o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 1
5(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008 |
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 1 5(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 1 5(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Name of each exchange on which registered | |
Shares of common stock, par value $0.001 per share
|
||
Class W Warrants to purchase shares of common stock
|
||
Class Z Warrants to purchase shares of common stock
|
Large accelerated filer o | Non-accelerated filer o | Accelerated filer þ |
U.S. GAAP þ | IFRS as issued by IASB o | Other o |
PART I |
|
1 | ||||||
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ITEM 1. | 1 | |||||||
ITEM 2. | 1 | |||||||
ITEM 3. | 1 | |||||||
ITEM 4. | 20 | |||||||
ITEM 4A. | 34 | |||||||
ITEM 5. | 34 | |||||||
ITEM 6. | 53 | |||||||
ITEM 7. | 56 | |||||||
ITEM 8. | 59 | |||||||
ITEM 9. | 59 | |||||||
ITEM 10. | 60 | |||||||
ITEM 11. | 75 | |||||||
ITEM 12. | 75 | |||||||
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PART II |
|
76 | ||||||
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ITEM 13. | 76 | |||||||
ITEM 14. | 76 | |||||||
ITEM 15. | 76 | |||||||
ITEM 16A. | 77 | |||||||
ITEM 16B. | 77 | |||||||
ITEM 16C. | 77 | |||||||
ITEM 16D. | 77 | |||||||
ITEM 16E. | 77 | |||||||
ITEM 16F. | 77 | |||||||
ITEM 16G. | 77 | |||||||
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PART III |
|
78 | ||||||
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ITEM 17. | 78 | |||||||
ITEM 18. | 78 | |||||||
ITEM 19. | 78 | |||||||
EX-2.9 | ||||||||
EX-4.53 | ||||||||
EX-4.54 | ||||||||
EX-4.55 | ||||||||
EX-4.56 | ||||||||
EX-4.57 | ||||||||
EX-4.58 | ||||||||
EX-4.59 | ||||||||
EX-4.60 | ||||||||
EX-4.61 | ||||||||
EX-8.1 | ||||||||
EX-12.1 | ||||||||
EX-12.2 | ||||||||
EX-13.1 | ||||||||
EX-13.2 | ||||||||
EX-15.2 |
| our future operating or financial results; | ||
| 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; | ||
| our ability to pay dividends in the future; | ||
| dry bulk shipping industry trends, including charter rates and factors affecting vessel supply and demand; | ||
| future, pending or recent acquisitions, business strategy, areas of possible expansion, and expected capital spending or operating expenses; | ||
| the useful lives and value of our vessels; | ||
| availability of crew, number of off-hire days, dry-docking requirements and insurance costs; | ||
| global and regional economic and political conditions; | ||
| our ability to leverage to our advantage our managers relationships and reputation in the dry bulk 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 and incidents involving our vessels; | ||
| acts of terrorism and other hostilities; and | ||
| other factors discussed in the section titled Risk Factors. |
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
Year Ended December 31,
From Inception
(April 23, 2004) to
2008
2007
2006
2005
December 31, 2004
$
66,689,000
$
20,147,000
$
11,727,000
$
10,326,000
$
2,830,000
26,570,000
5,761,000
(2,281,000
)
1,205,000
706,000
(7,378,000
)
(5,917,000
)
(1,043,000
)
(1,053,000
)
(236,000
)
19,192,000
(156,000
)
(3,324,000
)
152,000
470,000
$
0.91
$
(0.02
)
$
(0.53
)
$
0.03
$
0.10
$
0.91
$
(0.02
)
$
(0.53
)
$
0.03
$
0.10
21,006,497
8,786,287
6,290,100
4,574,588
4,500,000
21,051,963
8,786,287
6,290,100
4,600,444
4,500,000
December 31,
2008
2007
2006
2005
2004
$
3,378,000
$
63,394,000
$
372,000
$
3,285,000
$
461,000
(23,584,000
)
47,343,000
(8,843,000
)
(4,945,000
)
(3,528,000
)
307,861,000
191,972,000
23,086,000
29,840,000
18,335,000
160,350,000
56,300,000
7,830,000
13,000,000
10,150,000
2,552,000
3,200,00
3,828,000
120,855,000
112,626,000
7,007,000
9,705,000
3,386,000
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Historical as of
December 31, 2008
$
26,700
133,650
$
160,350
21
110,322
10,512
$
120,855
$
281,205
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economic and market conditions affecting the shipping industry in general;
supply of dry bulk vessels, including secondhand vessels;
demand for dry bulk vessels;
types and sizes of vessels;
other modes of transportation;
cost of newbuildings;
new regulatory requirements from governments or self-regulated organizations; and
prevailing level of charter rates.
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crew strikes and/or boycotts;
marine disaster;
piracy;
environmental accidents;
cargo and property losses or damage; and
business interruptions caused by mechanical failure, human error, war,
terrorism, political action in various countries, labor strikes or adverse weather
conditions.
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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; and
change the management of our vessels or terminate or materially amend the
management agreements and sell our vessels.
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locating and acquiring suitable vessels;
identifying and consummating acquisitions or joint ventures;
integrating any acquired vessel successfully with our existing operations;
enhancing our customer base;
managing our expansion; and
obtaining the required financing.
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quarterly variations in our results of operations;
changes in sales or earnings estimates or publication of research reports by analysts;
speculation in the press or investment community about our business or the
shipping industry generally;
changes in market valuations of similar companies and stock market price and
volume fluctuations generally;
strategic actions by us or our competitors such as acquisitions or restructurings;
regulatory developments;
additions or departures of key personnel;
general market conditions; and
domestic and international economic, market and currency factors unrelated to our
performance.
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authorizing our Board of Directors to issue blank check preferred stock
without shareholder approval;
providing for a classified Board of Directors with staggered, three year terms;
prohibiting cumulative voting in the election of directors;
authorizing the removal of directors only for cause and only upon the
affirmative vote of the holders of a two-thirds majority of the outstanding shares of
our common shares, voting as a single class, entitled to vote for the directors;
limiting the persons who may call special meetings of shareholders;
establishing advance notice requirements for election to our Board of Directors
or proposing matters that can be acted on by shareholders at shareholder meetings; and
limiting our ability to enter into business combination transactions with certain
shareholders.
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Vessel
DWT
Country Built
Year Built
Vessel Type
Purchase Price
25,240
Bulgaria
1982
Handysize
$7.60 million
26,318
Japan
1984
Handysize
$9.50 million
22,051
Japan
1995
Handysize
$25.20 million
24,318
Japan
1995
Handysize
$25.25 million
24,111
China
1997
Handysize
$37.50 million
47,777
China
2002
Handymax
$47.00 million
24,111
China
1998
Handysize
$39.25 million
50,246
Japan
2003
Handymax
$65.20 million
23,994
Japan
1998
Handysize
$39.60 million
Experienced management team
.
Our management team has significant experience in
commercial, technical, operational and financial areas of our business and has
developed relationships with leading charterers, ship brokers and financial
institutions. Since 1997, Ion G. Varouxakis, our chairman, chief executive officer and
president, has served in various management roles for shipping companies in the dry
bulk sector.
Affiliation with a leading shipping group
. FS Holdings Limited and Benbay
Limited, entities controlled by the Restis family, are collectively one of our largest
shareholders with 3,240,653 shares of our common stock as of December 31, 2008. The
Restis family has been engaged in the international shipping industry for more than 40
years and their interests include ownership and operation of more than 60 vessels in
several segments of the shipping industry, as well as cargo and chartering interests.
