |
10.1.22 | Unrest: the Flag State of the Vessel or the country in which any Security Party is incorporated or domiciled becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means unless the Borrower shall have transferred its Vessel onto a new flag acceptable to the Banks within thirty (30) days (or such other period as the Agent may notify to the Borrower) following the Agent’s written request to the Borrower to effect such transfer; or |
10.1.23 | Environmental Incidents: an Environmental Incident occurs which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Agent be expected to have a Material Adverse Effect; or |
10.1.24 | P&I: the Borrower or the Technical Manager or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which the Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of 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 |
10.1.25 | Material events: any other event occurs or circumstance arises which, in the opinion of the Agent (following consultation with the Banks), is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to |
10.1.26 | Required Authorisations: any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect or if any exchange control or other law or regulation shall exist which would make any transaction under the Security Documents or the continuation thereof, unlawful or would prevent the performance by any Security Party of any term of any of the Security Documents to which they are a party; |
10.1.27 | Shareholdings: there is any change in the immediate and/or ultimate legal and/or beneficial ownership or control of any of the shares of the Borrower from that existing on the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this Clause); |
10.1.28 | Classification : the Classification of the Vessel is withdrawn by the Classification Society; |
10.1.29 | Material adverse change: there occurs a material adverse change in: |
(a) | the financial condition or strength, business, assets or credit worthiness of the Borrower or the Corporate Guarantor by reference to the financial position or strength, business, assets or credit worthiness of such Security Party as described by any Security Party to the Agent in the negotiation of this Agreement; or |
(b) | in the conditions prevailing in the international money and capital markets; or |
(c) | in the financial, political or economic situation globally; or |
(d) | the financial prospects of the Borrower or the Corporate Guarantor |
10.1.30 | Money Laundering : any Security Party is in breach of or fails to observe any law, requirement, measure or procedure implemented to combat “money laundering” as defined in Article 1 of the Directive (91/308 EEC) of the Council of the European Communities; |
10.1.31 | Management Agreements: a Management Agreement is terminated, revoked, suspended, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except with the consent of the Agent (such consent not to be unreasonably withheld); |
10.1.32 | Charters : the Required Charter is terminated other than by mere effluxion of time (unless the Vessel shall have been delivered to a new charterer and on terms and in a form acceptable to the Lenders pursuant to an Extended Employment Contract within 30 days of such termination) or is amended in a material respect without the consent of the Agent; or |
10.1.33 | Master Agreement : (i) an Event of Default or Potential Event of Default (in each case as defined in the Master Agreement) has occurred and is continuing under the Master Agreement or (ii) an Early Termination Date (as defined in the Master Agreement) has occurred or been effectively designated under the Master Agreement or (iii) a person entitled to do so gives notice of an Early Termination Date (as defined in the Master Agreement) or (iv) the Master |
10.2 | Acceleration |
10.2.1 | the obligation of each Lender to make its Commitment available shall be terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or |
10.2.2 | the Loan and all interest accrued and all other sums payable whatsoever under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable. |
10.3 | Demand Basis |
11 | INDEMNITIES |
11.1 | General indemnity |
11.2 | Environmental indemnity |
11.3 | Capital adequacy and reserve requirements indemnity |
11.4 | The Borrower shall indemnify and shall procure that each Security Party shall indemnify each Lender on demand, against any and all losses or expenses (including VAT (or equivalent)) which the Lender shall certify as sustained by it as a consequence of any notice, fax or email communication purporting to be sent to the Agent by the Borrower but being sent without proper authorisation or fraudulently). |
12 | UNLAWFULNESS, INCREASED COSTS AND BAIL-IN |
12.1 | Unlawfulness |
(a) | have an adverse effect on its business, operations or financial condition; or |
(b) | involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or |
(c) | involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage. |
12.2 | Increased costs |
12.2.1 | subject any Lender to Taxes or change the basis of Taxation of any Lender with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of such Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or |
12.2.2 | increase the cost to, or impose an additional cost on, any Lender or its holding company in making or keeping such Lender’s Commitment available or maintaining or funding all or part of such Lender’s Contribution; and/or |
12.2.3 | reduce the amount payable or the effective return to any Lender under any of the Security Documents; and/or |
12.2.4 | reduce any Lender’s or its holding company’s rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to such Lender’s obligations under any of the Security Documents; and/or |
12.2.5 | require any Lender or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by such Lender under any of the Security Documents; and/or |
12.2.6 | require any Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of its Contribution or the Loan from its capital for regulatory purposes, |
(a) | such Lender shall notify the Borrower in writing of such event promptly upon its becoming aware of the same; and |
(b) | the Borrower shall on demand made at any time whether or not such Lender’s Contribution has been repaid, pay to the Agent for the account of such Lender the amount which such Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which such Lender or its holding company regards as confidential) is required to compensate such Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment , forgone return or loss. |
12.3 | Exception |
12.4 | Contractual recognition of bail-in |
(a) | any Bail-In Action in relation to any such liability, including (without limitation): |
(i) | a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability; |
(ii) | a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and |
(iii) | a cancellation of any such liability; and |
(b) | a variation of any term of any Security Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability. |
13 | APPLICATION OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND MISCELLANEOUS |
13.1 | Application of moneys |
13.1.1 | first, in or towards payment, on a pro-rata basis, of any unpaid costs and expenses of the Banks or any of them under any of the Security Documents; |
13.1.2 | secondly, in or towards payment of any fees payable to the Agent or any of the other Banks under, or in relation to, the Security Documents which remain unpaid; |
13.1.3 | thirdly, in or towards payment to the Banks, on a pro rata basis, of any accrued interest and interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid; |
13.1.4 | fourthly, pro rata in or towards repayment of the Loan (whether the same is due and payable or not) and payment to the Swap Bank of any sum which shall have become due under the Master Agreement in respect of any interest rate swap and any other sums payable in the nature of Break Costs under the Master Agreement but remains unpaid and shall be applied, in respect of the Loan, pro rata against the outstanding repayment instalments; |
13.1.5 | fifthly, in or towards payment to the Lenders, on a pro rata basis any Break Costs and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid; |
13.1.6 | sixthly, in or towards payment to any Bank of any other sums owing to it under any of the Security Documents; and |
13.1.7 | seventhly, the surplus (if any) shall be paid to the Borrower or to whomsoever else may then be entitled to receive such surplus. |
13.2 | Set-off |
13.2.1 | The Borrower irrevocably authorises each Bank (without prejudice to any of such Bank’s rights at law, in equity or otherwise), following the occurrence of an Event of Default which is continuing and without notice to the Borrower, to apply any credit balance to which the Borrower is then entitled standing upon any account of the Borrower with any branch of such Bank in or towards satisfaction of any sum due and payable from the Borrower to such Bank under any of the Security Documents. For this purpose, each Bank is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application. |
13.2.2 | No Bank shall be obliged to exercise any right given to it by this clause 13.2. Each Bank shall notify the Borrower through the Agent forthwith upon the exercise or purported exercise of any right of set off giving full details in relation thereto and the Agent shall inform the other Banks. |
13.2.3 | Nothing in this clause 13.2 shall be effective to create a charge or other security interest. |
13.3 | Pro rata payments |
13.3.1 | If at any time any Lender (the “ Recovering Lender ”) receives or recovers any amount owing to it by the Borrower under this Agreement (other than pursuant to any other Security Document) by direct payment, set-off or in any manner other than by payment through the Agent pursuant to clauses 6.1 or 6.9 (not being a payment received from a Transferee Bank or a sub-participant in such Lender’s Contribution or any other payment of an amount due to the Recovering Lender for its sole account pursuant to clauses 3.6, 5, 6.6, 11.1, 11.2, 11.3, 12.1, or 12.2), the Recovering Lender shall, within two (2) Banking Days of such receipt or recovery (a “ Relevant Receipt ”) notify the Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Lender would have received if the Relevant Receipt had been received by the Agent and distributed pursuant to clause 6.1 or 6.10 (as the case may be) then: |
(a) | within two (2) Banking Days of demand by the Agent, the Recovering Lender shall pay to the Agent an amount equal (or equivalent) to the excess; |
(b) | the Agent shall treat the excess amount so paid by the Recovering Lender as if it were a payment made by the Borrower and shall distribute the same to the Lenders (other than the Recovering Lenders) in accordance with clause 6.10; and |
(c) | as between the Borrower and the Recovering Lender the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrower to the other Lenders shall, to the extent of the amount so re-distributed to them, be treated as discharged. |
13.3.2 | If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Lender (whether to a liquidator or otherwise) each Lender to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Lender repay to the Recovering Lender such Lender’s pro-rata share of the amount which has to be refunded by the Recovering Lender. |
13.3.3 | Each Lender shall on request supply to the Agent such information as the Agent may from time to time request for the purposes of this clause 13.3. |
13.3.4 | Notwithstanding the foregoing provisions of this clause 13.3, no Recovering Lender shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to Proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such Proceedings or commence and diligently pursue separate Proceedings to enforce its rights in the same or another court (unless the Proceedings instituted by the Recovering Lender are instituted by it without prior notice having been given to such party through the Agent). |
13.4 | No release |
13.5 | No charge |
13.6 | Further assurance |
13.7 | Conflicts |
13.8 | No implied waivers, remedies cumulative |
13.9 | Severability |
13.10 | Force Majeure |
13.11 | Amendments |
13.12 | Counterparts |
13.13 | English language |
14 | ACCOUNTS AND RETENTIONS |
14.1 | General |
14.1.1 | it will on or before the Drawdown Date, open the Earnings Account, the Retention Account and the Drydock Reserve Account in its name; and |
14.1.2 | all moneys payable to the Borrower in respect of the Earnings of the Vessel shall, unless and until the Agent (acting on the instructions of the Majority Lenders) directs to the contrary pursuant to the provisions of the Mortgage, be paid to the Earnings Account, Provided however that if any of the moneys paid to the Earnings Account are payable in a currency other than USD the Account Bank shall then convert such moneys into USD at the Account Bank’s spot rate of exchange at the relevant time for the purchase of USD with such currency and the term “spot rate of exchange” shall include any premium and costs of exchange payable in connection with the purchase of USD with such currency). |
14.2 | Earnings Accounts: withdrawals |
14.3 | Retention Account: credits and withdrawals |
14.3.1 | The Borrower undertakes with each Bank that, throughout the Facility Period, it will procure that, on each Retention Date there is paid (whether from the Earnings Account or elsewhere) to the Retention Account, the Retention Amount for such date. |
14.3.2 | Unless and until there shall occur an Event of Default which is continuing (whereupon the provisions of clause 14.4 shall apply), all Retention Amounts credited to the Retention Account together with interest from time to time accruing or at any time accrued thereon must be applied by the Account Bank (and the Borrower hereby irrevocably authorises the Account Bank so to apply the same) upon each Repayment Date and/or on each day that interest is payable on the Loan or an Advance pursuant to clause 3.1, in or towards payment to the Agent of the instalment then falling due for repayment or, as the case may be, the amount of interest then due. Each such application by the Account Bank shall constitute a payment in or towards satisfaction of the Borrower’s corresponding payment obligations under this Agreement but shall be strictly without prejudice to the obligations of the Borrower to make any such payment to the extent that the aforesaid application by the Account Bank is insufficient to meet the same. |
14.3.3 | Unless the Agent (acting on the instructions of the Majority Banks) otherwise agrees in writing and subject to clause 14.3.2, the Borrower shall not be entitled to withdraw any moneys from the Retention Account at any time during the Facility Period. |
14.4 | Application of accounts |
14.5 | Charging of accounts |
14.6 | Drydock Reserve Account |
15 | ASSIGNMENT, TRANSFER AND LENDING OFFICE |
15.1 | Benefit and burden |
15.2 | No assignment by Borrower |
15.3 | Transfers by Banks |
(a) | cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents (including, but not limited to, the Loan and/or any commercial risk in granting the Loan in whole or in part) to be assigned or transferred (through the disposal of the Loan (including any collateral that may be associated with it), through credit derivatives or through the subparticipation of third parties in the Loan) to any one or more banks or other financial institutions (which may be any company affiliated to the Lender, a member of the European System of Central Banks, a banking or financial services institution, a financing company, an insurer, a social security or pension fund, a capital investment company, a financial intermediary or a special purpose vehicle with or without own legal status (a “ Transferee Lender ”) in each case by delivering to the Agent a Transfer Certificate duly completed and duly executed by the Transferor Lender and the Transferee Lender. No such transfer is binding on, or effective in relation to, the Borrower or the Agent unless (i) it is effected or evidenced by a Transfer Certificate which complies with the provisions of this clause 15.3 and is signed by or on behalf of the Transferor Lender, the Transferee Lender and the Agent (on behalf of itself, the Borrower and the other Banks) and (ii) such transfer of rights under the other Security Documents has been effected and registered. Upon signature of any such Transfer Certificate by the Agent, which signature shall be effected as promptly as is practicable after such Transfer Certificate has been delivered to the Agent, and subject to the terms of such Transfer Certificate, such Transfer Certificate shall have effect as set out below; or |
(b) | make use of the KEV refinancing ( Komfortable Einreichung und Verwaltung von Kreditforderungen ). |
15.3.2 | a Transfer Certificate may be in respect of a Lender’s rights in respect of all, or part of, its Commitment and shall be in respect of the same proportion of its Contribution; |
15.3.3 | a Transfer Certificate shall only be in respect of rights and obligations of the Transferor Lender in its capacity as a Lender and shall not transfer its rights and obligations (if applicable) as the Agent and/or the Agent and/or the Security Trustee, or in any other capacity, as the case may be and such other rights and obligations may only be transferred in accordance with any applicable provisions of this Agreement; |
15.3.4 | a Transfer Certificate shall take effect in accordance with English law as follows: |
(a) | to the extent specified in the Transfer Certificate, the Transferor Lender’s payment rights and all its other rights (other than those referred to in clause 15.3.2 above) under this Agreement are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrower had against the Transferor Lender and the Transferee Lender assumes all obligations of the Transferor Lender as are transferred by such Transfer Certificate; |
(b) | the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate; |
(c) | the Transferee Lender becomes a Lender with a Contribution and/or a Commitment in respect of the Loan Facility of the amounts specified in the Transfer Certificate; |
(d) | the Transferee Lender becomes bound by all the provisions of this Agreement and the Security Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Agent and the Security Trustee and to the extent that the Transferee Lender becomes bound by those provisions, the Transferor Lender ceases to be bound by them; |
(e) | the Loan or part of the Loan which the Transferee Lender makes after the Transfer Certificate comes into effect ranks in point of priority and security in the same way as it would have ranked had it been made by the Transferor Lender, assuming that any defects in the Transferor Lender’s title and any rights or equities of any Security Party against the Transferor Lender had not existed; and |
(f) | the Transferee Lender becomes entitled to all the rights under this Agreement which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under clauses 3.6, 5 and 12 and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; |
15.3.5 | the rights and equities of the Borrower or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim; and |
15.3.6 | the Borrower, the Security Trustee, the Agent and the Lenders hereby irrevocably authorise and instruct the Agent to sign any such Transfer Certificate on their behalf and undertake not to withdraw, revoke or qualify such authority or instruction at any time. Promptly upon its signature of any Transfer Certificate, the Agent shall notify the Borrower, the Transferor Lender and the Transferee Lender. |
15.4 | Reliance on Transfer Certificate |
15.4.1 | The Agent shall be entitled to rely on any Transfer Certificate believed by it to be genuine and correct and to have been presented or signed by the persons by whom it purports to have been presented or signed, and shall not be liable to any of the parties to this Agreement and the Security Documents for the consequences of such reliance. |
15.4.2 | The Agent shall at all times during the continuation of this Agreement maintain a register in which it shall record the name, Commitments, Contributions and administrative details (including the lending office) from time to time of the Lenders holding a Transfer Certificate and the date at which the transfer referred to in such Transfer Certificate held by each Lender was transferred to such Lender, and the Agent shall make the said register available for inspection by any Lender or the Borrower during normal banking hours upon receipt by the Agent of reasonable prior notice requesting the Agent to do so. |
15.4.3 | The entries on the said register shall, in the absence of manifest error, be conclusive in determining the identities of the Commitments, the Contributions and the Transfer Certificates held by the Lenders from time to time and the principal amounts of such Transfer Certificates and may be relied upon by all parties to this Agreement. |
15.5 | Transfer fees and expenses |
15.6 | Documenting transfers |
15.7 | Sub-Participation |
15.8 | Lending office |
15.9 | Securitisation |
15.10 | Disclosure of information |
(i) | any private, public, or internationally recognised authorities and governmental institutions or regulatory authorities that are entitled to and have requested to obtain such information, |
(ii) | the Banks’ respective head offices, holding companies, subsidiaries, branches and affiliates and professional advisors, |
(iii) | any other parties to the Security Documents, |
(iv) | a rating agency or their professional advisors, |
(v) | any national or international numbering service provider, |
(vi) | any person with whom such Bank proposes to enter (or considers entering) into contractual relations in relation to the Loan and/or its Commitment or Contribution, and |
(vii) | any other person regarding the funding, re-financing, transfer, assignment, sale, sub-participation or operational arrangements or other transaction in relation to the Loan, its Contribution or its Commitment, |
15.11 | Publication |
16 | AGENT AND SECURITY TRUSTEE |
16.1 | Appointment of the Agent |
16.1.1 | to execute such documents as may be approved by the Majority Lenders for execution by the Agent; and |
16.1.2 | (whether or not by or through employees or agents) to take such action on such Lender’s behalf and to exercise such rights, remedies, powers and discretions as are specifically delegated to the Agent by any Security Document, together with such powers and discretions as are reasonably incidental thereto. |