The Restis family group is regarded as one of the largest independent ship-owning and
management groups in the shipping industry. Our management believes that affiliation
with and access to the resources of companies controlled by the Restis family
commercially enhances the operations of our fleet, our ability to obtain employment for
our vessels and our ability to obtain more favorable financing.
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Strong customer relationships
. Through Free Bulkers, our ship management
company, and Safbulk, a Restis family controlled management company, we have
established and maintained customer relationships with leading charterers around the
world, such as major international industrial companies, commodity producers and
traders and a number of chartering brokerage houses. Free Bulkers has subcontracted the
charter and post-charter management of our fleet to Safbulk. We believe that the
established customer base and the reputation of our fleet managers enable us to secure
favorable employment for our vessels with well-known charterers. In addition, in light
of current economic conditions, we have worked to maintain our relationships with our
customers by negotiating strategically appropriate modifications to charters when
determined to be in our best long-term interests.
Stable cash flow from well-established and reputable charterers
. A majority of
the vessels in our fleet may be employed on time charters to well-established and
reputable charterers. We believe these time charters will provide us with steady cash
flow and high vessel utilization rates while limiting our exposure to freight rate
volatility.
Efficient operations
. Through Free Bulkers, we believe that we have
established a strong track record in the technical management of dry bulk carriers,
which has enabled us to maintain cost-efficient operations. We actively monitor and
control vessel operating expenses while maintaining the high quality of our fleet
through regular inspections, proactive maintenance programs, high standards of
operations, and retaining and training qualified crew members.
Leveraging our strategic relationships
.
Free Bulkers, Safbulk, the Restis family
and their affiliates have extensive experience and relationships in the ship
brokerage and financial industries as well as directly with industrial charterers and
commodity traders. We use these relationships to identify chartering and acquisition
opportunities and make available to us sources of additional financing, make
contacts, and gain market intelligence.
Handysize and Handymax focus
.
Our fleet of dry bulk carriers will consist
primarily of Handysize and Handymax vessels, although we may consider acquiring
larger vessels if we identify appropriate opportunities. Based on the relatively low
number of dry bulk newbuildings on order in the Handysize and Handymax categories, we
believe there will be continued high demand for such vessels. Handysize and Handymax
vessels are typically shallow-drafted and equipped with onboard cranes. This makes
Handysize and Handymax vessels more versatile and able to access a wider range of
loading and discharging ports than larger ships, which are unable to service many
ports due to their size or the local port infrastructure. Many countries in the Asia
Pacific region, including China, as well as countries in Africa and South America,
have shallow ports. We believe that our vessels, and any Handysize or Handymax
vessels that we acquire, will enable us to transport a wider variety of cargoes and
to pursue a greater number of chartering opportunities than if we owned larger dry
bulk vessels. Handysize and Handymax vessels have also historically achieved greater
charter rate stability than larger dry bulk vessels.
Renew and expand our fleet
.
We intend to continue growing our fleet in a
disciplined manner through acquisition of well-maintained, secondhand vessels,
preferably not more than 15 years old. We perform technical review and financial
analysis of each potential acquisition and only purchase vessels as market conditions
and opportunities dictate and warrant. We are focused on purchasing such vessels,
because we believe that secondhand vessels, when operated in a cost-efficient manner,
should provide significant value given the prevailing charter rate environment and
currently provide better returns as compared to newbuildings. Furthermore, as part of
our fleet renewal, we will continue to sell vessels in order to renew our fleet when
we believe it is in the best interests of FreeSeas and our shareholders.
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Maintain balanced time charter employment
.
We intend to strategically deploy a
substantial portion of our fleet under period employment and our remaining vessels
under spot employment depending on market conditions. We actively pursue time charter
coverage to provide adequate cash flow to cover our fleets fixed costs, consisting
of vessel operating expenses, management fees, debt repayment and interest expense,
general and administrative expenses, and dry-docking costs for the upcoming 12-month
period. We look to deploy part of our fleet through spot charters, depending on our
view of the direction of the markets and other tactical or strategic considerations.
We believe this balanced employment strategy will provide us with more predictable
operating cash flows and sufficient downside protection, while allowing us to
participate in the potential upside of the spot market during periods of rising
charter rates.
Use of flexible financial strategy
.
We have used and intend to continue to use a
combination of bank debt, cash flow and proceeds from equity offerings to fund our
vessel acquisitions. We assess the level of debt we will incur in light of our
ability to repay that debt based on the level of cash flow we expect to generate
pursuant to our chartering strategy and our operating cost structure. As of December
31, 2008, our ratio of debt to total capitalization is approximately 57%. We believe
that the maintenance of a reasonable ratio of debt to total capitalization will be
important to our ability to borrow funds to make additional vessel acquisitions, and
we have determined to suspend cash dividends to our shareholders while we focus on
reducing our debt.
Vessel Name
Type
Dwt
Employment
M/V Free Destiny
Handysize
25,240
M/V Free Envoy
Handysize
26,318
M/V Free Hero
Handysize
24,318
M/V Free Jupiter
Handymax
47,777
M/V Free Goddess
Handysize
22,051
M/V Free Knight
Handysize
24,111
M/V Free Impala
Handysize
24,111
M/V Free Lady
Handymax
50,246
M/V Free Maverick
Handysize
23,994
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100% commencing July 1, 2010
110% commencing July 1, 2011
120% commencing July 1, 2012
125% commencing December 31, 2012
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on-board installation of automatic information systems, to enhance vessel-to-vessel
and vessel-to-shore communications;
on-board installation of ship security alert systems;
the development of vessel security plans; and
compliance with flag state security certification requirements.
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Next Intermediate
Next Special Survey
Vessel
Dry-docking
Dry-docking
Third quarter 2010
Third quarter 2012
Third quarter 2011
Third quarter 2013
Third quarter 2013
Third quarter 2010
Fourth quarter 2013
Fourth quarter 2010
Third quarter 2009
Third quarter 2012
Second quarter 2010
Second quarter 2012
Third quarter 2010
Second quarter 2013
Third quarter 2011
Second quarter 2013
Second quarter 2011
First quarter 2010
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Vessel Name
Type
Dwt
Employment
Built
Purchase Price
Date of Acquisition
M/V Free Destiny
Handysize
25,240
1982
$7.60 million
August 3, 2004
M/V Free Envoy
Handysize
26,318
1984
$9.50 million
September 20, 2004
M/V Free Hero
Handysize
24,318
1995
$25.25 million
July 3, 2007
M/V Free Jupiter
Handymax
47,777
2002
$47.00 million
September 5, 2007
M/V Free Goddess
Handysize
22,051
1995
$25.20 million
October 30, 2007
M/V Free Knight
Handysize
24,111
1998
$39.25 million
March 19, 2008
M/V Free Impala
Handysize
24,111
1997
$37.5 million
April 2, 2008
M/V Free Lady
Handymax
50,246
2003
$65.2 million
July 7, 2008
M/V Free Maverick
Handysize
23,994
1998
$39.6 million
September 1, 2008
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Obtain the charterers consent to us as the new owner;
Obtain the charterers consent to a new technical manager;
Obtain the charterers consent to a new flag for the vessel, if applicable;
Arrange for a new crew for the vessel;
Replace all hired equipment on board the vessel, such as gas cylinders and
communication equipment;
Negotiate and enter into new insurance contracts for the vessel through our own
insurance brokers;
Register the vessel under a flag state and perform the related inspections in order to
obtain new trading certificates from the flag state, if we change the flag state;
Implement a new planned maintenance program for the vessel; and
Ensure that the new technical manager obtains new certificates of compliance with the
safety and vessel security regulations of the flag state.
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Employment and operation of our dry bulk carriers; and
Management of the financial, general and administrative elements involved in the
ownership and operation of our dry bulk vessels.
Vessel maintenance and repair;
Planning and undergoing dry-docking, special surveys and other major repairs;
Organizing and undergoing regular classification society surveys;
Crew selection and training;
Vessel spares and stores supply;
Vessel bunkering;
Contingency response planning;
Onboard safety procedures auditing;
Accounting;
Vessel insurance arrangements;
Vessel chartering;
Vessel hire management; and
Vessel performance monitoring.
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For the year ended December 31,
2008
2007
2006
$
40,658
$
8,350
$
2,582
7.36
3.3
3.0
2,688
1,206
1,095
2,605
1,177
1,005
2,441
1,048
941
90.8
%
86.9
%
86.0
%
$
25.719
$
17.925
$
10.881
6.084
4.976
4.094
0.727
0.726
0.493
1.129
2.014
2.046
6.811
5.702
4.587
(1)
Adjusted EBITDA reconciliation to net income:
For the year ended December 31,
2008
2007
2006
$
19,192
$
(156
)
$
(3,324
)
14,137
5,192
4,921
1,061
749
5,629
2,565
985
639
$
40,658
$
8,350
$
2,582
(2)
Average number of vessels is the number of vessels that constituted our fleet for the
relevant period, as measured by the sum of the number of days each vessel was a part of our
fleet during the period divided by the number of calendar days in the period.
(3)
Ownership days are the total number of days in a period during which the vessels in our fleet
have been owned by us. Ownership days are an indicator of the size of our fleet over a period
and affect both the amount of revenues and the amount of expenses that we record during a
period.
(4)
Available days are the number of ownership days less the aggregate number of days that our
vessels are off-hire due to major repairs, dry dockings or special or intermediate surveys.
The shipping industry uses available days to measure the number of ownership days in a period
during which vessels should be capable of generating revenues.
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(5)
Operating days are the number of available days less the aggregate number of days that our
vessels are off-hire due to any reason, including unforeseen circumstances. The shipping
industry uses operating days to measure the aggregate number of days in a period during which
vessels actually generate revenues.
(6)
We calculate fleet utilization by dividing the number of our fleets operating days during a
period by the number of ownership days during the period. The shipping industry uses fleet
utilization to measure a companys efficiency in finding suitable employment for its vessels
and minimizing the amount of days that its vessels are off-hire for reasons such as scheduled
repairs, vessel upgrades, or dry dockings or other surveys.
(7)
Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a
vessel on a per voyage basis. Our method of calculating TCE is consistent with industry
standards and is determined by dividing operating revenues (net of voyage expenses and
commissions) by operating days for the relevant time period. Voyage expenses primarily consist
of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be
paid by the charterer under a time charter contract. TCE is a standard shipping industry
performance measure used primarily to compare period-to-period changes in a shipping companys
performance despite changes in the mix of charter types (i.e., spot charters, time charters
and bareboat charters) under which the vessels may be employed between the periods:
For the year ended December 31,
2008
2007
2006
$
66,689
$
20,147
$
11,727
(3,910
)
(1,362
)
(1,488
)
62,779
18,785
10,239
2,441
1,048
941
$
25.719
$
17.925
$
10.881
(8)
Average daily vessel operating expenses, which includes crew costs, provisions, deck and
engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing
vessel operating expenses by ownership days for the relevant time periods:
For the year ended December 31,
2008
2007
2006
$
16,354
$
6,001
$
4,483
2,688
1,206
1,095
$
6.084
$
4.976
$
4.094
(9)
Daily management fees are calculated by dividing total management fees paid on ships owned by
ownership days for the relevant time period.
(10)
Average daily general and administrative expenses are calculated by dividing general and
administrative expenses by operating days for the relevant period.
(11)
Total vessel operating expenses, or TVOE, is a measurement of our total expenses associated
with operating our vessels. TVOE is the sum of daily vessel operating expense and daily
management fees. Daily TVOE is calculated by dividing TVOE by fleet ownership days for the
relevant time period.
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For the Year Ended
For the Year Ended
December 31, 2008
December 31, 2007
$
66,689
$
20,147
(16,354
)
(6,001
)
(527
)
(267
)
(13,349
)
(4,435
)
(788
)
(757
)
(2,634
)
(875
)
(3,383
)
(1,095
)
(107
)
(96
)
(2,756
)
(2,111
)
(221
)
(118
)
1,369
$
26,570
$
5,761
(6,209
)
(3,204
)
(639
)
(2,570
)
(1,061
)
(749
)
580
639
(49
)
(33
)
$
(7,378
)
$
(5,917
)
$
19,192
$
(156
)
$
0.91
$
(0.02
)
$
0.91
$
(0.02
)
21,006,497
8,786,287
21,051,963
8,786,287
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For the Year Ended
For the Year Ended
December 31, 2007
December 31, 2006
$
20,147
$
11,727
(6,001
)
(4,483
)
(267
)
(689
)
(4,435
)
(4,479
)
(757
)
(442
)
(875
)
(540
)
(1,095
)
(799
)
(96
)
(651
)
(2,111
)
(1,925
)
(118
)
1,369
$
5,761
$
(2,281
)
(3,204
)
(1,004
)
(2,570
)
(749
)
639
19
(33
)
(58
)
$
(5,917
)
$
(1,043
)
$
(156
)
$
(3,324
)
(0.02
)
(0.53
)
(0.02
)
(0.53
)
8,786,287
6,290,100
8,786,287
6,290,100
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Payments due by period
Less than
More than
(in thousands)
Total
1 year
1-3 years
3-5 years
5 years
$
160,350
$
26,700
$
32,800
$
49,100
$
51,750
25,540
5,636
10,757
6,373
2,774
$
185,890
$
32,336
$
43,557
$
55,473
$
54,524
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Name
Age
Position
Director Class
38
Chairman of the Board of Directors,
Chief Executive Officer and President
C
31
Interim Chief Financial Officer
54
Director, Vice President and Treasurer
A
32
Secretary
63
Director
A
51
Director
B
48
Director
C
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Percentage of
Number of Shares
Shares of Common
of Common Stock
Stock Beneficially
Name
Beneficially Owned
Owned
(1)
2,314,697
(2)
10.9
%
*
15,000
(3)
*
15,000
(3)
*
15,000
(3)
*
21,000
(3)
*
2,504,697
(4)
11.8
%
*
Less than 1%.
(1)
For purposes of computing the percentage of outstanding shares of common stock held
by each person named above, any shares that the named person has the right to acquire within
60 days under warrants or options are deemed to be outstanding for that person, but are not
deemed to be outstanding when computing the percentage ownership of any other person.
(2)
Reflects 2,314,697 shares owned by The Midas Touch S.A., a Marshall Islands
corporation wholly owned by Mr. Varouxakis; Does not include 40,000 shares owned by V Estates
S.A., which is controlled by Mr. Varouxakis father, and 30,600 shares owned by Mr.
Varouxakis mother, as to which shares he disclaims beneficial ownership.
(3)
Reflects 6,000 shares owned by Edifice Holding, S.A. a Marshall Islands corporation
wholly owned by Mr. Alexis Varouxakis and 5,000 shares underlying fully vested options.