16.2 | Agent’s actions |
16.3 | Agent’s duties |
16.3.1 | The Agent shall promptly notify each Lender of the contents of each notice, certificate or other document received by it from the Borrower under or pursuant to clauses 8.1.1, 8.1.6, 8.1.9, 8.1.10, 8.1.12 and 8.1.16; and |
16.3.2 | The Agent shall (subject to the other provisions of this clause 16) take (or instruct the Security Trustee to take) such action or, as the case may be, refrain from taking (or authorise the Security Trustee to refrain from taking) such action with respect to the exercise of any of its rights, remedies, powers and discretions as agent, as the Majority Lenders may direct. |
16.4 | Security Trustee’s and Agent’s rights |
16.4.1 | in the exercise of any right, remedy, power or discretion in relation to any matter, or in any context, not expressly provided for by this Agreement or any of the other Security Documents, act or, as the case may be, refrain from acting (or authorise the Security Trustee to act or refrain from acting) in accordance with the instructions of the Lenders, and shall be fully protected in so doing; |
16.4.2 | unless and until it has received directions from the Majority Lenders, take such action or, as the case may be, refrain from taking such action (or authorise the Security Trustee to take or refrain from taking such action) in respect of a Default of which the Agent has actual knowledge as it shall consider advisable in the best interests of the Lenders (but shall not be obliged to do so); |
16.4.3 | refrain from acting (or authorise the Security Trustee to refrain from acting) in accordance with any instructions of the Lenders to institute any Proceedings arising out of or in connection with any of the Security Documents until it and/or the Security Trustee has been indemnified and/or secured to its satisfaction against any and all costs, expenses or liabilities (including legal fees) which it would or might incur as a result; |
16.4.4 | deem and treat (i) each Lender as the person entitled to the benefit of the Contribution of such Lender for all purposes of this Agreement unless and until a notice shall have been filed with the Agent pursuant to clause 15.3 and shall have become effective, and (ii) the office set opposite the name of each of the Lenders in Schedule 1 as its lending office unless and until a written notice of change of lending office shall have been received by the Agent and the Agent may act upon any such notice unless and until the same is superseded by a further such notice; |
16.4.5 | rely as to matters of fact which might reasonably be expected to be within the knowledge of any Security Party upon a certificate signed by any director or officer of the relevant Security Party on behalf of the relevant Security Party; and |
16.4.6 | do anything which is in its opinion necessary or desirable to comply with any law or regulation in any jurisdiction. |
16.5 | No Liability of Agent |
16.5.1 | be obliged to make any enquiry as to the use of any of the proceeds of the Loan unless (in the case of the Agent) so required in writing by a Lender, in which case the Agent shall promptly make the appropriate request to the Borrower; or |
16.5.2 | be obliged to make any enquiry as to any breach or default by the Borrower or any other Security Party in the performance or observance of any of the provisions of the Security Documents or as to the existence of a Default unless (in the case of the Agent) the Agent has actual knowledge thereof or has been notified in writing thereof by a Bank, in which case the Agent shall promptly notify the Banks of the relevant event or circumstance; or |
16.5.3 | be obliged to enquire whether or not any representation or warranty made by the Borrower or any other Security Party pursuant to this Agreement or any of the other Security Documents is true; or |
16.5.4 | be obliged to do anything (including, without limitation, disclosing any document or information) which would, or might in its opinion, be contrary to any law or regulation or be a |
16.5.5 | be obliged to account to any Lender for any sum or the profit element of any sum received by it for its own account; or |
16.5.6 | be obliged to institute any Proceedings arising out of or in connection with any of the Security Documents other than on the instructions of the Majority Lenders; or |
16.5.7 | be liable to any Lender for any action taken or omitted under or in connection with any of the Security Documents unless caused by its gross negligence or wilful misconduct. |
16.6 | Non –reliance on Security Trustee, Agent |
16.7 | No responsibility on the Security Trustee, Agent for Borrower’s performance |
16.7.1 | on account of the failure of any Security Party to perform its obligations under any of the Security Documents; or |
16.7.2 | for the financial condition of any Security Party; or |
16.7.3 | for the completeness or accuracy of any statements, representations or warranties in any of the Security Documents or any document delivered under any of the Security Documents; or |
16.7.4 | for the execution, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of any of the Security Documents or of any certificate, report or other document executed or delivered under any of the Security Documents; or |
16.7.5 | to investigate or make any enquiry into the title of the Borrower or any other Security Party to the Vessel or any other security or any part thereof; or |
16.7.6 | for the failure to register any of the Security Documents with any official or regulatory body or office or elsewhere; or |
16.7.7 | for taking or omitting to take any other action under or in relation to any of the Security Documents or any aspect of any of the Security Documents; or |
16.7.8 | on account of the failure of the Security Trustee to perform or discharge any of its duties or obligations under the Security Documents; or |
16.7.9 | otherwise in connection with the Security Documents or their negotiation or for acting (or, as the case may be, refraining from acting) in accordance with the instructions of the Lenders. |
16.8 | Reliance on documents and professional advice |
16.9 | Other dealings |
16.10 | Rights of Agent as Lender; no partnership |
16.11 | Amendments and waivers |
16.11.1 | Subject to clause 16.11, the Security Trustee and/or the Agent (as the case may be) may, with the consent of the Majority Lenders (or if and to the extent expressly authorised by the other provisions of any of the Security Documents) and, if so instructed by the Majority Lenders, shall: |
(a) | agree (or authorise the Security Trustee to agree) amendments or modifications to any of the Security Documents with the Borrower and/or any other Security Party; and/or |
(b) |
vary or waive breaches of, or defaults under, or otherwise excuse performance of, any provision of any of the other Security Documents by the Borrower and/or any other Security Party (or authorise the Security Trustee to do so).
Any such action so authorised and effected by the Agent shall be documented in such manner as the Security Trustee and/or the Agent (as the case may be) shall (with the approval of the Majority Lenders) determine, shall be promptly notified to the Lenders by the Security Trustee and/or the Agent (as the case may be) and (without prejudice to the generality of clause 16.2) shall be binding on the Lenders.
|
16.11.2 | Except with the prior written consent of the Lenders, the Security Trustee and the Agent shall have no authority on behalf of the Lenders to agree (or authorise the Security Trustee to agree) with the Borrower and/or any other Security Party any amendment or modification to any of the Security Documents or to grant (or authorise the Security Trustee to grant) waivers in respect of breaches or defaults or to vary or excuse (or authorise the Security Trustee to vary or excuse) performance of or under any of the Security Documents by the Borrower and/or any other Security Party, if the effect of such amendment, modification, waiver or excuse would be to: |
(a) | reduce the Margin, postpone the due date or reduce the amount of any payment of principal, interest or other amount payable by any Security Party under any of the Security Documents; |
(b) | change the currency in which any amount is payable by any Security Party under any of the Security Documents; |
(c) | increase any Lender’s Commitment; |
(d) | extend any Maturity Date; |
(e) | change any provision of any of the Security Documents which expressly or impliedly requires the approval or consent of all the Lenders such that the relevant approval or consent may be given otherwise than with the sanction of all the Lenders; |
(f) | change the order of distribution under clauses 6.10 and 13.1; |
(g) | change this clause 16.11; |
(h) | change the definition of “ Majority Lenders ” in clause 1.2; |
(i) | release any Security Party from the security constituted by any Security Document (except as required by the terms thereof or by law) or change the terms and conditions upon which such security or guarantee may be, or is required to be, released; |
(j) | result in a FATCA Deduction, unless the Agent has given the Lenders ten Banking Days prior notice or each Lender is a FATCA Protected Lender. The Agent shall notify the Lenders reasonably promptly of any amendments or waivers proposed by the Borrower |
(i) | if the Agent or a Lender reasonably believes that an amendment or waiver may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Company and the Agent accordingly, that amendment or waiver may, subject to paragraph (ii) below, not be effected without the consent of the Agent or that Lender (as the case may be); and |
(ii) | the consent of a Lender shall not be required pursuant to paragraph (i) above if that Lender is a FATCA Protected Lender. |
16.11.3 | Except with the prior written consent of the Swap Bank, the Security Trustee and the Agent shall have no authority on behalf of the Lenders to agree (or authorise the Security Trustee to agree) with the Borrower and/or any other Security Party any amendment or modification to any of the Security Documents or to grant (or authorise the Security Trustee to grant) waivers in respect of breaches or defaults or to vary or excuse (or authorise the Security Trustee to vary or excuse) performance of or under any of the Security Documents by the Borrower and/or any other Security Party, if the effect of such amendment, modification, waiver or excuse would be to materially and adversely affect the rights or interest of the Swap Bank under the Master Agreement. |
16.12 | Reimbursement and indemnity by Lenders |
16.13 | Retirement of the Agent |
16.13.1 | The Agent may, having given to the Borrower and each of the Lenders not less than fifteen (15) days’ notice of its intention to do so, retire from its appointment as the Agent under this Agreement, provided that no such retirement shall take effect unless there has been appointed by the Lenders as a successor agent, with the prior written consent of the Borrower and the Corporate Guarantor (such consent not to be unreasonably withheld or delayed): |
(a) | a company in the same group of companies as the Agent nominated by the Agent, |
(b) | a Lender nominated by the Majority Lenders or, failing such a nomination, |
(c) | any reputable and experienced bank or financial institution nominated by the retiring Agent . |
16.13.2 | If the Majority Lenders, acting reasonably, are of the opinion that the Agent is unable to fulfil its respective obligations under this Agreement in a professional and acceptable manner, then they may require the Agent, by written notice, to resign in accordance with clause 16.13.1, which the Agent shall promptly do, and the terms of clause 16.13.1 shall apply to the appointment of any substitute Agent, save that the same shall be appointed by the Majority Lenders and not by all of the Lenders. |
16.13.3 | Upon any such successor as aforesaid being appointed, the retiring Agent shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Agent. The retiring Agent shall (at its own expense) provide its successor with copies of such of its records as its successor reasonably requires to carry out its functions under the Security Documents. |
16.14 | Appointment and retirement of Security Trustee |
16.14.1 | Appointment |
16.14.2 | Retirement |
(a) | Without prejudice to clause 16.13, the Security Trustee may, having given to the Borrower and each of the Lenders and the Swap Bank not less than fifteen (15) days’ notice of its intention to do so, retire from its appointment as Security Trustee under this Agreement and any Trust Deed, provided that no such retirement shall take effect unless there has been appointed by the Lenders and the Agent as a successor Security Trustee and trustee, with the prior written consent of the Borrower and the Corporate Guarantor (such consent not to be unreasonably withheld or delayed): |
(i) | a company in the same group of companies of the Security Trustee nominated by the Security Trustee which the Lenders hereby irrevocably and unconditionally agree to appoint or, failing such nomination, |
(ii) | a Lender or trust corporation nominated by the Majority Lenders or, failing such a nomination, |
(iii) | any bank or trust corporation nominated by the retiring Security Trustee, |
(b) | Any corporation into which the retiring Security Trustee may be merged or converted or any corporation with which the Security Trustee may be consolidated or any corporation resulting from any merger, conversion, amalgamation, consolidation or other reorganisation to which the Security Trustee shall be a party shall, to the extent permitted by applicable law, be the successor Security Trustee under this Agreement, any Trust Deed and the other Security Documents without the execution or filing of any document or any further act on the part of any of the parties to this Agreement, any Trust Deed and the other Security Documents save that notice of any such merger, conversion, amalgamation, consolidation or other reorganisation shall forthwith be given to each Security Party, the Swap Bank and the Lenders. |
(c) | If the Majority Lenders, acting reasonably, are of the opinion that the Security Trustee or Agent is unable to fulfil its respective obligations under this Agreement in a professional and acceptable manner, then they may require the Security Trustee or Agent, by written notice, to resign in accordance with clause 16.14.2(a), which the Agent shall promptly do, and the terms of clause 16.14.2(a) shall apply to the appointment of any substitute Security Trustee, save that the same shall be appointed by the Majority Lenders and not by all of the Lenders. |
(d) | Upon any such successor as aforesaid being appointed, the retiring Security Trustee shall be discharged from any further obligation under the Security Documents (but shall continue to have the benefit of this clause 16 in respect of any action it has taken or refrained from taking prior to such discharge) and its successor and each of the other parties to this Agreement shall have the same rights and obligations among themselves as they would have had if such successor had been a party to this Agreement in place of the retiring Security Trustee. The retiring Security Trustee shall (at its own expense) provide its successor with copies of such of its records as its successor requires to carry out its functions under the Security Documents. |
16.15 | Powers and duties of the Security Trustee |
16.15.1 | The Security Trustee shall have no duties, obligations or liabilities to any of the Lenders and the Agent beyond those expressly stated in any of the Security Documents. Each of the Agent, the Swap Bank and the Lenders hereby authorises the Security Trustee to enter into and execute: |
(a) | each of the Security Documents to which the Security Trustee is or is intended to be a party; and |
(b) | any and all such other Security Documents as may be approved by the Agent in writing (acting on the instructions of the Majority Lenders) for entry into by the Security Trustee, and, in each and every case, to hold any and all security thereby created upon trust for the Lenders, the Swap Bank and the Agent for the time being in the manner contemplated by this Agreement. |
16.15.2 | Subject to clause 16.15.3 the Security Trustee may, with the prior consent of the Majority Lenders communicated in writing by the Agent, concur with any of the Security Parties to: |
(a) | amend, modify or otherwise vary any provision of the Security Documents to which the Security Trustee is or is intended to be a party; or |
(b) | waive breaches of, or defaults under, or otherwise excuse performance of, any provision of the Security Documents to which the Security Trustee is or is intended to be a party; or |
(c) | give any consents to any Security Party in respect of any provision of any Security Document |
16.15.3 | The Security Trustee shall not concur with any Security Party with respect to any of the matters described in clause 16.11.2 without the consent of the Lenders communicated in writing by the Agent. |
16.15.4 | The Security Trustee shall (subject to the other provisions of this clause 16) take such action or, as the case may be, refrain from taking such action, with respect to any of its rights, powers and discretions as Security Trustee and trustee, as the Agent may direct. Subject as provided in the foregoing provisions of this clause, unless and until the Security Trustee has received such instructions from the Agent, the Security Trustee may, but shall not be obliged to, take (or refrain from taking) such action under or pursuant to the Security Documents referred to in clause 16.14 as the Security Trustee shall deem advisable in the best interests of the Banks provided that (for the avoidance of doubt), to the extent that this clause might otherwise be construed as authorising the Security Trustee to take, or refrain from taking, any action of the nature referred to in clause 16.15.2 - and for which the prior consent of the Lenders is expressly required under clause 16.15.3 - clauses 16.15.2 and 16.15.3 shall apply to the exclusion of this clause. |
16.15.5 | None of the Lenders, the Swap Bank nor the Agent shall have any independent power to enforce any of the Security Documents referred to in clause 16.14 or to exercise any rights, discretions or powers or to grant any consents or releases under or pursuant to such Security Documents or any of them or otherwise have direct recourse to the security and/or guarantees constituted by such Security Documents or any of them except through the Security Trustee. |
16.15.6 | For the purpose of this clause 16, the Security Trustee may, rely and act in reliance upon any information from time to time furnished to the Security Trustee by the Agent (whether pursuant to clause 16.15.7 or otherwise) unless and until the same is superseded by further such information, so that the Security Trustee shall have no liability or responsibility to any party as |
16.15.7 | Without prejudice to the foregoing each of the Agent, the Swap Bank and the Lenders (whether directly or through the Agent) shall provide the Security Trustee with such written information as it may require for the purpose of carrying out its duties and obligations under the Security Documents referred to in clause 16.14. |
16.16 | Trust provisions |
16.16.1 | The trusts constituted or evidenced in or by this Agreement and the Trust Deed shall remain in full force and effect until whichever is the earlier of: |
(a) | the expiration of a period of eighty (80) years from the date of this Agreement; and |
(b) | receipt by the Security Trustee of confirmation in writing by the Agent that there is no longer outstanding any Indebtedness (actual or contingent) which is secured or guaranteed or otherwise assured by or under any of the Security Documents, |
16.16.2 | In its capacity as trustee in relation to the Security Documents specified in clause 16.14, the Security Trustee shall, without prejudice to any of the powers, discretions and immunities conferred upon trustees by law (and to the extent not inconsistent with the provisions of any of those Security Documents), have all the same powers and discretions as a natural person acting as the beneficial owner of such property and/or as are conferred upon the Security Trustee by any of those Security Documents. |
16.16.3 | It is expressly declared that, in its capacity as trustee in relation to the Security Documents specified in clause 16.14, the Security Trustee shall be entitled to invest moneys forming part of the security and which, in the opinion of the Security Trustee, may not be paid out promptly following receipt in the name or under the control of the Security Trustee in any of the investments for the time being authorised by law for the investment by trustees of trust moneys or in any other property or investments whether similar to the aforesaid or not or by placing the same on deposit in the name or under the control of the Security Trustee as the Security Trustee may think fit without being under any duty to diversify its investments and the Security Trustee may at any time vary or transpose any such property or investments for or into any others of a like nature and shall not be responsible for any loss due to depreciation in value or otherwise of such property or investments. Any investment of any part or all of the security may, at the discretion of the Security Trustee, be made or retained in the names of nominees. |
16.17 | Independent action by Banks |
16.18 | Common Agent and Security Trustee |
16.19 | Co-operation to achieve agreed priorities of application |
16.20 | The Prompt distribution of proceeds |
16.21 | Reconventioning |
16.22 | Exclusivity |
17 | NOTICES AND OTHER MATTERS |
17.1 | Notices |
17.1.1 | unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by fax and/or electronically; |
17.1.2 | in this clause “notice” includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication. |
17.2 | Addresses for communications, effective date of notices |
17.2.1 | Subject to clause 17.2.2, clause 17.2.5 and 17.3 notices to the Borrower shall be deemed to have been given and shall take effect when received in full legible form by the Borrower at the address and/or the fax number appearing below (or at such other address or fax number as the Borrower may hereafter specify for such purpose to the Agent by notice in writing); |
Address |
c/o Euroseas Ltd.
4 Messogiou & Evropis Street
151 24 Maroussi
Greece
|
Fax no: | +30 211 1804097 |
Attn: | Anastasios Aslidis / George Kavalis |
17.2.2 | notwithstanding the provisions of clause 17.2.1 or clause 17.2.5, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 to the Borrower shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Banks or any of them to the Borrower to the address or fax number referred to in clause 17.2.1; |
17.2.3 | subject to clause 17.2.5, notices to the Agent and/or the Security Trustee and/or the Swap Bank shall be deemed to be given, and shall take effect, when received in full legible form by the Agent and/or the Security Trustee at the address and/or the fax number address appearing below (or at any such other address or fax number as the Agent and/or the Security Trustee and/or the Swap Bank (as appropriate) may hereafter specify for such purpose to the Borrower and the other Lenders by notice in writing); |
Address |
Friedrichswall 10
Hannover 30159
Germany
|
Fax no: | +49 511 361 4785 |
Attn: | Ship and Aircraft Finance Department, Christina Winkler |
17.2.4 | subject to clause 17.2.5 and 17.3, notices to a Lender shall be deemed to be given and shall take effect when received in full legible form by such Lender at its address and/or fax number |
17.2.5 | if under clause 17.2.1 or clause 17.2.3 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place. |
17.3 | Electronic Communication |
17.3.1 | Any communication to be made by and/or between the Banks or any of them and the Security Parties or any of them under or in connection with the Security Documents or any of them may be made by electronic mail or other electronic means, if and provided that all such parties: |
(a) | notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and |
(b) | notify each other of any change to their electronic mail address or any other such information supplied by them. |
17.3.2 | Any electronic communication made by and/or between the Banks or any of them and the Security Parties or any of them will be effective only when actually received in readable form and, in the case of any electronic communication made by the Borrower or the Lenders to the Agent, only if it is addressed in such manner as the Agent shall specify for this purpose. |
17.4 | Notices through the Agent |
18 | GOVERNING LAW |
19 | JURISDICTION |
19.1 | Exclusive Jurisdiction |
19.1.1 | to settle any disputes or other matters whatsoever arising under or in connection with this Agreement (or any non-contractual obligations arising out of or in connection with this Agreement) and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and |
19.1.2 |
to grant interim remedies or other provisional or protective relief.
|
19.2 | Submission and service of process |
19.2.1 | irrevocably empowers and appoints Hill Dickinson International at present of The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement; |
19.2.2 | agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period; |
19.2.3 | agrees that failure by a process agent to notify the Borrower of service of process will not invalidate the proceedings concerned; |
19.2.4 | without prejudice to the effectiveness of service of process on its agent under clause 19.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 17.2; |
19.2.5 | agrees that if the appointment of any person mentioned in clause 19.2.1 ceases to be effective, the Borrower shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within seven (7) days the Agent shall thereupon be entitled and is hereby irrevocably authorised by the Borrower in those circumstances to appoint such person by notice to the Borrower. |
19.3 | Forum non conveniens and enforcement abroad |
19.3.1 | waives any right and agrees not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that Proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 19.1; and |
19.3.2 | agrees that a judgment or order of an English court in a dispute or other matter falling within clause 19.1 shall be conclusive and binding on the Borrower and may be enforced against it in the courts of any other jurisdiction. |
19.4 | Right of Agent, but not Borrower, to bring proceedings in any other jurisdiction |
19.4.1 | Nothing in this clause 19 limits the right of any Lender to bring Proceedings, including third party proceedings, against the Borrower, or to apply for interim remedies, in connection with this Agreement in any other court and/or concurrently in more than one jurisdiction; |
19.4.2 | the obtaining by any Lender of judgment in one jurisdiction shall not prevent such Lender from bringing or continuing proceedings in any other jurisdiction, whether or not these shall be founded on the same cause of action. |
19.5 | Enforceability despite invalidity of Agreement |
19.6 | Effect in relation to claims by and against non-parties |
19.6.1 | For the purpose of this clause “Foreign Proceedings” shall mean any Proceedings except proceedings brought or pursued in England arising out of or in connection with (i) or in any way related to any of the Security Documents or any assets subject thereto or (ii) any action of any kind whatsoever taken by any Bank pursuant thereto or which would, if brought by the Borrower against any Bank, have been required to be brought in the English courts; |
19.6.2 | the Borrower shall not bring or pursue any Foreign Proceedings against any Bank and shall use its best endeavours to prevent persons not party to this Agreement from bringing or pursuing any Foreign Proceedings against any Bank; |
19.6.3 | If, for any reason whatsoever, any Security Party and/or any person connected howsoever with any Security Party brings or pursues against any Bank any Foreign Proceedings, the Borrower shall indemnify such Bank on demand in respect of any and all claims, losses, damages, demands, causes of action, liabilities, costs and expenses (including, but not limited to, legal costs) of whatsoever nature howsoever arising from or in connection with such Foreign Proceedings which such Bank (or the Agent on its behalf) certifies as having been incurred by it; |
Name
|
Address and fax number
|
Original Commitment (USD)
|
Percentage of Total Commitment
|
NORDDEUTSCHE
LANDESBANK
GIROZENTRALE
|
Lending Office
Friedrichswall 10
Hannover 30159
Germany
Address for Notices
Friedrichswall 10
Hannover 30159
Germany
Fax no:
+49 511 361 4785
Attn:
Ship and Aircraft Finance Department, Christina Winkler
|
USD 16,560,000
|
100%
|
Total Commitment
|
USD 16,560,000
|
100% |
To:
|
Norddeutsche Landesbank Girozentrale
Friedrichswall 10
Hannover 30159
Germany
(as Agent)
|
(b) | the representations and warranties contained in clause 7 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date; |
(c) | the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise howsoever) to be exceeded; |
(d) | there has been no material adverse change in our financial position or in the combined financial position of the Group from that described by us to the Banks or any of them in the negotiation of the Loan Agreement and/or in any documents or statements already delivered to the Agent in connection therewith; |
(e) | there are no Required Authorisations; and |
(f) | there are no Proceedings . |
(a) | Corporate documents |
(b) | Corporate authorities |
(i) | Certified Copies of resolutions of the directors of each Security Party and, if required by the Agent, shareholders of the Borrower approving such of the Underlying Agreements and the Security Documents to which such Security Party is a party and authorising the execution and delivery thereof and performance of such Security Party’s obligations thereunder, additionally certified by an officer of such Security Party as having been duly passed at duly convened meetings of the directors and shareholders of such Security Party and not having been amended, modified or revoked and being in full force and effect; and |
(i) | originals or Certified Copies of any powers of attorney issued by any Security Party pursuant to such resolutions; |
(c) | Required Authorisations |
(d) | Certificate of incumbency |
(e) | Legal Ownership |
(f) | Security Documents |
(g) | Know-your-customer |
(h) | Marshall Islands opinion |
(i) | process agent |
(j) | Fees |
(k) | Underlying Documents |
(a) | Fees and commissions |
(b) | Valuation |
(c) | Equity |
(a) | the Vessel |
(i) | Purchase |
(ii) | Registration and Encumbrances |
(iii) | Classification |
(iv) | Insurance |
(v) | Management |
(iv) | Charter |
(b) | Security Documents |
(c) | Mortgage registration |
(d) | Notices of assignment |
(e) | Earnings Account/Retention Account/Drydock Reserve Account |
(f) | Underlying Documents |
(g) | Marshall Islands opinion |
(h) | Flag State opinion |
(i) | Further opinions |
(j) | DOC and Application for SMC |
(k) | Insurance opinion |
(l) | Fees and commissions |
1. | The Transferor with full title guarantee assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as a Lender under or by virtue of the Loan Agreement and all the other Security Documents in relation to [●] per centum ([●]%) of the [Contribution] [Commitment] of the Transferor (or its predecessors in title). |
2. | By virtue of this Transfer Certificate and clause 15 of the Loan Agreement, the Transferor is discharged [entirely from its [Contribution] [Commitment] in respect of the Loan, which amounts to USD [●]] [from [●] per centum ([●]%) of its [Contribution] [Commitment] in respect of the Loan and the Transferee assumes all obligations in respect thereof. |
3. | The Transferee hereby requests the Agent (on behalf of itself, the Borrower, the Security Trustee, the Swap Bank and the Lenders) to accept the executed copies of this Transfer Certificate as being delivered pursuant to and for the purposes of clause 15.3 of the Loan Agreement so as to take effect in accordance with the terms thereof on [date of transfer]. |
4. | The Transferee: |
4.1 | confirms that it has received a copy of the Loan Agreement and the other Security Documents together with such other documents and information as it has required in connection with the transaction contemplated thereby; |
4.2 | confirms that it has not relied and will not hereafter rely on the Transferor, the Agent, the Agent, the Lenders or the Security Trustee to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of the Loan Agreement, any of the Security Documents or any such documents or information; |
4.3 | agrees that it has not relied and will not rely on the Transferor or any of the Banks to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower, or any other Security Party (save as otherwise expressly provided therein); |
4.4 | warrants that it has power and authority to become a party to the Loan Agreement and has taken all necessary action to authorise execution of this Transfer Certificate and to obtain all necessary approvals and consents to the assumption of its obligations under the Security Documents; and |
4.5 | if not already a Lender, appoints (i) the Agent to act as its agent and (ii) the Security Trustee to act as its Security Trustee and trustee, as provided in the Security Documents and agrees to be bound by the terms of all of the Security Documents. |
5.1 | warrants to the Transferee that it has full power to enter into this Transfer Certificate and has taken all corporate action necessary to authorise it to do so; |
5.2 | warrants to the Transferee that this Transfer Certificate is binding on the Transferor under the laws of England, the country in which the Transferor is incorporated and the country in which its lending office is located; and |
5.3 | agrees that it will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee’s title under this Transfer Certificate or for a similar purpose. |
6. | The Transferee hereby undertakes with the Transferor and each of the other parties to each of the Security Documents that it will perform in accordance with its terms all those obligations which by the terms of the Loan Agreement and the other Security Documents will be assumed by it after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect. |
7. | By execution of this Transfer Certificate on their behalf by the Agent and in reliance upon the representations and warranties of the Transferee, the Borrower and each of the Banks accept the Transferee as a party to the Security Documents with respect to all those rights and/or obligations which by the terms of the Security Documents will be assumed by the Transferee (including without limitation those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent, the Swap Bank, the Agent and the Security Trustee as provided by the Loan Agreement) after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect. |
8. | None of the Transferor or the Banks: |
8.1 | makes any representation or warranty nor assumes any responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of any of the Security Documents or any document relating thereto; or |
8.2 | assumes any responsibility for the financial condition of any Security Party or any party to any such other document or for the performance and observance by any Security Party or any party to any such other document (save as otherwise expressly provided therein) and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded (except as aforesaid). |
9. | The Transferor and the Transferee each undertake that they will on demand fully indemnify the Agent in respect of any claim, proceeding, liability or expense which relates to or results from this Transfer Certificate or any matter concerned with or arising out of it unless caused by the Agent’s gross negligence or wilful misconduct, as the case may be. |
10. | The agreements and undertakings of the Transferee in this Transfer Certificate are given to and for the benefit of and made with each of the other parties to each of the Security Documents. |
11. | This Transfer Certificate shall be governed by, and construed in accordance with, English law. |
Transferor
|
Transferee
|
By:___________________________________________
|
By:___________________________________________
|
Dated: ________________________________________
|
Dated: ________________________________________
|
|
By:___________________________________________
|
Dated: ________________________________________
|
Contribution:
|
USD [●]
|
Commitment:
|
USD [●]
|
Portion Transferred:
|
[●]%
|
(a) | The Security Trustee hereby acknowledges and declares that, from the date of this Deed, it holds and shall hold the Trust Property on trust from time to time and at all times for the other Banks on the terms and basis set out in the Loan Agreement. |
(b) | The declaration and acknowledgement contained in paragraph 1 above shall be irrevocable. |
SIGNED, SEALED
and
DELIVERED
|
)
|
|
as a
DEED
|
)
|
|
by
|
)
|
|
for and on behalf of
|
)
|
______________________________________ |
NORDDEUTSCHE LANDESBANK GIROZENTRALE
|
)
|
Attorney-in-fact
|
as Security Trustee
|
)
|
To:
|
Norddeutsche Landesbank Girozentrale
(as Agent)
|
From:
|
Euroseas Ltd.
|
1. | all the Borrower’s financial covenants in the Loan Agreement set out in clause 8 are being fully complied with, and, in particular, by reference to the latest audited financial statements, management accounts and all other current relevant information available to us: |
(a) | the Net Worth of the Group is USD [ ]; |
(b) | the Group maintains a market capitalisation of USD[]; |
(c) | the Total Liabilities are USD [ ] and the Total Assets (adjusted for market values of vessels calculated in accordance with Clause 8.2.2) are USD [ ]; |
(d) | the Total Liabilities divided by the Total Assets (adjusted for market values of vessels calculated in accordance with Clause 8.2.2) is [ ]%; |
(e) | the amount of cash or cash equivalents held in the Earnings Account is $[]; and |
(f) | the amount of cash or cash equivalents held in the Drydock Reserve Account is $[ ]. |
2. | no Default has occurred |
3. | the representations set out in clause 7 of the Loan Agreement are true and accurate with reference to all facts and circumstances now existing and all Required Authorisations have been obtained and are in full force and effect. |
SIGNED by
STEFANIA KARMIRI
|
) /s/ Stefania Karmiri
|
as a deed for and on behalf of
|
)
|
KAMSARMAX ONE SHIPPING LTD
|
)
|
(as Borrower under and pursuant to
|
)
|
a power of attorney dated 28 January 2016)
|
)
|
in the presence of
|
)
|
/s/ Ronan le du
Ince & Co
Akti Miaouli 47-49
Piraeus 185 36 Greece
|
SIGNED by
ROBIN PARRY
|
)/s/ Robin Parry
|
for and on behalf of
|
)
|
NORDDEUTSCHE LANDESBANK GIROZENTRALE
|
)
|
(as a Lender) in the presence of
|
)
|
/s/ Ronan le du
Ince & Co
Akti Miaouli 47-49
Piraeus 185 36 Greece
|
SIGNED by
ROBIN PARRY
|
)/s/ Robin Parry
|
for and on behalf of
|
)
|
NORDDEUTSCHE LANDESBANK GIROZENTRALE
|
)
|
(as Agent and Security Trustee)
|
)
|
in the presence of
|
)
|
/s/ Ronan le du
Ince & Co
Akti Miaouli 47-49
Piraeus 185 36 Greece
|
SIGNED by
ROBIN PARRY
|
)/s/ Robin Parry
|
for and on behalf of
|
)
|
NORDDEUTSCHE LANDESBANK GIROZENTRALE
|
)
|
(as Swap Bank)
|
)
|
in the presence of
|
|
/s/ Ronan le du
Ince & Co
Akti Miaouli 47-49
Piraeus 185 36 Greece
|
CLAUSE NO.
|
PAGE NO.