(4)
Includes an aggregate of 125,000 shares underlying fully vested options.
Table of Contents
Percentage of
Number of Shares of
Shares of Common
Common Stock
Stock Beneficially
Name
Beneficially Owned
Owned
(1)
2,314,697
(2)
10.9
%
3,240,653
(3)
15.3
%
(1)
For purposes of computing the percentage of outstanding shares of common stock held
by each person named above, any shares that the named person has the right to acquire within
60 days under warrants or options are deemed to be outstanding for that person, but are not
deemed to be outstanding when computing the percentage ownership of any other person.
(2)
Reflects 2,314,697 shares owned by The Midas Touch S.A., a Marshall Islands
corporation wholly owned by Mr. Varouxakis; Does not include 40,000 shares owned by V Estates
S.A., which is controlled by Mr. Varouxakis father, and 30,600 shares owned by Mr.
Varouxakis mother, as to which shares he disclaims beneficial ownership.
(3)
Reflects 2,808,782 shares owned by FS Holdings Limited, a Marshall Islands
corporation, and 431,811 shares owned by Benbay Limited, a Republic of Cyprus corporation,
each of which is controlled by the Restis Family.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
For the Years Ended:
Common Stock
Class W Warrants
Class Z Warrants
High
Low
High
Low
High
Low
$
10.24
$
2.76
$
5.14
$
0.25
$
5.20
$
0.48
7.97
0.90
3.05
0.02
3.35
0.05
For the Quarters Ended:
Common Stock
Class W Warrants
Class Z Warrants
High
Low
High
Low
High
Low
$
5.15
$
2.76
$
1.29
$
0.25
$
1.15
$
0.48
7.63
4.55
2.65
0.81
2.76
1.00
9.35
6.77
3.30
1.82
3.35
2.10
10.24
5.12
5.14
1.68
5.20
1.73
6.09
4.49
2.45
1.06
2.45
1.40
7.97
5.90
3.05
1.85
3.35
1.85
7.07
3.95
2.24
0.97
2.65
1.25
4.01
0.90
1.15
0.02
1.46
0.05
1.88
0.54
0.24
0.04
0.33
0.08
For the Months Ended:
Common Stock
Class W Warrants
Class Z Warrants
High
Low
High
Low
High
Low
$
4.01
$
1.99
$
1.15
$
0.24
$
1.46
$
0.25
2.50
0.90
0.24
0.02
0.50
0.05
2.02
1.11
0.18
0.03
0.29
0.12
1.88
1.28
0.24
0.10
0.33
0.16
1.67
1.21
0.14
0.09
0.21
0.16
1.48
0.54
0.15
0.04
0.15
0.08
Table of Contents
Table of Contents
we are acquired in a merger or other business combination transaction; or
50% or more of our assets, cash flows or earning power is sold or transferred.
Table of Contents
Table of Contents
100% commencing July 1, 2010
110% commencing July 1, 2011
120% commencing July 1, 2012
125% commencing December 31, 2012
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Vessel Name
2009
2010
2011
2012
2013
$
272,966
201,604
171,188
141,188
110,354
200,000
167,444
137,028
106,938
76,194
390,546
347,351
296,656
246,676
195,267
281,856
249,447
225,114
219,506
348,012
298,177
267,760
238,025
206,927
Table of Contents
76
77
Table of Contents
2007(1)
2008(1)
$
1,078,000
$
749,000
(1)
Audit fees represent fees for professional services related to the audit of our
financial statements for the years ended December 31, 2007 and 2008, which include for 2007
fees for professional services related to the filing of our registration statement with the
SEC for our 2007 public offering.
Table of Contents
78
79
80
81
82
83
84
Page
Number
F-1
F-2
F-3
F-4
F-5
F-7
F-8
1.1
Exhibit 3.1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on May 11, 2005 and
incorporated herein
by reference
1.2
Exhibit 3.2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on May 11, 2005 and
incorporated herein
by reference
1.3
Exhibit 3.3 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-145203) filed
on October 15, 2007
and incorporated
herein by reference
2.1
Exhibit 4.1 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
2.2
Exhibit 4.2 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
2.3
Exhibit 4.3 to
Registrants
Registration
Statement on Form
F-3 filed on August
3, 2007 and
incorporated herein
by reference
2.4
Exhibit 4.4 to
Registrants
Registration
Statement on Form
F-3 filed on August
3, 2007 and
incorporated herein
by reference
2.5
Exhibit 4.3 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
2.6
Exhibit 4.4 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
Table of Contents
2.7
Exhibit 4.27 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2006
and incorporated
herein by reference
2.8
Exhibit 4.5 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
2.9
Filed herewith
4.1
Exhibit 10.2 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.2
Exhibit 10.2 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-145203) filed
on October 15, 2007
and incorporated
herein by reference
4.3
Annex A to
Registrants Form
6-K filed on
December 1, 2006
and incorporated
herein by reference
4.4
Exhibit 10.7 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.5
Exhibit 10.8 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.6
Exhibit 10.9 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.7
Exhibit 10.10 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.8
Exhibit 10.11 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on May 11, 2005 and
incorporated herein
by reference
4.9
Exhibit 10.20 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
Table of Contents
4.10
Exhibit 10.12 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on May 11, 2005 and
incorporated herein
by reference
4.11
Exhibit 10.13 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-145203) filed
on October 15, 2007
and incorporated
herein by reference
4.12
Exhibit 10.13 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.13
Exhibit 10.14 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.14
Exhibit 10.15 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.15
Exhibit 10.16 to
Amendment No. 1 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on July 22, 2005
and incorporated
herein by reference
4.16
Exhibit 10.22 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.17
Exhibit 10.23 to
Amendment No. 2 of
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.18
Exhibit 10.24 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.19
Exhibit 10.25 to
Registrants
Registration
Statement of
Amendment No. 2 of
Form F-1 (File No.
333-124825) dated
October 11, 2005
and incorporated
herein by reference
4.20
Exhibit 4.22 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2005
and incorporated
herein by reference
4.21
Exhibit 4.23 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2005
and incorporated
herein by reference
Table of Contents
4.22
Exhibit 4.27 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2005
and incorporated
herein by reference
4.23
Exhibit 4.28 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2005
and incorporated
herein by reference
4.24
Exhibit 4.24 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2006
and incorporated
herein by reference
4.25
Exhibit 4.25 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2006
and incorporated
herein by reference
4.26
Exhibit 4.26 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2006
and incorporated
herein by reference
4.27
Exhibit 4.28 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2006
and incorporated
herein by reference
4.28
Exhibit 10.30 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.29
Exhibit 10.31 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.30
Exhibit 10.32 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.31
Exhibit 10.34 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.32
Exhibit 10.35 to
Amendment No. 2 to
Registrants
Registration
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.33
Exhibit 10.36 to
Amendment No. 2 to
Registrants
Registrations
Statement on Form
F-1 (File No.
333-124825) filed
on October 11, 2005
and incorporated
herein by reference
4.34
Exhibit 4.34 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
Table of Contents
4.35
Exhibit 4.35 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.36
Exhibit 4.36 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.37
Exhibit 4.37 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.38
Exhibit 4.38 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.39
Exhibit 4.39 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.40
Exhibit 4.40 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.41
Exhibit 4.41 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.42
Exhibit 4.42 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.43
Exhibit 4.43 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.44
Exhibit 4.44 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.45
Exhibit 4.45 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.46
Exhibit 4.46 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.47
Exhibit 4.47 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.48
Exhibit 4.48 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.49
Exhibit 4.49 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
Table of Contents
4.50
Exhibit 4.45 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.51
Exhibit 4.51 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.52
Exhibit 4.52 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2007
and incorporated
herein by reference
4.53
Filed herewith.