|
|
1
|
INTERPRETATION
|
2
|
2
|
FACILITY
|
18
|
3
|
POSITION OF THE LENDERS
|
19
|
4
|
DRAWDOWN
|
20
|
5
|
INTEREST
|
20
|
6
|
INTEREST PERIODS
|
22
|
7
|
DEFAULT INTEREST
|
23
|
8
|
REPAYMENT AND PREPAYMENT
|
24
|
9
|
CONDITIONS PRECEDENT
|
25
|
10
|
REPRESENTATIONS AND WARRANTIES
|
26
|
11
|
GENERAL UNDERTAKINGS
|
28
|
12
|
CORPORATE UNDERTAKINGS
|
32
|
13
|
INSURANCE
|
34
|
14
|
SHIP COVENANTS
|
38
|
15
|
SECURITY COVER
|
42
|
16
|
PAYMENTS AND CALCULATIONS
|
44
|
17
|
APPLICATION OF RECEIPTS
|
45
|
18
|
APPLICATION OF EARNINGS
|
46
|
19
|
EVENTS OF DEFAULT
|
48
|
20
|
FEES AND EXPENSES
|
52
|
21
|
INDEMNITIES
|
53
|
22
|
NO SET-OFF OR TAX DEDUCTION
|
55
|
23
|
ILLEGALITY, ETC
|
57
|
24
|
INCREASED COSTS
|
58
|
25
|
SET‑OFF
|
59
|
26
|
TRANSFERS AND CHANGES IN LENDING OFFICES
|
60
|
27
|
VARIATIONS AND WAIVERS
|
63
|
28
|
NOTICES
|
65
|
29
|
SUPPLEMENTAL
|
66
|
30
|
LAW AND JURISDICTION
|
67
|
SCHEDULE 1 LENDERS AND COMMITMENTS
|
68
|
|
SCHEDULE 2 DRAWDOWN NOTICE
|
69
|
|
SCHEDULE 3 CONDITION PRECEDENT DOCUMENTS
|
70
|
|
SCHEDULE 4 TRANSFER CERTIFICATE
|
73
|
|
SCHEDULE 5 FORM OF COMPLIANCE CERTIFICATE
|
77
|
|
EXECUTION PAGES
|
79
|
(1) | (a) | SAF-CONCORD SHIPPING LTD , being a company incorporated in accordance with the laws of the Republic of Liberia whose registered office is situated at 80, Broad Street, Monrovia, Liberia (“ Borrower A ”) |
(d) | MANOLIS SHIPPING LIMITED , a company duly incorporated in accordance with the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960, Republic of Marshall Islands (the “ Borrower D ”); |
(e) | ALTERWALL BUSINESS INC. , being a company incorporated in accordance with the laws of the Republic of Panama, whose registered office is at c/o Quijano y Asociates, Salbuda Building, top floor, East 53 rd Street, Urbanizacion Obarrio, P.O. BOX 7284, Panama 5, Panama (the “ Borrower E ”); and |
(f) | AGGELIKI SHIPPING LTD, being a company incorporated in accordance with the laws of the Republic of Liberia whose registered office is situated at 80, Broad Street, Monrovia, Liberia (the “ Borrower F ”); |
(2) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as lenders (the “ Lenders ”); |
(3) | EUROBANK ERGASIAS S.A. , a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as arranger (the “ Arranger ”); |
(4) | EUROBANK ERGASIAS S.A. , a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as account bank (the “ Account Bank ”); |
(5) | EUROBANK ERGASIAS S.A. , a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as agent (the “ Agent ”); and |
(6) | EUROBANK ERGASIAS S.A. , a banking societé anonyme duly incorporated under the laws of Greece, having its registered office at 8, Othonos Street, Athens, Greece, acting for the purposes of this Agreement through its office at 83, Akti Miaouli, 185 38 Piraeus, Greece, as security trustee (the “ Security Trustee ”). |
1 | INTERPRETATION |
1.1 | Definitions. Subject to Clause 1.5, in this Agreement: |
(a) | the Latest Permissible Drawdown Date or such later date as the Lenders may agree with the Borrowers; or |
(b) | if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated; |
(a) | all freight, hire and passage moneys, compensation payable to the owner of a Ship or (as the case may be) to the Security Trustee pursuant to the Assignment in connection with that Ship in the event of requisition of that Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; |
(b) | all moneys which are at any time payable under Insurances in respect of loss of earnings; |
(c) | contributions of any nature whatsoever in respect of general average; and |
(d) | if and whenever a Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship; |
(a) | any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or |
(b) | any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident, |
(a) | any release of Environmentally Sensitive Material from a Ship; or |
(b) | any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between that Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which that Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or that Ship or the owner of that Ship and/or any operator or manager is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
(c) | any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which that Ship is actually or potentially liable to be arrested and/or where the owner of that Ship and/or any operator or manager of that Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; |
(a) | sections 1471 to 1474 of the Code or any associated regulations or other 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 2017; 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) | this Agreement; |
(b) | the Drawdown Notice; |
(c) | the Agency and Trust Deed; |
(d) | the Guarantee; |
(e) | the Mortgages; |
(f) | the Assignments; |
(g) | the Accounts Pledges; |
(h) | the Approved Manager’s Undertakings; |
(i) | the Guarantor’s Undertaking(s)-Assignments; and |
(j) | any other document (whether creating a Security Interest or not) which is executed at any time by the Borrowers or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the documents referred to in this definition; |
(a) | for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
(b) | under any loan stock, bond, note or other security issued by the debtor; |
(c) | under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
(d) | under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
(e) | under any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or |
(f) | under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person; |
“ Insurances ” means: |
(a) | all policies and contracts of insurance, including entries of a Ship in any protection and indemnity or war risks association, which are effected in respect of that Ship; and |
(b) | all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium; |
(a) | a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrowers under Clause 26.14), its successor or assign, unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and |
(b) | the holder for the time being of a valid Transfer Certificate; |
(a) | the London interbank offered rate administrated by ICE Benchmark Administration Limited (or if ICE Benchmark Administration Limited ceases to act in the role of administrating and publishing LIBOR rates, the equivalent rate published by a subsequently appointed administrator of LIBOR) for United States Dollars for the relevant period displayed on the appropriate page of the Reuters screen at or about 11:00 a.m. (London time) on the Quotation Date for such period (and if the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Borrowers); or |
(b) | if on such date no such rate is displayed, the arithmetic mean of the rates (rounded upwards to the nearest 1/16th of one per cent) quoted to the Agent as the rate for deposits of United States Dollars in an amount comparable to the amount in relation to which LIBOR is to be determined and for a period equivalent to the relevant period offered by the Agent to prime banks in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for such period, |
(a) | before the Loan has been made, Lenders whose Commitments are equal to or greater than 66 ⅔ per cent. of the Total Commitments; and |
(b) | after the Loan has been made, Lenders whose Contributions are equal to or greater than 66 ⅔ per cent. of the Loan; |
(a) | Security Interests created by the Finance Documents; |
(b) | liens for unpaid crew’s wages in accordance with usual maritime practice; |
(c) | liens for salvage; |
(d) | liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement; |
(e) | liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the owner of such Ship in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.12(h); |
(f) | any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where a Borrower is prosecuting or defending such action in good faith by appropriate steps; and |
(g) | Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; |
(a) | England and Wales; |
(b) | the country under the laws of which the company is incorporated or formed; |
(c) | a country in which the company's central management and control is or has recently been exercised; |
(d) | a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax; |
(e) | a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and |
(f) | a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above; |
(c) | the European Union or any of its Member States, including without limitation, the United Kingdom; |
(d) | any country to which any Borrower, or any other member of the Group is bound; or |
(e) | the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury ( OFAC ), the United States Department of State and Her Majesty’s Treasury ( HMT ) (together Sanctions Authorities ); |
(a) | a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; |
(b) | the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; and |
(c) | any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution; |
(a) | the m.v. “MONICA P.”, built in 1998, being of 27,011 tons gross, 16,011 tons net, currently registered under the flag of the Republic of Liberia with Official Number 10909 in the name of Borrower A (“ Ship A ”); |
(b) | the m.v. “CAPTAIN COSTAS” built in 1992, being of 21053 gross tons registered under the Marshall Islands flag with Official Number 2892 in the ownership of Borrower B (“ Ship B ”); |
(c) | the m.v. “KUO HSIUNG”, built in 1993, being of 15183 gross tons registered under the Panama flag with IMO 9055448 in the ownership of Borrower C (“ Ship C ”); |
(d) | the m.v. “MANOLIS P.” built in 1995, being of 14962 tons gross, 7579 tons net, currently registered under the flag of the Republic of the Marshall Islands with Official Number 2849 in the name of Borrower D (“ Ship D ”); |
(e) | the m.v. “NINOS”, built in 1990, being of 15122 gross tons and of 6244 net tons currently registered under the Panama flag with IMO N 8909082 in the ownership of Borrower E (“ Ship E ”); |
(f) | the m.v. “AGGELIKI P.” built in 1998, being of 23,809 tons gross, 10474 tons net, currently registered under the flag of the Republic of Liberia with Official Number 14698 in the name of Borrower F (“ Ship F ”); |
(a) | actual, constructive, compromised, agreed or arranged total loss of a Ship; |
(b) | any expropriation, confiscation, requisition or acquisition of a Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire unless it is within 40 days redelivered to the full control of such Ship’s owner; |
(c) | any arrest, capture, seizure or detention of a Ship (including any hijacking or theft) unless she is within 40 days redelivered to the full control of such Ship’s owner; |
(a) |
in the case of an actual loss of a Ship, the date on which it occurred or, if that is unknown, the date when such Ship was last heard of;
|
(b) | in the case of a constructive, compromised, agreed or arranged total loss of a Ship, the earliest of: |
(i) | the date on which a notice of abandonment is given to the insurers; and |
(ii) | the date of any compromise, arrangement or agreement made by or on behalf of the owner of a Ship, with the Ship's insurers in which the insurers agree to treat that Ship as a total loss; and |
(c) | in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred; |
(a) | a Party which is resident for tax purposes in the United States of America; or |
(b) | a Party some or all of whose payments under the Finance Documents are from sources within the United States for US Federal income tax purposes. |
1.2 | Construction of certain terms. In this Agreement: |
1.3 | Meaning of “month”. A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“ the numerically corresponding day ”), but: |
(a) | on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
(b) | on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
1.4 | Meaning of “subsidiary”. A company (S) is a subsidiary of another company (P) if: |
(a) | a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or |
(b) | P has direct or indirect control over a majority of the voting rights attached to the issued shares of S; or |
(c) | P has the direct or indirect power to appoint or remove a majority of the directors of S; or |
(d) | P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P; |
1.5 | General Interpretation. |
(a) | In this Agreement: |
(i) | references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise; |
(ii) | references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and |
(iii) | words denoting the singular number shall include the plural and vice versa. |
(b) | Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears. |
(c) | References in Clause 1.1 to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires. |
(d) | The clause headings shall not affect the interpretation of this Agreement. |
1.6 | Event of Default. A Potential Event of Default and/or an Event of Default) are “ continuing ” if either of them has not been remedied or waived. |
2 | FACILITY |
2.1 | Amount of facility. Subject to the satisfaction of all conditions precedent and in reliance on the representations and warranties made in or in accordance with them and furthermore subject to Capital Control Approval and the other provisions of this Agreement, the Lenders shall make available to the Borrowers a secured term loan in one advance not exceeding the lesser of (a) $14,500,000 and (b) 56% of the aggregate market value of the Ships as at the Drawdown Date. |
2.2 | Lenders' participations in Loan. Subject to the other provisions of this Agreement, each Lender shall participate in the Loan in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments. |
2.3 | Purpose of Loan. The Borrowers undertake with each Creditor Party to use the Loan only for the purpose stated in the preamble to this Agreement. |
3 | POSITION OF THE LENDERS |
3.1 | Interests of Lenders several. The rights of the Lenders under this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Majority Lenders) are several; accordingly each Lender shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender and/or any other Creditor Party to be joined as an additional party in any proceedings for this purpose. |
3.2 | Independent action by a Lender. None of the Lenders shall enforce, exercise any rights, remedies or powers or grant any consents or releases under or pursuant to, or otherwise have a direct recourse to the security and/or guarantees constituted by any of the Finance Documents without the prior written consent of the Majority Lenders but, provided such consent has been obtained, it shall not be necessary for any other Lender to be joined as an additional party in any proceedings for this purpose. |
3.3 | Obligations of Lenders several. The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement to which it is a party shall not result in: |
(a) | the obligations of the other Lenders being increased; nor |
(b) | the Borrowers, any Security Party, any other Lender being discharged (in whole or in part) from its obligations under any Finance Document, |
3.4 | Parties bound by certain actions of Majority Lenders. Every Lender and any other Creditor Party, the Borrowers and each Security Party shall be bound by: |
(a) | any determination made, or action taken, by the Majority Lenders under any provision of a Finance Document; |
(b) | any instruction or authorisation given by the Majority Lenders to the Agent or the Security Trustee under or in connection with any Finance Document; |
(c) | any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation. |
3.5 | Reliance on action of Agent. The Borrowers and each Security Party shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take. |
3.6 | Construction. In Clauses 3.4 and 3.5 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter. |
4 | DRAWDOWN |
4.1 | Request for Loan. Subject to the following conditions, the Borrowers may request the Loan to be made by ensuring that the Agent receives a completed Drawdown Notice not later than 10.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date. |
4.2 | Availability. The conditions referred to in Clause 4.1 are that: |
(a) | the Drawdown Date has to be a Business Day during the Latest Permissible Drawdown Date; |
(b) | the amount of the Loan shall not exceed the lesser of (i) $14,500,000 and (ii) 56% of the aggregate market value of the Ships as at the Drawdown Date; and |
(c) | the Borrowers have complied with the provisions of Clause 9.1 with respect to the Loan. |
4.3 | Notification to Lenders of receipt of the Drawdown Notice. The Agent shall promptly notify the Lenders that it has received the Drawdown Notice and shall inform each Lender of: |
(a) | the amount of the Loan and the Drawdown Date; |
(b) | the amount of that Lender's participation in the Loan; and |
(c) | the duration of the first Interest Period. |
4.4 | Drawdown Notice irrevocable. The Drawdown Notice must be signed by a director or other authorised person of the Borrowers; and once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders. |
4.5 | Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrowers the amount due from that Lender on the Drawdown Date under Clause 2.2. |
4.6 | Disbursement of Loan. Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrowers shall be made: |
(a) | to the account which the Borrowers specify in the Drawdown Notice; and |
(b) | in the same funds as the Agent received the payments from the Lenders. |
4.7 | Disbursement of Loan to third party. The payment by the Agent under Clause 4.6 shall constitute the making of the Loan and the Borrowers shall thereupon become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender's Contribution. |
5 | INTEREST |
5.1 | Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period. |
5.2 | Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of the Margin and LIBOR for that Interest Period. |
5.3 | Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period. |
5.4 | Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrowers and each Lender of: |
(a) | each rate of interest; and |
(b) | the duration of each Interest Period; |
5.5 | Market disruption. The following provisions of this Clause 5 apply if: |
(a) | at least one Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 40 per cent. of the Loan (or, if the Loan has not been made, Commitments amounting to more than 40 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period (provided always that any such notifications by any such Lenders shall be duly substantiated); or |
(b) | at least one Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “ Affected Lender ”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period. |
5.6 | Notification of market disruption. The Agent shall promptly notify the Borrowers and each of the Lenders stating the circumstances falling within Clause 5.5 which have caused its notice to be given. |
5.7
|
Suspension of drawdown. If the Agent's notice under Clause 5.6 is served before the Loan is made: |
(a) | in a case falling within paragraph (a) of Clause 5.5, the Lenders' obligations to make the Loan; |
(b) | in a case falling within paragraph (b) of Clause 5.5, the Affected Lender's obligation to participate in the Loan; |
5.8 | Negotiation of alternative rate of interest. If the Agent’s notice under Clause 5.6 is served after the Loan is made, the Borrowers, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 Business Days after the date on which the Agent serves its notice under Clause 5.6 (the “ Negotiation Period ”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned. |
5.9 | Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed. |
5.10 | Alternative rate of interest in absence of agreement. 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 Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin; and the procedure provided for by this Clause 5.10 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent. |
5.11 | Notice of prepayment. If the Borrowers do not agree with an interest rate set by the Agent under Clause 5.10, the Borrowers may give the Agent not less than 15 Business Days' notice of their intention to prepay the Loan at the end of the interest period set by the Agent. |
5.12 | Prepayment; termination of Commitments. A notice under Clause 5.11 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrowers’ notice of intended prepayment; and: |
(a) | on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and |
(b) | on the last Business Day of the interest period set by the Agent, the Borrowers shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
5.13 | Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment. |
6 | INTEREST PERIODS |
6.1 | Commencement of Interest Periods. The first Interest Period shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period. |
6.2 | Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be: |
(a) | 3, 6, or 9 months as notified by the Borrowers to the Agent not later than 11.00 am (London time) 3 Business Days before the commencement of the Interest Period; or |
(b) | 3 months, if the Borrowers fail to notify the Agent by the time specified in paragraph (a); or |
(c) | such other period as the Agent may, with the Majority Lenders' authority, agree with the Borrowers. |
6.3 | Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date. No Interest Period shall extend beyond the final Repayment Date. |
6.4 | Non-availability of matching deposits for Interest Period selected. If, after the Borrowers have selected and the Lenders have agreed to an Interest Period, any Lender notifies the Agent by 10:00 a.m. (London time) on the second Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, then that Interest Period shall have such duration as the Agent after having consulted with the Borrowers may determine. |
7 | DEFAULT INTEREST |
7.1 | Payment of default interest on overdue amounts. The Borrowers shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrowers under any Finance Document which the Agent, the Security Trustee or any other Creditor Party does not receive on or before the relevant due date for payment thereunder, that is: |
(a) | the date on which such Finance Documents provide that such amount is due for payment; or |
(b) | if a Finance Document provides that such amount is payable on demand, three (3) days following the date on which the demand is served; or |
(c) | if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable. |
7.2 | Default rate of interest and its calculation. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be two point fifty per cent (2.50%) |
(i) | LIBOR; or |
(ii) | if the Agent determines that Dollar deposits for any such period are not being made available to a Lender or (as the case may be) Lenders by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Agent from such other sources as the Agent may from time to time determine. |
7.3 | Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrowers of each interest rate determined by the Agent under Clause 7.2 and of each period selected by the Agent for the purposes of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Agent's notification. |
7.4 | Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due. |
7.5 | Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded. |
8 | REPAYMENT AND PREPAYMENT |
8.1 | Amount of repayment instalments. The Borrowers shall repay the Loan by twelve (12) consecutive quarterly instalments, each of which shall be in the amount of Four hundred and sixty thousand Dollars ($460,000) and by a balloon payment of Eight million nine hundred and eighty thousand Dollars ($8,980,000). |
8.2 | Repayment Dates. The first instalment shall be repaid on the date falling three (3) months after the Drawdown Date, each subsequent instalment shall be repaid at three monthly intervals thereafter and the balloon payment shall be repaid concurrently with the twelfth and final repayment instalment, which shall be repaid on the date falling on the earlier of (i) the third annual anniversary of the Drawdown Date and (ii) the Final Maturity Date. |
8.3 | Final Repayment Date. On the final Repayment Date, the Borrowers shall additionally pay to the Lenders all other sums then accrued or owing under any Finance Document. |
8.4 | Voluntary prepayment. Subject to the following conditions, the Borrowers may prepay the whole or part of the Loan on the last day of an Interest Period. |
8.5 | Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that: |
(a) | a partial prepayment shall be in the minimum amount of Two hundred fifty thousand Dollars ($250,000) or a multiple thereof; |
(b) | the Agent has received from the Borrowers at least ten (10) Business Days prior written confirmative and irrevocable notice specifying the amount to be prepaid and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and |
(c) | the Borrowers have provided evidence satisfactory to the Agent that any consent required by the Borrowers or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrowers or any Security Party has been complied with. |
8.6 | Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authority of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice. |
8.7 | Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 8.5(c). |
8.8 | Mandatory prepayment. Upon sale or Total Loss of any of the Ships, following the application of the relevant proceeds, the Loan outstanding will be reduced pro rata and for the avoidance of any doubt, any amount so applied shall be used to reduce the outstanding Repayment Instalments and the balloon payment on a pro rata basis. |
8.9 | Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the Loan and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clause 21.2 but without premium or penalty). |
8.10 | Application of partial prepayment. Each partial prepayment shall be applied against the repayment instalments specified in Clause 8.1 (including the balloon payment) on a pro rata basis. |
8.11 | No reborrowing . No amount prepaid or repaid may be re-borrowed. |
9 | CONDITIONS PRECEDENT |
9.1 | Documents, fees and no default. Each Lender's obligation to contribute to the Loan is subject to the following conditions precedent: |
(a) | that, on or before the date of signing of this Agreement, the Agent receives the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers; |
(b) | that, on or before the date of drawdown of the Loan, the Lender receives the documents described in Part B in Schedule 3 in form and substance satisfactory to the Agent and its lawyers; |
(c) | that, on or before the service of the Drawdown Notice, the Agent receives the relevant fees payable pursuant to Clause 20.1 and has received payment of the expenses referred to in Clause 20.2; |
(d) | that at the date of the Drawdown Notice, at the Drawdown Date on the first day of each Interest Period and on the date of each Compliance Certificate: |
(i) | no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan; |
(ii) | the representations and warranties in Clause 10 and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading in any material respect if repeated on each of those dates with reference to the circumstances then existing; |
(iii) | none of the circumstances contemplated by Clause 5.5 has occurred and is continuing; |
(iv) | there has not been a Material Adverse Change in the financial positon or state of affairs of the Borrowers from that disclosed to the Agent prior to the date of this Agreement; |
(e) | that, if the ratio set out in Clause 15.1 were applied immediately following the making of the Loan, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and |
(f) | that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent (acting reasonably)_may, with the authorisation of the Majority Lenders, request by notice to the Borrowers prior to the Drawdown Date. |
9.2 | Waiver of conditions precedent. If the Majority Lenders, at their discretion, permit the Loan to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Agent may, with the authority of the Majority Lenders, specify). |
10 | REPRESENTATIONS AND WARRANTIES |
10.1 | General. The Borrowers represent and warrant to each Creditor Party as follows: |
10.2 | Status. Each Borrower is duly incorporated and validly existing and in good standing under the laws of its country of incorporation; neither the Borrowers nor any Security Party is a FATCA FFI or a US Tax Obligor. |
10.3 | Share capital and ownership. Each Borrower incorporated in Liberia and/or in the Marshall Islands has an authorised share capital divided into 500 registered and/or bearer shares and each Borrower incorporated in the Republic of Panama has an authorised share capital divided into 100 shares and the legal title and ownership of all those shares is held, free of any Security Interest or other claim, by the Guarantor. |
10.4 | Corporate power. Each Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it: |
(a) | to execute the Finance Documents to which it is a party; and |
(b) | to borrow under this Agreement and to make all the payments contemplated by, and to comply with, the Finance Documents to which each Borrower is a Party. |
10.5 | Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation. |
10.6 | Legal validity; effective Security Interests. The Finance Documents to which each Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents): |
(a) | constitute that Borrower's legal, valid and binding obligations enforceable against that Borrower in accordance with their respective terms; and |
(b) | create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate, |
10.7 | No third party Security Interests. Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document: |
(a) | the Borrowers will have the right to create all the Security Interests which that Finance Document purports to create; and |
(b) | no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates. |
10.8 | No conflicts. The execution by the Borrowers of each Finance Document to which they are a party, and the borrowing by the Borrowers of the Loan, and its compliance with each Finance Document to which they are a party will not involve or lead to a contravention of: |
(a) | any law or regulation in any Pertinent Jurisdiction; or |
(b) | the constitutional documents of the Borrowers; or |
(c) | any contractual or other obligation or restriction which is binding on the Borrowers or any of its assets, and will not have a Material Adverse Effect. |
10.9 | No withholding taxes. All payments which the Borrowers are liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction. |
10.10 | No default. No Event of Default or Potential Event of Default has occurred and is continuing. |
10.11 | Information. All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.6; all audited and consolidated accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no Material Adverse Change in the financial position or state of affairs of the Borrowers from that disclosed in the latest of those accounts which constitutes a Material Adverse Effect. |
10.12 | No litigation. No legal or administrative action involving the Borrowers or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrowers’ knowledge, is likely to be commenced or taken which, in either case and if determined adversely, would be likely to have a Material Adverse Effect. |
10.13 | Compliance with certain undertakings. At the date of this Agreement, the Borrowers are in compliance with Clauses 11.2, 11.5, 11.9, 11.11 and 11.17. |
10.14 | Taxes paid. The Borrowers have paid all taxes applicable to, or imposed on or in relation to it and its business. |
10.15 | ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrowers, the Approved Manager and the Ships have been complied with. |
10.16 | No Money Laundering. Without prejudice to the generality of Clause 2.3, in relation to the borrowing by the Borrowers of the Loan, the performance and discharge of their obligations and liabilities under the Finance Documents, and the transactions and other arrangements effected or contemplated by the Finance Documents to which the Borrowers are a party, the Borrowers confirm that (i) they are acting for their own account, (ii) that they will use the proceeds of the Loan for their own benefit, under their full responsibility and exclusively for the purposes specified in this Agreement and (iii) that the foregoing will not involve or lead to contravention of any law, official requirements or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities). |
10.17 | Patriot Act. To the extent applicable to any of the Borrowers, the Borrowers are in compliance with (i) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto and (ii) the PATRIOT Act. No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. |
11 | GENERAL UNDERTAKINGS |
11.1 | General. The Borrowers undertake with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit. |
11.2 | Title; negative pledge; pari passu. Each Borrower will: |
(a) | ensure that the Ships will maintain their present ownership, management, control and ultimate beneficial ownership and the Borrowers will hold the legal title to, and own the entire beneficial interest in the Ships’ Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and except |
(b) | not create or permit to arise any Security Interest (except for Permitted Security Interests) over any of its asset, present or future; and |
(c) | procure that its liabilities under the Finance Documents to which it is a party to will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law. |
11.3 | No disposal of assets. The Borrowers will not (without the prior written consent of the Agent, acting with authority from the Majority Lenders) transfer, lease or otherwise dispose of: |
(a) | all or a substantial part of their assets, whether by one transaction or a number of transactions, whether related or not; or |
(b) | any debt payable to them or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation. |
11.4 | No other liabilities or obligations to be incurred. The Borrowers will not incur any liability or obligation except (i) liabilities and obligations under the Finance Documents to which they are a party and (ii) liabilities or obligations incurred in the ordinary course of their business of operating and chartering the Ships. |
11.5 | Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrowers under or in connection with any Finance Document will be true and not misleading in any material respect and will not omit any material fact or consideration. |
11.6 | Provision of financial statements. The Borrowers will: |
(a) | procure that the Guarantor furnishes the Agent, with annual, audited and consolidated financial statements of the Guarantor within 180 days after the end of the financial year concerned, and prepared in accordance with GAAP consistently applied, such obligation commencing from 1 st January 2015; |
(b) | send to the Agent, together with the Accounting Information referred to in paragraph (a) above, a Compliance Certificate; and |
(c) | provide the Agent from time to time as the Agent may reasonably request and in form and substance satisfactory to the Agent with any information on the financial condition, commitments, business and operations of the Borrowers and any other Security Party. |
11.7 | Form of financial statements. All financial statements delivered under Clause 11.6 will: |
(a) | give a true and fair view of the state of affairs of the Guarantor, or as the case may be, of the Borrowers at the date of those accounts and of the profit for the period to which those accounts relate; and |
(b) | fully disclose or provide for all significant liabilities of the Guarantor, or as the case may be, of the Borrowers for the period to which those accounts relate, to the Agent’s satisfaction. |
11.8 | Consents. The Borrowers will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required: |
(a) | for the Borrowers and any Security Party to perform their respective obligations under each of the Finance Documents to which each of them is a party; |
(b) | for the validity or enforceability of any Finance Document to which each of the Borrowers and any Security Party are is party, |
11.9 | Maintenance of Security Interests. The Borrowers will: |
(a) | at their own cost, do all that they reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and |
(b) | without limiting the generality of paragraph (a) above, at their own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the reasonable opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates. |
11.10 | Notification of litigation. The Borrowers will provide the Agent with details of any legal or administrative action involving a Borrower, the Approved Manager and any other Security Party or a Ship, its Earnings or its Insurances as soon as such action is instituted or it becomes apparent to the Borrowers that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered as having a material adverse effect on the business, assets or financial condition of them or as affecting the validity or enforceability of any Finance Document. |
11.11 | Principal place of business. The Borrowers will not establish, or do anything as a result of which they would be deemed to have, a place of business in the United Kingdom or the United States of America. |
11.12 | Confirmation of no default. The Borrowers will, not more than once per quarter and within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by 2 directors of the Borrowers and which: |
(a) | states that no Event of Default or Potential Event of Default has occurred; or |
(b) | states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given. |
11.13 | Notification of default. The Borrowers will notify the Agent as soon as the Borrowers become aware of: |
(a) | the occurrence of an Event of Default or a Potential Event of Default which is continuing; or |
(b) | any matter which indicates that an Event of Default or a Potential Event of Default may have occurred, |
11.14 | Provision of further information. The Borrowers will inform the Agent of all major financial developments in the Borrowers and the Guarantor such as new loans, refinancing/restructuring of existing loans, new acquisitions and sales, contracts for term employment of the Ships and furthermore will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating to: |
(a) | the Borrowers, the Ships, their Insurances or their Earnings; or |
(b) | any other matter relevant to, or to any provision of, a Finance Document, |
11.15 | Provision of customer information. The Borrowers will produce such documents and evidence as the Lenders shall from time to time require, based on applicable laws and regulations from time to time and the Lenders’ own internal guidelines from time to time, relating to the Lenders’ knowledge of its customers. |
11.16 | Ownership. The Borrowers or, as the case may be, any other corporate Security Party shall ensure that, throughout the Security Period without the prior written consent of the Agent, which shall not be unreasonably withheld, there shall be no change in the Directors and Officers in the Borrowers and in the Chief Executive Officer(s) of the Guarantor and moreover the Borrowers shall ensure that no change shall be made directly or indirectly in the ownership of the Borrowers, the beneficial ownership of the Guarantor, or the control of the Borrowers without the prior written consent of the Agent, which shall not be unreasonably withheld. For the avoidance of doubt the Lenders consent and agree to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement. |
11.17 | Sanctions |
(a) | no member of the Group, no Security Party nor any of their subsidiaries, nor any of their respective directors, officers, employees (nor, to the knowledge of such Security Party, any of their affiliates, agents or representatives): |
(ii) | is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Restricted Party, and none of such persons owns or controls a Restricted Party; |
(iv) | has received notice of or is aware of or is subject to any claim,proceedings, formal notice or investigation with respect to Sanctions; |
(b) | no proceeds of the Loan or any part thereof shall be made available, directly or indirectly, to any subsidiary, joint venture partner or other person to fund any trade, business or other activities involving or for the benefit of a Restricted Party or in any country or territory, that, at the time of such funding, is a Sanctioned Country nor shall they be otherwise directly or indirectly, applied in a manner that would result in a violation of Sanctions by any Security Party or for any purpose prohibited by Sanctions; |
(c) | no Security Party nor any of their subsidiaries, nor any of their respective directors, officers, employees (nor, to the knowledge of such Security Party, any of their affiliates, agents or representatives) has taken any action resulting in a violation by such persons of Sanctions or which constitutes or would constitute any such violation by the Borrowers or any Security Party. |
11.18 | Provision of copies and translation of documents. The Borrowers will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party. |
12 | CORPORATE UNDERTAKINGS |
12.1 | General. The Borrowers also undertake with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit. |
12.2 | Maintenance of status. Each Borrower will maintain its separate corporate existence and remain in good standing under the laws of its incorporation. |
12.3 | Negative undertakings. Each Borrower will not: |
(a) | carry on any type of business other than the ownership, chartering and operation of its Ship in accordance with its constitutional documents; |
(b) | make any form of distribution (other than payment of a dividend pursuant to Clause 12.4) or effect any form of redemption, purchase, reduction or return of share capital or issue, allot or grant any person a right to any shares in its capital; or |
(c) | without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any debt or provide any form of credit or issue any guarantee to any person, except in the ordinary course of business; or |
(d) | without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), open or maintain any account with any bank or financial institution except accounts with the Agent (or another office of the Agent in Cyprus or Luxembourg) for the purposes of the Finance Documents and accounts notified to the Agent prior to the date of this Agreement; or |
(e) | acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or |
(f) | enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation, or change its name; or |
(g) | purchase any further assets (other than the Ship owned by such Borrower), either directly or indirectly (through subsidiaries); or |
(h) | without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), which consent and instructions will not be unreasonably be withheld, incur any other Financial Indebtedness. Any shareholder loans, inter company loans, affiliate loans and third party loans to the Borrowers shall be fully subordinated to the rights of the Creditor Parties under the Loan Agreement and the Finance Documents, on terms satisfactory to the Agent in its sole discretion. |
12.4 | Dividends. The Borrowers will not declare or pay any dividends or other distribution following the occurrence of an Event of Default which is continuing without the prior written consent of the Agents. |
12.5 | Cash Collateral Deposit. The Borrowers shall ensure that the Guarantor will maintain from the Drawdown Date and at all times thereafter during the Security Period, in an account with the Agent or the Security Trustee or (at the Borrowers’ option and subject to the satisfaction of the Agent’s relevant reasonable requirements) with any of their affiliates outside Greece, in Cyprus or Luxembourg the Cash Collateral Deposit which is, and will not be subject to any Security Interest (other than pursuant to the relevant Account Pledge) as cash collateral. |
12.6 | Debt to equity ratio. The Borrowers will ensure that the aggregate debt to equity ratio of the Ships will not exceed 75% of the aggregate Market Value of the Ships obtained in accordance with Clause 15.4. |
12.7 | Minimum Net Worth. The Borrowers will ensure that the Guarantor’s minimum Net Worth listed in Nasdaq will be United States Dollars fifteen million (USD15,000,000). |
12.8 | Compliance Check. On each Compliance Date, compliance with the undertakings contained in Clause 12.5 and 15.1 shall be determined by reference to the Accounting Information for the twelve month period in each Financial Year of the Borrowers (commencing with the twelve month period ending on 31 December 2015) delivered to the Agent pursuant to the Agreement. At the same time as it delivers that Accounting Information, the Borrowers shall deliver to the Agent a Compliance Certificate signed by a director of the Borrowers. If, prior to the delivery of a Compliance Certificate, the Borrowers become aware that such undertakings will not be complied with, the Borrowers shall immediately notify the Agent thereof. |
12.9 | Application of FATCA |
13 | INSURANCE |
13.1 | General. The Borrowers undertake with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period, except as the Agent may (with the authority of the Majority Lenders), otherwise permit. |
13.2 | Maintenance of obligatory insurances. The Borrowers shall keep the Ships insured at the expense of the Borrowers against: |
(a) | fire and usual marine risks (including hull and machinery and excess risks); |
(b) | war risks (including war protection and indemnity liabilities, terrorism, piracy and confiscation); and |
(c) | protection and indemnity risks (including cover for oil pollution liability risks); and |
(d) | loss of hire; and |
(e) | any other risks against which the Majority Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Majority Lenders be reasonable for the Borrowers to insure and which are specified by the Security Trustee by notice to the Borrowers. |
13.3 | Terms of obligatory insurances. The Borrowers shall effect such insurances: |
(a) | in Dollars; |
(b) | in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) 125% of the amount of the Loan and (ii) the aggregate market value of the Ships; |
(c) | in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000); |
(d) | in relation to protection and indemnity risks in respect of the full value and tonnage of the Ship; |
(e) | on approved terms; and |
(f) | through approved brokers and with approved insurance companies and/or underwriters and/or war risks associations, and protection and indemnity risks shall be placed with a member of the International Group of P&I Clubs. |
13.4 | Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, the Borrowers shall procure that the obligatory insurances shall: |
(a) | be in the name of the respective Borrower or whenever the Security Trustee so requires, name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
(b) | procure that the insurers shall note the Security Trustee’s interest and endorse the relevant notices of assignment and Loss Payable Clause on the relevant certificates of entry or policies and shall furnish the Security Trustee with a copy of such certificates of entry or policies; |
(c) | use their best enceavors to provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set‑off, counterclaim or deductions or condition whatsoever; |
(d) | provide that following an Event of Default which is continuing the Security Trustee may make proof of loss if the Borrowers fail to do so. |
13.5 | Renewal of obligatory insurances. The Borrowers shall: |
(a) | at least 21 days before the expiry of any obligatory insurance: |
(i) | notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrowers propose to renew that insurance and of the proposed terms of renewal; and |
(ii) | in case of any material change in insurance cover, obtain the Majority Lenders' approval to the matters referred to in paragraph (i) above; |
(b) | at least 14 days before the expiry of any obligatory insurance, renew the insurance; and |
(c) | procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall before the expiry of the current insurances notify the Security Trustee in writing of the terms and conditions of the renewal. |
13.6 | Copies of policies; letters of undertaking. The Borrowers shall ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters or undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that: |
(a) | they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4; |
(b) | they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause; |
(c) | they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances; |
(d) | they will notify the Security Trustee, not less than 7 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrowers or their agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and |
(e) | if the insurances form part of a fleet cover, they will not set off any claims on the Ships against premiums due for other vessels under the fleet cover or against premiums due for other insurances; neither will they cancel the insurance cover of the Ships for reason of non-payment of such premiums; and they will arrange for a separate policy to be issued in respect of the Ships forthwith upon being so requested by the Security Trustee. |
13.7 | Copies of certificates of entry. The Borrowers shall ensure that, from any protection and indemnity and/or war risks associations in which a Ship is entered, the Security Trustee is provided with: |
(a) | a certified copy of the certificate of entry for that Ship; |