4.54
Filed herewith.
4.55
Filed herewith
4.56
Filed herewith.
4.57
Filed herewith
4.58
Filed herewith.
4.59
Filed herewith.
4.60
Filed herewith.
4.61
Filed herewith
8.1
Filed herewith.
12.1
Filed herewith.
12.2
Filed herewith.
Table of Contents
13.1
Filed herewith.
13.2
Filed herewith.
15.1
Exhibit 15.1 to
Registrants Annual
Report on Form 20-F
for the year ended
December 31, 2005
and incorporated
herein by reference
15.2
Filed herewith.
Table of Contents
85
F-1
FREESEAS INC.
By:
/s/ Dimitris Filippas
Name:
Dimitris Filippas
Title:
Interim Chief Financial Officer
Table of Contents
Page
F-2
F-3
F-4
F-5
F-6
F-7
Table of Contents
F-2
Athens
April 14, 2009
Table of Contents
F-3
F-4
Twelve Months Ended | ||||||||||||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2007 | 2006 | ||||||||||
Cash Flows from Operating Activities:
|
||||||||||||
Net income (loss)
|
$ | 19,192 | $ | (156 | ) | $ | (3,324 | ) | ||||
|
||||||||||||
Adjustments to reconcile net income (loss) to net cash
|
||||||||||||
Depreciation
|
13,349 | 4,435 | 4,479 | |||||||||
Amortization of deferred charges
|
1,141 | 757 | 514 | |||||||||
Amortization of debt discount
|
433 | 77 | ||||||||||
Provision for bad debts
|
221 | 118 | 202 | |||||||||
Write off of deferred charges
|
32 | |||||||||||
Dry-docking and special survey
|
(2,617 | ) | (907 | ) | (2,069 | ) | ||||||
Compensation cost for stock options granted
|
107 | 96 | 651 | |||||||||
Loss on debt extinguishment
|
639 | 2,570 | ||||||||||
Change in fair value of derivatives
|
1,061 | 749 | ||||||||||
Amortization of deferred revenue
|
(368 | ) | (1,516 | ) | ||||||||
Gain on sale of vessel
|
(1,369 | ) | ||||||||||
Back log asset
|
899 | |||||||||||
|
||||||||||||
Changes in:
|
||||||||||||
Trade receivables
|
(973 | ) | 100 | 40 | ||||||||
Inventories
|
(80 | ) | (257 | ) | (200 | ) | ||||||
Prepayments and other
|
(638 | ) | (334 | ) | ||||||||
Due from related party
|
(597 | ) | (997 | ) | 637 | |||||||
Insurance claims
|
(1,691 | ) | (15,631 | ) | 277 | |||||||
Accounts payable
|
7,735 | 1,178 | 827 | |||||||||
Unearned revenue
|
537 | 604 | 7 | |||||||||
Accrued liabilities
|
(5,366 | ) | 15,198 | (25 | ) | |||||||
Due to related party
|
12 | (893 | ) | |||||||||
Other liabilities
|
(154 | ) | ||||||||||
|
||||||||||||
Net Cash from Operating Activities
|
$ | 32,563 | $ | 5,071 | $ | 1,078 | ||||||
|
||||||||||||
Cash flows from (used in) Investing Activities:
|
||||||||||||
Vessel acquisitions
|
(182,539 | ) | (97,585 | ) | | |||||||
Cash from sale of vessel, net
|
10,606 | |||||||||||
|
||||||||||||
Net Cash (used in) Investing Activities
|
$ | (182,539 | ) | $ | (86,979 | ) | ||||||
|
||||||||||||
Cash flows from (used in) Financing Activities:
|
||||||||||||
(Increase) in restricted cash
|
(2,245 | ) | (350 | ) | ||||||||
Net movement in bank overdraft
|
(2,000 | ) | 2,000 | |||||||||
Proceeds from long term loan
|
153,650 | 104,743 | 2,330 | |||||||||
Payments of bank loans
|
(49,600 | ) | (56,273 | ) | (7,500 | ) | ||||||
Payments of shareholders loans
|
(16,614 | ) | (750 | ) | ||||||||
Proceeds from issuance of common shares
|
95,153 | |||||||||||
Exercise of warrants
|
836 | 8,667 | ||||||||||
Exercise of stock options
|
1,250 | |||||||||||
Shareholders loans
|
14,000 | |||||||||||
Common stock dividend
|
(13,157 | ) | ||||||||||
Deferred financing cost
|
(774 | ) | (2,396 | ) | (71 | ) | ||||||
|
||||||||||||
Net Cash from (used in) Financing Activities
|
$ | 89,960 | $ | 144,930 | $ | (3,991 | ) | |||||
Net increase (decrease) in cash in hand and at bank
|
$ | (60,016 | ) | $ | 63,022 | $ | (2,913 | ) | ||||
Cash and cash equivalents, Beginning of year
|
63,394 | 372 | 3,285 | |||||||||
|
||||||||||||
Cash and cash equivalents, End of year
|
$ | 3,378 | $ | 63,394 | $ | 372 | ||||||
|
||||||||||||
|
||||||||||||
Supplemental Cash Flow Information:
|
||||||||||||
Cash paid for interest
|
$ | 4,410 | $ | 2,629 | $ | 758 | ||||||
Non-cash shareholder distributions
|
$ | 6 | $ | 25 | ||||||||
Discount on promissory note
|
$ | 1,865 | ||||||||||
Liability assumed in connection with vessel acquisitions
|
$ | 3,136 |
F-5
Additional | Retained | |||||||||||||||||||||||
Common | Common | Paid-in | Earnings | Deferred Stock | ||||||||||||||||||||
Shares | Shares $ | Capital | (Accumulated deficit) | Compensation | Total | |||||||||||||||||||
Balance January 1, 2006
|
6,290,100 | 6 | 9,242 | 622 | (165 | ) | 9,705 | |||||||||||||||||
Issuance of shares, net
(Note 13)
|
| |||||||||||||||||||||||
Distributions to shareholders
|
| (25 | ) | (25 | ) | |||||||||||||||||||
Stock compensation expense
|
| 486 | 165 | 651 | ||||||||||||||||||||
Exercise of warrant
conversions
|
| |||||||||||||||||||||||
Net loss
|
| (3,324 | ) | (3,324 | ) | |||||||||||||||||||
|
||||||||||||||||||||||||
Balance December 31, 2006
|
6,290,100 | 6 | 9,703 | (2,702 | ) | 7,007 | ||||||||||||||||||
Issuance of shares, net
(Note 13)
|
12,650,000 | 12 | 95,141 | 95,153 | ||||||||||||||||||||
Distributions to shareholders
|
| (6 | ) | (6 | ) | |||||||||||||||||||
Stock compensation expense
|
| 96 | 96 | |||||||||||||||||||||
Stock issued upon exercise
of warrants
|
1,803,356 | 2 | 8,665 | 8,667 | ||||||||||||||||||||
Discount on promissory note
|
1,865 | 1,865 | ||||||||||||||||||||||
Net loss
|
| (156 | ) | (156 | ) | |||||||||||||||||||
|
||||||||||||||||||||||||
Balance December 31, 2007
|
20,743,456 | 20 | 115,464 | (2,858 | ) | 112,626 | ||||||||||||||||||
|
||||||||||||||||||||||||
Dividend payments
|
(7,335 | ) | (5,822 | ) | (13,157 | ) | ||||||||||||||||||
Stock compensation expense
|
107 | 107 | ||||||||||||||||||||||
Stock issued upon exercise
of warrants
|
177,873 | 836 | 836 | |||||||||||||||||||||
Stock issued upon exercise
of options
|
250,000 | 1 | 1,250 | 1,250 | ||||||||||||||||||||
Net income
|
19,192 | 19,192 | ||||||||||||||||||||||
|
||||||||||||||||||||||||
Balance December 31, 2008
|
21,171,329 | 21 | 110,322 | 10,512 | 120,855 | |||||||||||||||||||
|
F-6
% | Date of | Date of | ||||||||||||
Company | Owned | M/V | Type | Dwt | Built | Acquisition | Disposal | |||||||
FreeSeas Inc.