(b) | a letter or letters of undertaking in such form as may be required by the Security Trustee; and |
(c) | a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship. |
13.8 | Deposit of original policies. The Borrowers shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed. |
13.9 | Payment of premiums. The Borrowers shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee. |
13.10 | Guarantees. The Borrowers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
13.11 | Restrictions on employment. The Borrowers shall not employ the Ships owned by them, nor permit them to be employed, outside the cover provided by any obligatory insurances. |
13.12 | Compliance with terms of insurances. The Borrowers shall not do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular: |
(a) | the Borrowers shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval; |
(b) | the Borrowers shall not make any changes relating to the classification or classification society or manager or operator of the Ships approved by the underwriters of the obligatory insurances; and |
(c) | the Borrowers shall not employ the Ships, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
13.13 | Alteration to terms of insurances. The Borrowers shall neither make or agree to any material alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee (not to be unreasonably withheld). |
13.14 | Settlement of claims. The Borrowers shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty without the prior written consent of the Security Trustee (which consent will not be unreasonably withheld), and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances in accordance with the Finance Documents. |
13.15 | Provision of copies of communications. A Borrower shall, if required by the Security Trustee, provide the Security Trustee, at the time of each such communication, copies of all material written communications between that Borrower and: |
(a) | the approved brokers; and |
(b) | the approved protection and indemnity and/or war risks associations; and |
(c) | the approved insurance companies and/or underwriters, which relate directly or indirectly to: |
(i) | such Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
(ii) | any credit arrangements made between such Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances . |
13.16 | Provision of information. In addition, a Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) reasonably requests for the purpose of: |
(a) | obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or |
(b) | effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 below or dealing with or considering any matters relating to any such insurances, |
13.17 | Mortgagees’ interest, additional perils. The Agent shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest additional perils pollution insurance and a mortgagees’ interest insurance in an amount equal to 115% of the Loan and otherwise on such terms, through such insurers and generally in such manner as the Lenders may from time to time consider appropriate and the Borrowers shall upon demand against appropriate vouchers/invoices fully indemnify the Lenders in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance. |
13.18 | Review of insurance requirements. The Majority Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the reasonable opinion of the Majority Lenders, significant and capable of affecting the Borrowers or the Ships and their insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrowers may be subject), and, prior to the occurrence of an Event of Default which is continuing, may appoint insurance consultants in relation to this review at the cost of the Borrowers, subject to such appointment taking place once per year. |
13.19 | Modification of insurance requirements. The Security Trustee shall notify the Borrowers of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Majority Lenders (acting reasonably) consider appropriate in the circumstances. |
13.20 | Compliance with instructions. The Security Trustee shall be entitled but will not be bound to (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to effect the insurances of a Ship in the amount and in terms acceptable to the Security Trustee from time to time at the cost and on behalf of the Borrowers. |
14 | SHIPS COVENANTS |
14.1 | General. The Borrowers also undertake with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period, except as the Agent (with the authority of the Majority Lenders) may otherwise permit. |
14.2 | Ship's name and registration. Each Borrower shall keep its Ship registered in its name under the Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry or flag of that Ship without the prior written consent of the Agent (acting on the authority of the Majority Lenders), such consent not to be unreasonably withheld. |
14.3 | Repair and classification. Each Borrower shall keep its Ship in a good and safe condition and state of repair: |
(a) | consistent with first‑class ship ownership and management practice; |
(b) | so as to maintain such Ship with the highest classification available for vessels of the same age, type and specification as that Ship with Lloyd’s Register of Shipping (or such other first class classification society being a member of IACS and as may be approved by the Security Trustee), free of overdue recommendations and conditions affecting the Ship’s class; and |
(c) | so as to comply with all laws and regulations applicable to vessels registered at ports in the Approved Flag State or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code. |
14.4 | Modification. The Borrowers shall not make any modification or repairs to, or replacement of, the Ships or equipment installed on her which would or might materially alter the structure, type or performance characteristics of the Ships or materially reduce her value. |
14.5 | Removal of parts. A Borrower shall not remove any material part of its Ship, or any item of equipment installed on, such Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lenders and becomes on installation on that Ship the property of the relevant Borrower and subject to the security constituted by the relevant Mortgage Provided that a Borrower may install leased equipment owned by a third party if the equipment can be removed without any risk of damage to its Ship. |
14.6 | Surveys. Each Borrower shall submit its Ship regularly to all periodical or other surveys which may be required for classification purposes, at the cost and expense of the Borrowers. The Agent shall have the right to request one or more technical survey reports of the Ships by surveyors appointed to by the Agent at the cost of the Borrowers, provided that the frequency of such reports shall be limited to one per year (unless an Event of Default shall have occurred and is continuing). |
14.7 | Inspection. The Borrowers shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship at all reasonable times, but without interference to the Ship’s trading and operations, to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. Provided that the Ships are found to be in satisfactory condition, the cost of such inspections shall be borne by the Borrowers not more than once per year. |
14.8 | Prevention of and release from arrest. Unless contested in good faith by appropriate proceedings, the Borrowers shall promptly discharge: |
(a) | all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ships, their Earnings or their Insurances; and |
(b) | all taxes, dues and other amounts charged in respect of the Ships, their Earnings or their Insurances; |
14.9 | Compliance with laws etc. Each Borrower shall: |
(a) | comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Borrower (including, without limitation, the obtaining of all relevant certificates of financial responsibility and any other matters required for entering United States territorial waters or calling at any United States Port); |
(b) | comply (and procure that each Security Party and each Affiliate of any of them shall comply) in all aspects with all Sanctions; |
(c) | not employ its Ship nor allow her employment in any manner contrary to any Sanctions; |
(d) | in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit its Ship to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless the prior written consent of the Majority Lenders has been given and the Borrowers have (at their expense) effected any special, additional or modified insurance cover which the Majority Lenders may require. |
14.10 | Provision of information. The Borrowers shall promptly provide the Security Trustee with any information which the Majority Lenders reasonably request regarding: |
(a) | the Ships, their employment, position and engagements; |
(b) | the Earnings and payments and amounts due to the master and crew of the Ships; |
(c) | any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ships and any payments made in respect of the Ships; |
(d) | any towages and salvages; |
(e) | its compliance, the Approved Manager's compliance or the compliance of the Ships with the ISM Code and, upon the Security Trustee's request, provide copies of any current charter relating to the Ship and of any current charter guarantee, and copies of the ISM Code and ISPS Code documentation. |
14.11 | Notification of certain events. The Borrower shall immediately notify the Security Trustee by letter of: |
(a) | any casualty which is or is likely to be or to become a Major Casualty; |
(b) | any occurrence as a result of which a Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss; |
(c) | any requirement or recommendation made by any insurer or classification society (or any withdrawal of class) or by any competent authority which is not complied with in accordance with its terms; |
(d) | any arrest or detention of a Ship which is not lifted within forth eight (48) hours, any exercise or purported exercise of any lien on a Ship or her Earnings or any requisition of that Ship for hire; |
(e) | any intended dry docking of a Ship; |
(f) | any Environmental Claim made against the Borrowers or in connection with the Ships or any Environmental Incident; |
(g) | any claim for breach of the ISM Code or the ISPS Code being made against the Borrowers, the Approved Manager or otherwise in connection with the Ships; or |
(h) | any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with, |
14.12 | Restrictions on chartering, appointment of managers, etc. The Borrowers shall not without the prior written consent of the Agent (acting on the authority of the Majority Lenders): |
(a) | let a Ship on demise charter for any period; |
(b) | enter into any time or consecutive voyage charter in respect of a Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months; |
(c) | enter into any charter in relation to a Ship under which more than 2 months' hire (or the equivalent) is payable in advance; |
(d) | charter a Ship otherwise than on bona fide arm's length terms at the time when that Ship is fixed; |
(e) | appoint a commercial, technical or operational manager of a Ship (other than the Approved Manager) or agree to any material alteration to the terms of the Approved Manager's appointment (and in respect of which, the consent of the Agent shall not be unreasonably withheld); |
(f) | de‑activate or lay up a Ship; |
(g) | change the legal ownership of the shares in a Ship; |
(h) | put a Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed Three hundred thousand United States Dollars ($300,000) (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or her Earnings for the cost of such work or otherwise; or |
(i) | change the classification society with which a Ship is classed (and in respect of which, the consent of the Agent and the authority of the Majority Lenders shall not be unreasonably withheld). |
14.13 | Notice of Mortgage. The Borrowers shall keep each Mortgage registered against the relevant Ship as a valid first priority mortgage, carry on board that Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of such Ship a framed printed notice stating that such Ship is mortgaged by the relevant Borrower to the Lenders. |
14.14 | Sharing of Earnings. The Borrowers shall not enter into any agreement or arrangement for the sharing of any Earnings other than a profit sharing agreed at arm’s length under a charter party provided that it is not a part of any pool arrangement, in which case the Agent’s prior written consent will be required (such consent not to be unreasonably withheld). |
14.15 | ISPS Code. The Borrowers shall comply with the ISPS Code and in particular, without limitation, shall: |
(a) | procure that a Ship and the company responsible for such Ship’s compliance with the ISPS Code, comply with the ISPS Code; and |
(b) | maintain for each Ship an ISSC; and |
(c) | notify the Lender immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC. |
14.16 | Time charter assignment. If a Borrower enters into any time charter or contract of affreightment in respect of its Ship which is of twelve (12) months or more in duration, or is capable of exceeding twelve (12) months in duration, that Borrower shall execute in favour of the Security Trustee an assignment and notice of assignment (and shall use its best endeavours to obtain an acknowledgement of the same from the relevant charterer or counterparty) of such time charter or contract of affreightment in such form and on such terms as the Agent may reasonably require, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Schedule 3 hereof as the Agent may require. |
14.17 | No freight derivatives. The Borrowers shall not enter into or agree to enter into (without the consent of the Majority Lenders) any freight derivatives or any other instruments which have the effect of hedging forward exposure to freight derivatives. |
15 | SECURITY COVER |
15.1 | Provision of additional security cover; prepayment of Loan. The Borrowers undertake with each Creditor Party that if the Agent (acting on the instructions of the Majority Lenders) notifies the Borrowers that: |
(a) | the aggregate market values (determined as provided below) of the Ships; plus |
(b) | the net realisable value of any additional security previously provided under this Clause 15 (including the Cash Collateral Deposit but always excluding amounts standing to the credit of the Operating Account, the Retention Account), is |
(i) | provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which consists of either (aa) cash pledged to the Security Trustee which when in the form of cash in Dollars, will be valued on a Dollar for Dollar basis or (bb) a Security Interest (including, but not limited to, a first priority mortgage or a second priority mortgage over another vessel), covering such asset or assets and documented in such terms as the Agent may, with authorisation from the Majority Lenders, approve or require; or |
(ii) | prepay in accordance with Clause 8 such part of the Loan as will eliminate the shortfall, to be applied against repayment instalments (including the balloon payment) on a pro rata basis. |
15.2 | Meaning of additional security. In Clause 15.1 “ security ” means a Security Interest over an asset or assets (whether securing the Borrowers’ liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrowers’ liabilities under the Finance Documents, in each case in a form and substance acceptable to the Agent in its sole discretion. |
15.3 | Requirement for additional documents. The Borrowers shall not be deemed to have complied with Clause 15.1(i) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 3 and such legal opinions in terms acceptable to lawyers selected by the Agent in its sole discretion. |
15.4 | Valuation of Ship. Subject to the following provisions of this Clause 15.4, the Market Value of the Ships shall be determined: |
(a) | in Dollars, as at the date of (or no earlier than 30 days prior to) such valuation; |
(b) | by an independent shipbroker selected by or acceptable to the Agent and reporting to the Agent; |
(c) | with or without physical inspection of the Ships (as the Agent may require); |
(d) | on the basis of a sale for prompt delivery for cash on normal arm's length commercial form as between a willing seller and a willing buyer, free of any existing charter or other contract of employment. |
15.5 | Value of additional vessel security. The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel other than a Ship shall be that shown by way of a valuation complying with the requirements of Clause 15.4. |
15.6 | Valuations binding and conclusive. Any valuation under Clause 15.1(i), 15.4 or 15.5 shall be binding and conclusive evidence of the Market Value of the Ships or of the other assets it refers to at the date of such valuation. |
15.7 | Provision of information. The Borrowers shall promptly provide the Agent and any shipbroker or expert acting under Clause 15.4 or 15.5 with any information which the Agent or the shipbroker or expert may reasonable request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Majority Lenders (or the expert appointed by them) consider prudent. |
15.8 | Payment of valuation expenses. Without prejudice to the generality of the Borrowers’ obligations under Clauses 20.2, 20.3 and 21.3, the Borrowers shall, subject to the provisions of Clause 15.9, on demand, pay the Agent the amount of the fees and expenses of any shipbrokers or experts instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause. |
15.9 | Frequency of valuations. The Agent shall be entitled to obtain written valuations of the Ships prior to the drawdown of the Loan and any time during the Security Period, provided that after drawdown of the Loan the costs and expenses of such shall only be borne by the Borrowers once per year (unless an Event of Default has occurred and is continuing or a mandatory prepayment event under Clause 8.8 has occurred, in which case the Agent shall be entitled to obtain a valuation at any time, at the cost and expense of the Borrowers). |
16 | PAYMENTS AND CALCULATIONS |
16.1 | Currency and method of payments. All payments to be made by the Lenders or by the Borrowers under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it: |
(i) | by not later than 11.00 a.m. (New York City time) on the due date; |
(ii) | in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); |
(iii) | if in Dollars, to the account of the Agent with such corresponding bank in New York as the Agent may from time to time notify to the Borrowers and the other Creditor Parties; and |
(iv) | in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrowers and the other Creditor Parties. |
16.2 | Payment on non-Business Day. If any payment by the Borrowers under a Finance Document would otherwise fall due on a day which is not a Business Day: |
(a) | the due date shall be extended to the next succeeding Business Day; or |
(b) | if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day, |
16.3 | Basis for calculation of periodic payments. All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year. |
16.4 | Distribution of payments to Creditor Parties. Subject to Clauses 16.5, 16.6 and 16.7: |
(a) | any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, or the Security Trustee shall be made available by the Agent to that Lender, or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and |
(b) | amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it. |
16.5 | Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand. |
16.6 | Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrowers or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrowers or that Lender until the Agent has satisfied itself that it has received that sum. |
16.7 | Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrowers or a Lender, without first having received that sum, the Borrowers or (as the case may be) the Lender concerned shall, on demand: |
(a) | refund the sum in full to the Agent; and |
(b) | pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it. |
16.8 | Agent may assume receipt. Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available. |
16.9 | Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party. |
16.10 | Agent's memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party. |
16.11 | Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrowers or a Security Party to a Creditor Party, those accounts shall, absent manifest error, be prima facie evidence that that amount is owing to that Creditor Party. |
17 | APPLICATION OF RECEIPTS |
17.1 | Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:‑ |
(a) | FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions: |
(i) | first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrowers under Clauses 20, 21 and 22 of this Agreement or by the Borrowers or any Security Party under any corresponding or similar provision in any other Finance Document); |
(ii) | secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents but shall have failed to pay or deliver to the Creditor Parties at the time of application or distribution under this Clause 17); and |
(iii) | thirdly, in or towards satisfaction pro rata of the Loan; |
(b) | SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrowers, the Security Parties and the other Creditor Parties, states in its reasonable opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a); and |
(c) | THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it. |
17.2 | Variation of order of application. The Agent may, following the occurrence of an Event of Default or a Potential Event of Default which is continuing, with the authorisation of the Majority Lenders by notice to the Borrowers, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories. |
17.3 | Appropriation rights overriden. This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrowers or any Security Party. |
18 | APPLICATION OF EARNINGS |
18.1 | Payment and application of Earnings. The Borrowers undertake with the Lenders to ensure that, throughout the Security Period (and subject only to the provisions of an Assignment for a Ship), all the Earnings of a Ship are paid to the relevant Operating Account and shall be applied as follows: |
(a) | first, towards payment of all sums other than principal and interest due to the Lenders under this Agreement and the other Finance Documents; |
(b) | secondly, towards payment of the next instalment of principal and the next payment of interest due to the Lenders in accordance with the provisions of Clause 18.2; and |
(c) | thirdly, any surplus shall (subject always to the other provisions of this Clause 18 and provided no Event of Default is continuing) be available to the Borrowers, and |
18.2 | Monthly retentions. The Borrowers undertake with the Lender to ensure that, in each calendar month of the Security Period commencing one month after the Drawdown Date, on such dates as the Lenders may from time totime specify, there is transferred to the Retention Account out of the aggregate Earnings received in the Operating Account(s) during the preceding calendar month: |
(a) | one‑third of the amount of the repayment instalment falling due under Clause 8 on the next Repayment Date; and |
(b) | the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest under this Agreement. |
18.3 | Shortfall in Earnings. If the aggregate Earnings received in the Operating Account are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 18.2, the Borrowers shall make up the amount of the insufficiency on demand from the Lenders; but, without thereby prejudicing the Lenders’ right to make such demand at any time, the Lenders may permit the Borrowers to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 18.2 from the Earnings received in the next or subsequent months. |
18.4 | Application of retentions. Until an Event of Default occurs, the Lenders shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with the payment details set out in Clause 16.1 so much of the balance on the Retention Account as equals: |
(a) | the repayment instalment due on that Repayment Date; or |
(b) | the amount of interest payable on that interest payment date; |
18.5 | Interest accrued on Retention Account. Any credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Lenders to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balance appears to the Lenders likely to remain on the Retention Account. Interest accruing under this Clause shall be credited to the Operating Account. |
18.6 | Location of accounts. The Borrowers shall promptly: |
(a) | comply with any requirement of the Agent as to the location or re‑location of the Operating Account(s) and the Retention Account (or either of them); |
(b) | execute any documents which the Lenders specify to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Operating Account and the Retention Account. |
18.7 | Debits for expenses etc. The Lenders shall be entitled (but not obliged) from time to time to debit the Operating Account with prior notice in order to discharge any amount due and payable to it under Clause 20 or 21 or payment of which they have become entitled to demand under Clause 20 or 21. |
18.8
|
Borrowers’ obligations unaffected. The provisions of this Clause 18 do not affect: |
(a) | the liability of the Borrowers to make payments of principal and interest on the due dates; or |
(b) | any other liability or obligation of the Borrowers or any Security Party under any Finance Document. |
19 | EVENTS OF DEFAULT |
19.1 | Events of Default. An Event of Default occurs if: |
(a) | the Borrowers or any Security Party fail to pay when due or (if payable on demand) three (3) days following the date on which the written demand is served any sum payable under a Finance Document or under any document relating to a Finance Document, unless such failure to pay is caused by an administrative or technical error or any disruption event in the payment/communication system which is beyond the control of the Borrowers, in which case the Borrowers shall rectify such error within three (3) Business Days; or |
(b) | any breach occurs of Clauses 9.2, 11.2, 11.11, 11.17, 12.2, 12.3, 13 or 15.1 and in case any such breach (other than those referred to in Clauses 9.2. 13 and 15.1 hereinabove to which other grace periods are applicable, as therein provided) is in the opinion of the Security Trustee, capable of remedy, if it will continue un-remedied for seven (7) Business Days after its occurrence; or |
(c) | any breach by the Borrowers or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or (b)) which, in the opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied ten (10) days after written notice from the Agent requesting action to remedy the same; or |
(d) | (subject to any applicable grace period specified in the Finance Document) any breach by the Borrowers or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c)); or |
(e) | any representation, warranty or statement made by, or by an officer of, the Borrowers or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading in a material way when it is made; or |
(f) | any of the following occurs in relation to any Financial Indebtedness of the Borrowers: |
(i) | any Financial Indebtedness of the Borrowers is not paid when due or, if payable on demand, three (3) days following the date on which the written demand is served; or |
(ii) | any Financial Indebtedness of the Borrowers becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or |
(iii) | a lease, hire purchase agreement or charter creating any Financial Indebtedness of the Borrowers is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or |
(iv) | any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of the Borrowers ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or |
(v) | any Security Interest securing any Financial Indebtedness of the Borrowers becomes enforceable; or |
(g) | any of the following occurs in relation to the Borrowers: |
(i) | the Borrowers become, in the opinion of the Majority Lenders, unable to pay their debts as they fall due; or |
(ii) | any assets of the Borrowers are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $300,000 or more or the equivalent in another currency unless such execution, attachment, arrest, sequestration or distress is being contested in good faith and on substantial grounds and is discussed or withdrawn within thirty (30) days of the occurrence thereof; or |
(iii) | any administrative or other receiver is appointed over any asset of the Borrowers; or |
(iv) | the Borrowers make any formal declaration of bankruptcy or any formal statement to the effect that they are insolvent or likely to become insolvent, or a winding up or administration order is made in relation to the Borrowers, or the members or directors of the Borrowers pass a resolution to the effect that it should be wound up, placed in administration; or |
(v) | a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of the Borrowers unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or |
(vi) | the Borrowers petition a court, or present any proposal for, any form of judicial or non‑judicial suspension or deferral of payments, reorganisation of their debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or |
(vii) | any meeting of the members or directors of the Borrowers is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or |
(viii) | in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the reasonable opinion of the Majority Lenders, is similar to any of the foregoing; or |
(h) | the Borrowers cease or suspend carrying on its business or a part of their business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or |
(i) | it becomes unlawful in any Pertinent Jurisdiction or impossible: |
(i) | for the Borrowers or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or |
(ii) | for the Agent, the Security Trustee, the Account Bank or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or |
(j) | any consent necessary to enable the Borrowers to own, operate or charter the Ships or to enable the Borrowers or any Security Party to comply with any provision which the Majority Lenders (acting reasonably) consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or |
(k) | it appears to the Majority Lenders that, without their prior consent, a change has occurred after the date of this Agreement in the beneficial ownership of the shares in the Borrowers as declared to the Bank prior to the execution of this Agreement. For the avoidance of doubt the Bank consents and agrees to any changes relating to the Guarantor’s trading shares in the normal course of business and confirm that such changes do not violate the terms of this Agreement; or |
(l) | any provision which the Majority Lenders (acting reasonably) consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another third party claim or interest; or |
(m) | the security constituted by a Finance Document is in any way imperilled or in jeopardy; or |
(n) | If any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $750,000) is not paid when due or any debt of any Security Party (which in the case of the Guarantor exceeds an aggregate amount of $750,000) becomes due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Security Party of a voluntary right of prepayment), or any creditor of any Security Party becomes entitled to declare its claim (which in the case of the Guarantor exceeds an aggregate amount of $750,000) due and payable, or any facility or commitment available to any Security Party is withdrawn, suspended or cancelled by reason of any default (however described) of such Security Party and such debt is not discharged within seven (7) Business Days; or |
(o) | any other event occurs or any other circumstances arise or develop including, without limitation: |
(i) | a Material Adverse Effect; or |
(ii) | any accident or other event involving the Ship, |
19.2 | Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default which is continuing: |
(a) | the Agent may, and if so instructed by the Majority Lenders, the Agent shall: |
(i) | serve on the Borrowers a notice stating that the Commitments and all other obligations of each Lender to the Borrowers under this Agreement are terminated; and/or |
(ii) | serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or |
(iii) | take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or |
(b) | the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law. |
19.3 | Termination of Commitments. On the service of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all other obligations of each Lender to the Borrowers under this Agreement shall terminate. |
19.4 | Acceleration of Loan. On the service of a notice under paragraph (a)(ii) of Clause 19.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand. |
19.5 | Multiple notices; action without notice. The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices. |
19.6 | Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee, the Account Bank and each Security Party a copy or the text of any notice which the Agent serves on the Borrowers under Clause 19.2; but the notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrowers or any Security Party with any form of claim or defence. |
19.7 | Creditor Parties’ rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 and Clause 3.2. |
19.8 | Exclusion of Creditor Party Liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to a Borrowers or a Security Party: |
(a) | for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or |
(b) | as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset; |
19.9 | Interpretation. In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “ petition ” includes an application. |
19.10 | Relevant Persons. In this Clause 19, a “ Relevant Person ” means the Borrowers, the Approved Manager, and any other Security Party. |
20 | FEES AND EXPENSES |
20.1 | Fees. The Borrowers shall pay to the Agent a non-refundable front end flat fee of 1.5% of the amount of the Loan for the account of the Arranger, on the Drawdown Date. |
20.2 | Costs of negotiation, preparation etc. The Borrowers shall pay to the Agent on its demand the amount of all expenses (including, but not limited to, all legal expenses and VAT, if applicable) incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document, other than any syndication costs/expenses. |
20.3 | Costs of variations, amendments, enforcement etc. The Borrowers shall pay to the Agent, on the Agent's demand, the amount of all expenses incurred by a Lender in connection with: |
(a) | any amendment or supplement to a Finance Document; |
(b) | any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document; |
(c) | the valuation of any security provided or offered under Clause 15 or any other matter relating to such security; |
(d) | any step taken by the Agent or the Security Trustee concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose. |
20.4 | Documentary taxes. The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent's demand, fully indemnify each Creditor Party against any liabilities and expenses resulting from any failure or delay by the Borrowers to pay such a tax. |
20.5 | Certification of amounts. A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due. |
21 | INDEMNITIES |
21.1 | Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Agent and each Lender on the Agent's written demand and the Security Trustee on its demand in respect of all expenses, liabilities and losses which are incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with: |
(a) | the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity; |
(b) | the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period; |
(c) | any failure (for whatever reason) by the Borrowers to make payment of any amount due under a Finance Document on the due date or, if payable on demand, three (3) days following the date on which the written demand is served (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 7); |
(d) | the occurrence and/or continuance of an Event of Default or a Potential Event of Default (including, but not limited to, a breach of Clauses 11.17 or 11.18) and/or the acceleration of repayment of the Loan under Clause 19; |
21.2 | Breakage costs. Without limiting its generality, Clause 21.1 covers any liability, expense or loss, incurred by a Lender: |
(a) | in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and |
(b) | in terminating, or reversing or otherwise in connection with, any open position arising under this Agreement. |
21.3 | Miscellaneous indemnities. The Borrowers shall fully indemnify the Agent and the Security Trustee severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“ liability items ”) which may be made or brought against, or incurred by, the Agent or the Security Trustee, in any country, in relation to: |
(a) | any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; |
(b) | any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document; |
21.4 | Extension of indemnities; environmental indemnity. Without prejudice to its generality, Clause 21.3 covers: |
(a) | any matter which would be covered by Clause 21.3 if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and |
(b) | any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution or the protection of the environment if such liability items would not have arise or asserted against the Lender or Agent or the Security Trustee (as the case may be) if any of them had not entered into any of the Finance 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 Finance. |
21.5 | Currency indemnity. If any sum due from the Borrowers or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “ Contractual Currency ”) into another currency (the “ Payment Currency ”) for the purpose of: |
(a) | making or lodging any claim or proof against the Borrowers or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or |
(b) | obtaining an order or judgment from any court or other tribunal; or |
(c) | enforcing any such order or judgment; |
21.6 | Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due. |
21.7 | Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender. |
21.8 | Mandatory Costs. The Borrowers shall, on demand by the Agent, pay to the Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Agent to be its good faith determination of the amount necessary to compensate it for complying with: |
(a) | in the case of a Lender lending from a lending office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that lending office; and |
(b) | in the case of any Lender lending from a lending office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions), which, in each case, is referable to that Lender's participation in the Loan. |
22 | NO SET-OFF OR TAX DEDUCTION |
22.1 | No deductions. All amounts due from the Borrowers under a Finance Document shall be paid: |
(a) | without any form of set‑off, cross-claim or condition; and |
(b) | free and clear of any tax deduction except a tax deduction which the Borrowers are required by law to make. |
22.2 | Grossing-up for taxes. If the Borrowers are required by law to make a tax deduction from any payment: |
(a) | the Borrowers shall notify the Agent as soon as it becomes aware of the requirement; |
(b) | the Borrowers shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; |
(c) | the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received. |
22.3 | Evidence of payment of taxes. Within 1 month after making any tax deduction, the Borrowers shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority. |
22.4 | Exclusion of tax on overall net income. In this Clause 22 “ tax deduction ” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party's overall net income. |
22.5 | FATCA Information. |
(a) | Subject to paragraph (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 a FATCA Exempt Party or is not a FATCA Exempt Party; and |
(ii) | supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable "passthru payment percentage" or other information required under the US 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 paragraph (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) | Paragraph (a) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such party for purposes of this paragraph (c). |
(d) | If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with paragraph (a) above (including, for the avoidance of doubt, where paragraph (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 Finance Documents as if it is not a FATCA Exempt Party; and |
(ii) | if that Party failed to confirm its applicable "passthru payment percentage" then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable "passthru payment percentage" is 100%, |
22.6 | FATCA Withholding. |
(a) | Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction. |
(b) | Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrowers, the Agent and the other Creditor Parties. |
23 | ILLEGALITY, ETC |
23.1 | Illegality. This Clause 23 applies if a Lender (the “ Notifying Lender ”) notifies the Agent that it has become, or will with effect from a specified date, become: |
(a) | unlawful or prohibited (including, without limitation, due to a breach of Clauses 11.17 or 11.18) as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
(b) | contrary to, or inconsistent with, any regulation, |
23.2 | Notification of illegality. The Agent shall promptly notify the Borrowers, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender. |
23.3 | Prepayment; termination of Commitment. On the Agent notifying the Borrowers under Clause 23.2, the Notifying Lender's Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender's notice under Clause 23.1 as the date on which the notified event would become effective the Borrowers shall prepay the Notifying Lender's Contribution in accordance with Clause 8. |
23.4 | Mitigation . If circumstances arise which would result in a notification under Clause 23.1 then, without in any way limiting the rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might: |
(a) | have an adverse effect on its business, operations or financial condition; or |
(b) | involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or |
(c) | involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage. |
24 | INCREASED COSTS |
24.1 | Increased costs. This Clause 24 applies if a Lender (the “ Notifying Lender ”) notifies the Agent that the Notifying Lender considers that as a result of: |
(a) | the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or |
(b) | the effect of complying with any regulation (including any regulation which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement (including, but not limited to, Basel III, CRR and CRD IV costs), |
(i) | an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums; or |
(ii) | a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital; |
(iii) | an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender's Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or |
(iv) | a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement; |
24.2 | Notification to Borrowers of claim for increased costs. The Agent shall promptly notify the Borrowers and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1. |
24.3 | Payment of increased costs. The Borrowers shall pay to the Agent, on the Agent's demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost. |
24.4 | Notice of prepayment. If the Borrowers are not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.3, the Borrowers may give the Agent not less than 14 days' notice of its intention to prepay the Notifying Lender's Contribution at the end of an Interest Period. |
24.5 | Prepayment; termination of Commitment. A notice under Clause 24.4 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrowers’ notice of intended prepayment; and: |
(a) | on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and |
(b) | on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Notifying Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
24.6 | Application of prepayment. Clause 8 shall apply in relation to the prepayment. |
25 | SET‑OFF |
25.1 | Application of credit balances. Each Creditor Party may without prior notice at any time after the occurrence of an Event of Default which is continuing: |
(a) | apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrowers at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrowers to that Creditor Party under any of the Finance Documents; and |
(b) | for that purpose: |
(i) | break, or alter the maturity of, all or any part of a deposit of the Borrowers; |
(ii) | convert or translate all or any part of a deposit or other credit balance into Dollars; |
(iii) | enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate. |
25.2 | Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set‑off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document). |
25.3 | Sums deemed due to a Lender. For the purposes of this Clause 25, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender's proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender. |
25.4 | No Security Interest. This Clause 25 gives the Lenders a contractual right of set off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrowers. |
25.5 | No Borrowers set off. The Borrowers shall not have a right of set off in relation to sums that may be due from any Creditor Party under this Agreement or any of the other Finance Documents. |
26 | TRANSFERS AND CHANGES IN LENDING OFFICES |
26.1 | Transfer by the Borrowers. The Borrowers may not: |
(a) | without the prior written consent of the Agent (given on the instructions of all of the Lenders), transfer any of its rights or obligations under any Finance Document; |
(b) | without the prior written consent of the Agent (given on the instructions of all the Lenders), enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person. |
26.2 | Transfer by a Lender. Subject to Clause 26.4, a Lender (the “ Transferor Lender ”) may, at its sole discretion, without the consent of and/or the prior consultation with the Borrowers (but with notice to the Borrower) and/or any Security Party, at any time assign or transfer: |
(a) | its rights in respect of all or part of its Contribution; or |
(b) | its obligations in respect of all or part of its Commitment; or |
(c) | a combination of (a) and (b); |
26.3 | Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective): |
(a) | sign the Transfer Certificate on behalf of itself, the Borrowers, the Security Parties, the Security Trustee, the Arranger, the Account Bank and each of the Lenders; |
(b) | on behalf of the Transferee Lender, send to the Borrowers and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; |
(c) | send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above. |
26.4 | Effective Date of Transfer Certificate. A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date. |
26.5 | No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrowers, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate. |
26.6 | Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “ successor ”), the Agent may, if it sees fit, by notice to the successor and the Borrowers and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent's notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender. In addition, where security rights (such as pledge and mortgage rights) created in the interest of the Lender concerned were transferred to the successor as a result of such a merger, de-merger or other reorganisation, then such rights will serve as if they were created in the interest of the successor. |
26.7 | Effect of Transfer Certificate. A Transfer Certificate takes effect in accordance with English law as follows: |
(a) | to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender's title and of any rights or equities which the Borrowers or any Security Party had against the Transferor Lender; |
(b) | the Transferor Lender's Commitment is discharged to the extent specified in the Transfer Certificate; |
(c) | the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate; |
(d) | the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro‑rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them; |
(e) | any part of the Loan which the Transferee Lender advances after the Transfer Certificate's effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor's title and any rights or equities of the Borrowers or any Security Party against the Transferor Lender had not existed; |
(f) | the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and |
(g) | in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount. |
26.8 | Maintenance of register of Lenders . During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrowers during normal banking hours, subject to receiving at least 3 Business Days prior notice. |
26.9 | Reliance on register of Lenders. The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents. |
26.10 | Authorisation of Agent to sign Transfer Certificates. The Borrowers, the Arranger, the Account Bank, the Security Trustee, each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf. |
26.11 | Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferor Lender or (at the Agent's option) the Transferee Lender. Such fees will not burden any of the Security Parties under any circumstances. |
26.12 | Sub-participation; subrogation assignment. A Lender may sub‑participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrowers, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them. |
26.13 |
Disclosure of information.