|
||||||||||||||
|
||||||||||||||
Adventure Two S.A.
|
100% | Free Destiny | Handysize | 25,240 | 1982 | 08/04/04 | N/A | |||||||
|
||||||||||||||
Adventure Three S.A.
|
100% | Free Envoy | Handysize | 26,318 | 1984 | 09/29/04 | N/A | |||||||
|
||||||||||||||
Adventure Four S.A.
|
100% | Free Fighter | Handysize | 38,905 | 1982 | 06/14/05 | 04/27/07 | |||||||
|
||||||||||||||
Adventure Five S.A.
|
100% | Free Goddess | Handysize | 22,051 | 1995 | 10/30/07 | N/A | |||||||
|
||||||||||||||
Adventure Six S.A.
|
100% | Free Hero | Handysize | 24,318 | 1995 | 07/03/07 | N/A | |||||||
|
||||||||||||||
Adventure Seven S.A.
|
100% | Free Knight | Handysize | 24,111 | 1998 | 03/19/08 | N/A | |||||||
|
||||||||||||||
Adventure Eight S.A.
|
100% | Free Jupiter | Handymax | 47,777 | 2002 | 09/05/07 | N/A | |||||||
|
||||||||||||||
Adventure Nine S.A.
|
100% | Free Impala | Handysize | 24,111 | 1997 | 04/02/08 | N/A | |||||||
|
||||||||||||||
Adventure Ten S.A.
|
100% | Free Lady | Handymax | 50,246 | 2003 | 07/07/08 | N/A | |||||||
|
||||||||||||||
Adventure Eleven S.A
|
100% | Free Maverick | Handysize | 23,994 | 1998 | 09/01/08 | N/A |
F-7
F-8
F-9
F-10
F-11
Accumulated | ||||||||||||
Vessel Cost | Depreciation | Net book value | ||||||||||
January 1, 2006
|
$ | 28,273 | $ | (4,425 | ) | $ | 23,848 | |||||
Depreciation for the year
|
(4,479 | ) | (4,479 | ) | ||||||||
|
||||||||||||
December 31, 2006
|
$ | 28,273 | $ | (8,904 | ) | $ | 19,369 | |||||
Additions new vessels
|
100,721 | 100,721 | ||||||||||
Depreciation for the year
|
(4,435 | ) | (4,435 | ) | ||||||||
Disposal of vessel
|
(11,213 | ) | 3,579 | (7,634 | ) | |||||||
|
||||||||||||
December 31, 2007
|
$ | 117,781 | $ | (9,760 | ) | $ | 108,021 | |||||
|
||||||||||||
Depreciation for the year
|
(13,349 | ) | (13,349 | ) | ||||||||
Additions new vessels
|
180,733 | 180,733 | ||||||||||
|
||||||||||||
December 31, 2008
|
$ | 298,514 | $ | (23,109 | ) | $ | 275,405 | |||||
|
F-12
Dry-docking costs | Special survey costs | Financing costs | Total | |||||||||||||
January 1, 2006
|
$ | 321 | $ | 235 | $ | 150 | $ | 706 | ||||||||
Additions
|
715 | 1,354 | 71 | 2,140 | ||||||||||||
Written-off
|
(32 | ) | (32 | ) | ||||||||||||
Amortization
|
(306 | ) | (136 | ) | (72 | ) | (514 | ) | ||||||||
|
||||||||||||||||
December 31, 2006
|
$ | 730 | $ | 1,453 | $ | 117 | $ | 2,300 | ||||||||
Additions
|
147 | 760 | 2,396 | 3,303 | ||||||||||||
Written-off
|
(350 | ) | (1,252 | ) | (1,083 | ) | (2,685 | ) | ||||||||
Amortization
|
(285 | ) | (209 | ) | (263 | ) | (757 | ) | ||||||||
|
||||||||||||||||
December 31, 2007
|
$ | 242 | $ | 752 | $ | 1,167 | $ | 2,161 | ||||||||
Additions
|
737 | 1,880 | 774 | 3,391 | ||||||||||||
Written-off
|
(639 | ) | (639 | ) | ||||||||||||
Amortization
|
(273 | ) | (515 | ) | (353 | ) | (1,141 | ) | ||||||||
|
||||||||||||||||
December 31, 2008
|
$ | 706 | $ | 2,117 | $ | 949 | $ | 3,772 | ||||||||
|
December 31, 2008 | December 31, 2007 | |||||||
Suppliers
|
$ | 10,484 | $ | 3,065 | ||||
Agents
|
93 | 68 | ||||||
Insurers
|
339 | 48 | ||||||
|
||||||||
Total
|
$ | 10,916 | $ | 3,181 | ||||
|
December 31, 2008 | December 31, 2007 | |||||||
Accrued interest
|
$ | 1,386 | $ | 96 | ||||
Accrued insurance and related liabilities
|
9,556 | 16,089 | ||||||
Accrued financial advisory costs
|
196 | 26 | ||||||
Other accrued liabilities
|
209 | 502 | ||||||
|
||||||||
Total
|
$ | 11,347 | $ | 16,713 | ||||
|
F-13
Fair Value Measurements as of December 31, 2008 | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets | Inputs | Inputs | ||||||||||||||
Liabilities | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Interest rate swap contracts
|
$ | 1,810 | $ | | $ | 1,810 | $ | | ||||||||
|
||||||||||||||||
Total
|
$ | 1,810 | $ | | $ | 1,810 | $ | | ||||||||
|
F-14
December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||
Current | Long-term | Current | Long-term | |||||||||||||||||||||
Lender | portion | portion | Total | portion | portion | Total | ||||||||||||||||||
First Business Bank
|
3,000 | 21,750 | 24,750 | | | | ||||||||||||||||||
(Free Impala) (e)
Hollandsche Bank Unie N.V. |
| | | 3,100 | | 3,100 | ||||||||||||||||||
(M/V Free Destiny)
Hollandsche Bank Unie N.V. (a) |
4,000 | 17,750 | 21,750 | | | | ||||||||||||||||||
(M/V Free Knight)
Hollandsche Bank Unie N.V. (b) |
6,200 | 25,900 | 32,100 | | | | ||||||||||||||||||
(M/V Free Maverick)
HSH Nordbank AG |
| | | 3,700 | 24,300 | 28,000 | ||||||||||||||||||
( M/V Free Jupiter)
Credit Suisse |
6,725 | 36,975 | 43,700 | 5,000 | 20,200 | 25,200 | ||||||||||||||||||
(M/V Free Hero, Free Goddess and Free Jupiter) (c) | ||||||||||||||||||||||||
Credit Suisse | 6,775 | 31,275 | 38,050 | | | | ||||||||||||||||||
(M/V Free Lady) (d) | ||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total
|
$ | 26,700 | $ | 133,650 | $ | 160,350 | $ | 11,800 | $ | 44,500 | $ | 56,300 | ||||||||||||
|
F-15
Lender | Vessel | Repayment Terms | ||||||
(a) Hollandsche Bank
Unie N.V.