A Lender may disclose to a potential Transferee Lender or sub‑participant any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document.
|
26.14 | Change of lending office. A Lender may change its lending office without consultation with the Borrowers by giving notice to the Agent and the change shall become effective on the later of: |
(a) | the date on which the Agent receives the notice; and |
(b) | the date, if any, specified in the notice as the date on which the change will come into effect. |
26.15 | Notification. On receiving such a notice, the Agent shall notify the Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice. |
26.16 | Consent to disclosure. The Borrowers authorise any of the Lenders to disclose all information related or connected to: |
(a) | the Ships or any other vessel owned or operated by a Security Party; |
(b) | the negotiation, drafting and content of this Agreement and the Finance Documents; |
(c) | the Loan; or |
(d) | any Security Party, |
27 | VARIATIONS AND WAIVERS |
27.1 | Variations, waivers etc. by Majority Lenders. Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrowers, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party. |
27.2 | Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”: |
(a) | a change in the Margin or in the definition of LIBOR; |
(b) | a change to the date for, the amount of, any payment of principal, interest, fees, or other sums payable under this Agreement; |
(c) | a change to any Lender's Commitment; |
(d) | an extension of the Availability Period; |
(e) | a change to the definition of “Majority Lenders” or “Finance Documents”; |
(f) | a change to the preamble or to Clause 2, 3, 4, 5.1, 11.17, 11.18, 17, 19 or 30; |
(g) | a change to this Clause 27; |
(h) | any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and |
(i) | any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required. |
27.3 | Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising: |
(a) | a provision of this Agreement or another Finance Document; or |
(b) | an Event of Default; or |
(c) | a breach by the Borrowers or a Security Party of an obligation under a Finance Document or the general law; or |
(d) | any right or remedy conferred by any Finance Document or by the general law, |
27.4 | Notification of Variation or Waiver. No variation or waiver may be made before the date falling ten (10) Business Days after the terms of that variation or waiver have been notified by the Agent to the Lenders, unless each Lender is a FATCA Protected Lender. The Agent shall notify the Lenders reasonably promptly of any variations or waivers proposed by the Borrowers. |
27.5 | Variation or Waiver: FATCA. |
(a) | Notwithstanding the foregoing, if the Agent or a Lender reasonably believes that an amendment or waiver may constitute a “material modification” for the purposes of FATCA that may result (directly or indirectly) in a Party being required to make a FATCA Deduction and the Agent or that Lender (as the case may be) notifies the Borrowers and the Agent accordingly, that amendment or waiver may, subject to paragraph (b) below, not be effected without the consent of the Agent or that Lender (as the case may be). |
(b) | The consent of a Lender shall not be required pursuant to paragraph (a) above if that Lender is a FATCA Protected Lender. |
28 | NOTICES |
28.1 | General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly. |
28.2 | Addresses for communications. A notice shall be sent: |
(a) | to the Borrowers: |
c/o Eurobulk Ltd.
4, Messogiou & Evropis Street
151 24, Maroussi
Athens
Greece
Fax No: +30 2111 804097
Attn: Tassos Aslidis/George Kavalis
|
(b) | to a Lender: | At the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate; |
(c) |
to the Arranger, Account Bank and
Security Trustee:
|
EUROBANK ERGASIAS S.A.
83, Akti Miaouli Street
185 38 Piraeus
Greece
Fax No: +30 210 4587877;
|
(d) | to the Agent: |
EUROBANK ERGASIAS S.A.
83, Akti Miaouli Street
185 38 Piraeus
Greece
Fax: +30 210 4587877
Attn: Mrs S. Ydreou
|
28.3 | Effective date of notices. Subject to Clauses 28.4 and 28.5: |
(a) | a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; |
(b) | a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed. |
28.4 | Service outside business hours. However, if under Clause 28.3 a notice would be deemed to be served: |
(a) | on a day which is not a business day in the place of receipt; or |
(b) | on such a business day, but after 5 p.m. local time; |
28.5 | Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect. |
28.6 | Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if, |
28.7 | English language. Any notice under or in connection with a Finance Document shall be in English. |
28.8 | Meaning of “ notice ” . In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication. |
28.9 | Electronic communication. |
(a) | Any communication to be made between the Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender: |
(i) | agree that, unless and until notified to the contrary, this is to be an accepted form of communication; |
(ii) | notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and |
(iii) | notify each other of any change to their respective addresses or any other such information supplied to them. |
(b) | Any electronic communication made between the Agent and a Lender will be effective only when actually received in readable form and, in the case of any electronic communication made by a Lender to the Agent, only if it is addressed in such a manner as the Agent shall specify for this purpose |
29 | SUPPLEMENTAL |
29.1 | Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are: |
(a) | cumulative; |
(b) | may be exercised as often as appears expedient; and |
(c) | shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law. |
29.2 | Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document. |
29.3 | Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement. |
29.4 | Counterparts. A Finance Document may be executed in any number of counterparts. |
29.5 | PATRIOT Act Notice. Each of the Agent and the Lenders hereby notifies the Borrowers that pursuant to the requirements of the PATRIOT Act and the policies and practices of the Agent and each Lender, the Agent and each of the Lenders is required to obtain, verify and record certain information and documentation that identifies the Borrowers and each Security Party, which information includes the name and address of the Borrowers and each Security Party and such other information that will allow the Agent and each of the Lenders to identify the Borrowers and each Security Party in accordance with the PATRIOT Act. |
30 | LAW AND JURISDICTION |
30.1 | English law. This Agreement (and any non-contractual obligations connected with it) shall be governed by, and construed in accordance with, English law. |
30.2 | Exclusive English jurisdiction. Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement. |
30.3 | Choice of forum for the exclusive benefit of the Creditor Parties. Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right: |
(a) | to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and |
(b) | to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England. |
30.4 | Process agent. The Borrowers irrevocably appoint Hill Dickinson Services (London) Ltd at their office for the time being, presently at The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement. |
30.5 | Creditor Party rights unaffected. Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction. |
30.6 | Meaning of “proceedings”. In this Clause 30, “ proceedings ” means proceedings of any kind, including an application for a provisional or protective measure. |
Lender
|
Lending Office
|
Commitment
|
EUROBANK ERGASIAS S.A.
|
83, Akti Miaouli Street
185 38 Piraeus
Greece
Fax No: +30 210 4587877
Attn: Loans Administration
|
$14,500,000
|
To:
|
EUROBANK ERGASIAS S.A.
83, Akti Miaouli
185 38 Piraeus
Greece
|
1. | We refer to the loan agreement (the “ Loan Agreement ”) dated [ ] February 2016 and made between (1) ourselves as Borrowers, (2) the Lenders referred to therein and (3) yourselves as Arranger, Account Bank, Agent and as Security Trustee in connection with a secured term loan of up to US$14,500,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice. |
2. | We request to borrow the Loan as follows: |
(a) | Amount: US$[14,500,000]; |
(b) | Drawdown Date: [ ] February 2016; |
(c) | Duration of the first Interest Period shall be [ ] months; |
(d) | Payment instructions: account of [ ] and numbered [ ] with [ ] of [ ]. |
3. | We represent and warrant that: |
(a) | the representations and warranties in Clause 10 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing; |
(b) | no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Loan. |
4. | This notice cannot be revoked without the prior consent of the Majority Lenders. |
1. | A duly executed original of this Agreement, the Agency and Trust Deed, the Guarantee, the Accounts Pledge (together with all notices of assignment required thereunder). |
2. | Copies of the certificate of incorporation and constitutional documents of each Borrower, the Guarantor and the Approved Manager, together with up to date evidence of the good standing of each Borrower, the Guarantor and the Approved Manager. |
3. | Originals of resolutions of the directors and shareholders of each Borrower and originals of the relevant minutes containing the resolutions of the directors of the Guarantor and the Approved Manager authorising the execution of each of the Finance Documents referred to at 1 above to which that Borrower is a party and authorising named officers to give the Drawdown Notice and other notices under this Agreement. |
4. | The original of any power of attorney under which any Finance Document referred to at 1 above is executed on behalf of each Borrower, the Guarantor and the Approved Manager. |
5. | Copies of all consents which a Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document. |
6. | All documentation required by the Agent in respect of the Borrowers and any other Security Party pursuant to each Lender’s “Know your customer” requirements, together with such other documents or evidence as the Lenders may reasonably require with respect to money laundering regulations. |
7. | Documentary evidence that the agent for service of process named in Clause 30 of this Agreement has accepted its appointment. |
8. | Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of Liberia and/or of the Marshall Islands and/or of Panama and such other relevant jurisdictions as the Agent may require. |
9. | A certificate in a form and substance satisfactory to the Lenders confirming the legal ownership and the beneficial ownership of the shares in the Borrowers, in a form and substance satisfactory to the Agent in its sole discretion. |
10. | The originals of any mandates or other documents required in connection with the opening and operation of the Operating Account, the Retention Account and the Cash Collateral Deposit Account. |
11. | Receipt by the Agent and the Arranger of all fees due under Clause 20 of this Agreement. |
12. | Evidence that the sum of $2,800,000 is standing to the credit of the Cash Collateral Deposit Account held with the Agent or the Security Trustee or (at the Borrowers’ option) with any of their affiliates outside Greece in the name of either the Borrowers or the Guarantor, by way of cash collateral pursuant to the provisions of Clause 12.5 of this Agreement. |
13. | If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent. |
1. | In respect of each Ship, a duly executed original of the Mortgage and the Assignment (together with all notices of assignment and acknowledgements required thereunder), together with original resolutions of directors/shareholders and a power of attorney of the Borrowers with respect to the execution of such Finance Documents by the Borrowers. |
2. | Documentary evidence that: |
(a) | each Ship will on the Drawdown Date be definitively and permanently registered in the name of the relevant Borrower under the Approved Flag; |
(b) | each Ship will on the Drawdown Date be in the absolute and unencumbered ownership of the relevant Borrower save as contemplated by the Finance Documents; |
(c) | each Ship will on the Drawdown Date be classed with the highest available class with Lloyds Register of Ships (or IACS equivalent) free of all overdue recommendations and conditions of such classification society affecting Class; |
(d) | the Mortgage in respect of a Ship has been executed by the relevant Borrower and has been, or will immediately following drawdown of the Loan be, registered against that Ship as a valid first priority ship mortgage in accordance with the laws of the Approved Flag State; and |
(e) | each Ship will on the Drawdown Date be insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances shall have been complied with. |
3. | Documents establishing that each Ship will, as from the Drawdown Date, be managed by the Approved Manager on terms acceptable to the Agent, together with: |
(a) | the Approved Manager’s Undertaking in respect of the Ships, together with a copy of the ship management agreement for the Ships; |
(b) | the Guarantor’s Undertaking(s)-Assignments in respect of the Ships; |
(c) | copies of the Document of Compliance and Safety Management Certificate and ISSC; |
(d) | copies of such other ISM Code or ISPS Code documentation as the Agent may by written notice to the Borrowers have requested not later than 2 days before the Drawdown Date, certified as true and complete in all material respects by the Borrowers and the Approved Manager. |
4. | Valuations of the Ships addressed to the Agent (at the cost and the expense of the Borrowers), prepared in accordance with Clause 15.4 of this Agreement, in a form satisfactory to the Agent. |
5. | A favourable opinion from an independent insurance consultant appointed by the Agent on such matters relating to the insurances for the Ships as the Agent may require, and at the cost and expense of the Borrowers. |
6. | Favourable legal opinions from lawyers appointed by the Lenders on such matters concerning the laws of Liberia, the laws of the Marshall Islands, the laws of Panama, the laws of the Approved Flag State (if different) and such other relevant jurisdictions as the Lenders may require. |
7. | Receipt by the Agent of any fees due under Clause 20 of this Agreement. |
To: | EUROBANK ERGASIAS S.A. for itself and for and on behalf of the Borrowers, each Security Party, the Arranger, the Account Bank, the Agent, the Security Trustee and each Lender, as defined in the Loan Agreement referred to below. |
1. | This Certificate relates to a Loan Agreement (the “ Loan Agreement ”) dated […. February 2016 and made between (1) the entities named therein as borrowers (the “ Borrowers ”), (2) the banks and financial institutions named therein as Lenders, (3) EUROBANK ERGASIAS S.A. as Arranger, Account Bank, Agent and Security Trustee, for a secured term loan of up to US$14,500,000. |
2. | In this Certificate: |
3. | The effective date of this Certificate is [ ] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date. |
4. | The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [ ] per cent of the Contribution outstanding to the Transferor (or its predecessors in title) which is set out below: |
Contribution
|
Amount transferred
|
|
5. | By virtue of this Transfer Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[ ]] [from [ ] per cent. of its Commitment, which percentage represents $[ ]] and the Transferee acquires a Commitment of $[ ]. |
6. | The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect. |
7. | The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement. |
(a) | warrants to the Transferee and each Relevant Party: |
(i) | that the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and |
(ii) | that this Certificate is valid and binding as regards the Transferor; |
(b) | warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4 above; |
(c) | undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee's title under this Certificate or for a similar purpose. |
(a) | confirms that it has received a copy of the Loan Agreement and each other Finance Document; |
(b) | agrees that it will have no rights of recourse on any ground against either the Transferor, the Arranger, the Account Bank, the Agent, the Security Trustee, any Lender in the event that: |
(i) | the Finance Documents prove to be invalid or ineffective, |
(ii) | the Borrowers or any Security Party fail to observe or perform its obligations, or to discharge its liabilities, under the Finance Documents; |
(iii) | it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrowers or Security Party under the Finance Documents; |
(c) | agrees that it will have no rights of recourse on any ground against the Arranger, the Account Bank, the Agent, the Security Trustee, any Lender in the event that this Certificate proves to be invalid or ineffective; |
(d) | warrants to the Transferor and each Relevant Party (i) that it has full capacity to enter into this transaction and has taken all corporate action and obtained all official consents which it needs to take or obtain in connection with this transaction; and (ii) that this Certificate is valid and binding as regards the Transferee; and |
(e) | confirms the accuracy of the administrative details set out below regarding the Transferee. |
10. | The Transferor and the Transferee each undertake with the Agent and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent's or the Security Trustee's own officers or employees. |
11. | The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 8 above as exceeds one-half of the amount demanded by the Agent or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent or the Security Trustee for the full amount demanded by it. |
[Name of Transferor]
|
[Name of Transferee]
|
|
By:
|
By:
|
|
Date:
|
Date:
|
Note : | This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor's interest in the security constituted by the Finance Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose. |
To:
|
EUROBANK ERGASIAS S.A.
83, Akti Miaouli
185 38 Piraeus
Greece
|
(a) | a minimum cash balance of $2,800,000 was maintained on the Cash Collateral Deposit Account (free of any Security Interest other than the Account Pledge) throughout the [12] months ending as at the date to which the enclosed accounts are prepared; |
(b) | the asset cover ratio under Clause 15.1 of the Loan Agreement is [ ]%. |
• | Allendale Investment S.A., incorporated in Panama. |
• | Alterwall Business Inc., incorporated in Panama. |
• | Manolis Shipping Ltd., incorporated in the Marshall Islands. |
• | Eternity Shipping Company, incorporated in the Marshall Islands. |
• | Noumea Shipping Ltd, incorporated in the Marshall Islands. |
• | Saf-Concord Shipping Ltd., incorporated in Liberia. |
• | Eleni Shipping Ltd., incorporated in Liberia. |
• | Pantelis Shipping Corp., incorporated in Liberia. |
• | Aggeliki Shipping Ltd., incorporated in Liberia. |
• | Joanna Maritime Ltd., incorporated in Liberia. |
• | Eirini Shipping Ltd., incorporated in Liberia. |
• | Ultra One Shipping Ltd., incorporated in Liberia. |
• | Ultra Two Shipping Ltd., incorporated in Liberia. |
• | Kamsarmax One Shipping Ltd., incorporated in the Marshall Islands. |
• | Kamsarmax Two Shipping Ltd., incorporated in the Marshall Islands. |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. |
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|