|
M/V FREE KNIGHT | One quarterly installment of $1,750, then followed by twenty-six installments of $750 and one installment of $500. Interest rate at 1.30% above LIBOR. | ||||||
(b) Hollandsche Bank
Unie N.V.
|
M/V FREE MAVERICK | Two quarterly installments of $2,500 and one installment of $27,100 on August 1, 2009. Interest rate at 1.30% above LIBOR. As of March 20, 2009, this last installment has been refinanced by a new three and one-half year facility with the following schedule: thirteen quarterly installments of $600, beginning on August 1, 2009 and one balloon payment of $19,300 on November 1, 2012. Interest rate at 3.00% above LIBOR which will be increased by a liquidity premium, to be determined on August 01, 2009. | ||||||
(c) Credit Suisse
|
M/V FREE HERO,
M/V FREE GODDESS, M/V FREE JUPITER |
Twenty-eight quarterly installments of $1,250 each, a prepayment of $1,725 on July 31, 2009 and a balloon payment of $6,975 on final maturity. Interest rate at 1.25% above LIBOR. | ||||||
(d) Credit Suisse
|
M/V FREE LADY | One payment of $1,250, twenty-eight consecutive quarterly installments of $750 and a prepayment of $3,275 on July 31, 2009. The balloon payment of $12,525 to be paid with the last installment. Interest rate at 1.25% above LIBOR. | ||||||
(e) First Business Bank
|
M/V FREE IMPALA | Twenty-six quarterly consecutive installments of $750 each, plus a balloon payment in the amount of $5,250, payable together with the last installment. Interest rate at 1.375% above LIBOR. | ||||||
F-16
F-17
| 100% commencing July 1, 2010 | ||
| 110% commencing July 1, 2011 | ||
| 120% commencing July 1, 2012 | ||
| 125% commencing December 31, 2012 |
Year | Amount | |||
2009
|
$ | 26,700 | ||
2010
|
16,400 | |||
2011
|
16,400 | |||
2012
|
35,100 | |||
2013
|
14,000 | |||
2014
|
14,000 | |||
2015
|
24,475 | |||
2016
|
13,275 | |||
|
||||
|
||||
Total
|
$ | 160,350 | ||
|
F-18
F-19
F-20
For the year ended | For the year ended | For the year ended | ||||||||||
December 31, 2008 | December 31, 2007 | December 31, 2006 | ||||||||||
Numerator:
|
||||||||||||
Net income (loss) basic and diluted
|
$ | 19,192 | $ | (156 | ) | $ | (3,324 | ) | ||||
|
||||||||||||
Basic earnings per share denominator:
|
||||||||||||
Weighted average common shares outstanding
|
21,006,497 | 8,786,827 | 6,290,100 | |||||||||
|
||||||||||||
Diluted earnings per share denominator:
|
||||||||||||
Weighted average common shares outstanding
|
21,051,963 | 8,786,827 | 6,290,100 | |||||||||
|
||||||||||||
Dilutive common shares:
|
||||||||||||
Options
|
17,229 | | | |||||||||
Warrants
|
28,237 | | | |||||||||
|
||||||||||||
Dilutive effect
|
45,466 | | | |||||||||
|
||||||||||||
Weighted average common shares diluted
|
21,051,963 | 8,786,827 | 6,290,100 | |||||||||
|
||||||||||||
Basic income/(loss) per common share
|
$ | 0.91 | $ | (0.02 | ) | (0.53 | ) | |||||
Diluted income/(loss) per common share
|
$ | 0.91 | $ | (0.02 | ) | (0.53 | ) |
F-21
Exercise | Options | Warrants | Exercise | |||||||||||||||||||||||||||||
Options | Warrants | Total | Price | Exercisable | Exercisable | Total | Price | |||||||||||||||||||||||||
January 1, 2006
|
750,000 | 200,000 | 950,000 | $ | 5.00 | 250,000 | 200,000 | 450,000 | $ | 5.00 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Options vested
|
250,000 | $ | 5.00 | |||||||||||||||||||||||||||||
December 31, 2006
|
750,000 | 200,000 | 950,000 | $ | 5.00 | 500,000 | 200,000 | 450,000 | $ | 5.00 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Options granted to
directors
|
45,000 | 45,000 | $ | 8.25 | ||||||||||||||||||||||||||||
Options granted to
officers
|
125,000 | 125,000 | $ | 8.25 | ||||||||||||||||||||||||||||
Options forfeited
|
(165,000 | ) | (165,000 | ) | $ | 5.00 | ||||||||||||||||||||||||||
Options cancelled
|
(335,000 | ) | (335,000 | ) | $ | 5.00 | (335,000 | ) | $ | 5.00 | ||||||||||||||||||||||
Options vested
|
85,000 | $ | 5.00 | |||||||||||||||||||||||||||||
December 31, 2007
|
420,000 | 200,000 | 620,000 | $ | 5.83 | 250,000 | 200,000 | 450,000 | $ | 5.00 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Options exercised
|
(250,000 | ) | (50,000 | ) | (300,000 | ) | $ | 5.00 | (250,000 | ) | (50,000 | ) | (300,000 | ) | $ | 5.00 | ||||||||||||||||
Options vested
|
140,000 | 140,000 | $ | 8.25 | ||||||||||||||||||||||||||||
December 31, 2008
|
170,000 | 150,000 | 320,000 | $ | 6.73 | 140,000 | 150,000 | 290,000 | $ | 6.57 | ||||||||||||||||||||||
|
F-22
F-23
F-24
Operating revenues | ||||
Charterer | December 31, 2008 | |||
MUR Shipping FZCO
|
38% | |||
Korea Line Corporation
|
13% | |||
Navision Shipping Co. A/S
|
10% | |||
Premuda S.p.A.
|
Under 10% | |||
AWB Limited
|
Under 10% |
Operating revenues | ||||
Charterer | December 31, 2007 | |||
Seaside Navigation ApS
|
30% | |||
Armada Pacific Bulk Carriers
|
19% | |||
Navision Shipping Co. A/S
|
Under 10% | |||
Oldendorff
|
Under 10% |
Operating revenues | ||||
Charterer | December 31, 2006 | |||
Oldendorff
|
20% | |||
Seaside Navigation ApS
|
12% | |||
Cargill
|
Under 10% | |||
Copenship
|
Under 10% |
F-25
Operating revenues | ||||||||||||
December 31, 2008 | December 31, 2007 | December 31, 2006 | ||||||||||
Europe
|
$ | 13,026 | $ | 2,855 | $ | 3,031 | ||||||
North America
|
7,050 | 2,715 | | |||||||||
South America
|
4,572 | 2,674 | 1,803 | |||||||||
Asia
|
25,912 | 6,811 | 4,758 | |||||||||
Africa
|
14,536 | 5,092 | 2,135 | |||||||||
Oceania
|
1,593 | | | |||||||||
|
||||||||||||
Total
|
$ | 66,689 | $ | 20,147 | $ | 11,727 | ||||||
|
| 100% commencing July 1, 2010 | ||
| 110% commencing July 1, 2011 | ||
| 120% commencing July 1, 2012 | ||
| 125% commencing December 31, 2012 |
F-26
F-27
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
|
FreeSeas Inc. | |
|
89 Akti Miaouli & 4 Mavrokordatou Street | |
|
185 38 Piraeus, Greece | |
|
Attention: Chief Executive Officer | |
|
||
with a copy to:
|
Broad and Cassel | |
|
Attn: A. Jeffry Robinson, Esq. | |
|
2 South Biscayne Boulevard | |
|
21st Floor | |
|
Miami, Florida 33131 |
34
35
36
FREESEAS INC.
|
||||
By: | /s/ Ion G. Varouxakis | |||
Name: | Ion G. Varouxakis | |||
Title: | Chief Executive Officer | |||
AMERICAN STOCK TRANSFER & TRUST
COMPANY, LLC |
||||
By: | /s/ Herbert J. Lemmer | |||
Name: | Herbert J. Lemmer | |||
Title: | Vice President | |||
37
A-1
A-2
A-3
A-4
|
||
|
President | |
|
||
|
||
|
Secretary |
A-5
B-1
C-1
Classification Society/Class:
|
LR | |
|
||
Built:
January 1998
|
By: Kanda, Japan | |
|
||
Flag:
Liberian Flag
|
Place of Registration: Monrovia, Liberia | |
(bareboat registry)
|
||
Call sign:
A8GH3
|
|
|
|
||
Register Number:
90829
|
IMO No.: 9157416 |
a)* |
The Buyers have inspected and
accepted
the Vessels
classification
records. The Buyers
have also inspected the Vessel
|
|
|
|
|
||
|
||
|
||
* | 4 a) and 4b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4a) to apply. |
a) |
The Sellers shall keep the Buyers well informed of the Vessels itinerary
and shall provide the Buyers with
15/7/3 days
approximate delivery notice and 1 day
definite notice of
tendering the notice of readiness as per Line 56
|
latest by tendering 15 days approximate notice of delivery. When the Vessel is at the place of delivery and in every respect physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery. | ||
b) |
The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth
upon
completion
of present voyage at Ho
Chi Minh City, Vietnam, provided it is suitable for
delivery of the vessel and underwater
inspection,
|
|
in the Sellers option. | ||
Expected time of delivery: between 25 th August 2008 and 19 th September 2008 in Sellers option | ||
Date of cancelling (see Clauses 5 c), 6 b) (iii) and 14): 19 th September 2008 in Buyers option, however if for any reasons beyond Sellers control the Vessel is not ready for delivery as per the M.O.A. within those dates, then Buyers will grant Sellers an extension to the cancelling date of 7 days. |
c) |
If the Sellers anticipate that, notwithstanding the exercise of due diligence by them,
the Vessel will not be ready for delivery by the cancelling date
as above extended
they may notify the Buyers in
writing stating the date when they anticipate that the Vessel will be ready for delivery and propose a new cancelling date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 within 7 running days of receipt of the notice or of accepting the new date as the new cancelling date. If the Buyers have not declared their option within 7 running days of receipt of the Sellers notification or if the Buyers accept the new date, the date proposed in the Sellers notification shall be deemed to be the new cancelling date and shall be substituted for the cancelling date stipulated in line 61. |
|
If this Agreement is maintained with the new cancelling date all other terms and conditions hereof including those contained in Clauses 5 a) and 5 c) shall remain unaltered and in full force and effect. Cancellation or failure to cancel shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 for the Vessel not being ready by the original cancelling date |
d) | Should the Vessel become an actual, constructive or compromised total loss before delivery the deposit together with interest earned shall be released immediately to the Buyers whereafter this Agreement shall be null and void |
a)** |
|
b)** | (i) The Vessel is to be delivered without drydocking. However, the Buyers shall have the right at their expense to arrange for an underwater inspection by a diver approved by the Classification Society prior to the delivery of the Vessel. The Sellers shall at their cost make the Vessel available for such inspection. The extent of the inspection and the conditions under which it is performed shall be to the satisfaction of the Classification Society. If the conditions at the port of delivery are unsuitable for such inspection, the Sellers shall make the Vessel available at a suitable alternative place near to the delivery port. | |
ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line |
are found broken, damaged or defective so as to affect the Vessels class, then unless repairs can be carried out afloat to the satisfaction of the Classification Society, the Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by the Classification Society of the Vessels underwater parts below the deepest load line, the extent of the inspection being in accordance with the Classification Societys rules. If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken, damaged or defective so as to affect the Vessels class, such defects shall be made good by the Sellers at their expense to the satisfaction of the Classification Society without condition/recommendation*. | ||
In such event the Sellers are to pay also for the cost of the underwater inspection and the Classification Societys attendance. | ||
(iii) If the Vessel is to be drydocked pursuant to Clause 6 b) (ii) and no suitable dry-docking facilities are available at the port of delivery, the Sellers shall take the Vessel to a port where suitable drydocking facilities are available, whether within or outside the delivery range as per Clause 5 b). Once drydocking has taken place the Sellers shall deliver the Vessel at a port within the delivery range as per Clause 5 b) which shall, for the purpose of this Clause, become the new port of delivery. In such event the cancelling date provided for in Clause 5 b) shall be extended by the additional time required for the drydocking and extra steaming, but limited to a maximum of 14 running days. | ||
c) | If the Vessel is drydocked pursuant to Clause 6 a) or 6 b) above | |
(i) the Classification Society may require survey of the tailshaft system, the extent of the survey being to the satisfaction of the Classification surveyor. If such survey is not required by the Classification Society, the Buyers shall have the right to require the tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey being in accordance with the Classification Societys rules for tailshaft survey and consistent with the current stage of the Vessels survey cycle. The Buyers shall declare whether they require the tailshaft to be drawn and surveyed not later than by the completion of the inspection by the Classification Society. The drawing and refitting of the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be condemned or found defective so as to affect the Vessels class, those parts shall be renewed or made good at the Sellers expense to the satisfaction of the Classification Society without condition/recommendation*. | ||
(ii) the expenses relating to the survey of the tailshaft system shall be borne by the Buyers unless the Classification Society requires such survey to be carried out, in which case the Sellers shall pay these expenses. The Sellers shall also pay the expenses if the Buyers require the survey and parts of the system are condemned or found defective or broken so as to affect the Vessels class*. | ||
(iii) the expenses in connection with putting the Vessel in and taking her out of drydock, including the drydock dues and the Classification Societys fees shall be paid by the Sellers if the Classification Society issues any condition/recommendation* as a result of the survey or if it requires survey of the tailshaft system. In all other cases the Buyers shall pay the aforesaid expenses, dues and fees. | ||
(iv) the Buyers representative shall have the right to be present in the drydock, but without interfering with the work or decisions of the Classification surveyor. | ||
(v) the Buyers shall have the right to have the underwater parts of the Vessel cleaned and painted at their risk and expense without interfering with the Sellers or the Classification surveyors work, if any, and without affecting the Vessels timely delivery. If, however, the Buyers work in drydock is still in progress when the Sellers have completed the work which the Sellers are required to do, the additional docking time needed to complete the Buyers work shall be for the Buyers risk and expense. In the event that the Buyers work requires such additional time, the Sellers may upon completion of the Sellers work tender Notice of Readiness for delivery whilst the Vessel is still in drydock and the Buyers shall be obliged to take delivery in accordance with Clause 3, whether the Vessel is in drydock or not and irrespective of Clause 5 b). |
* | Notes, if any, in the surveyors report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. |
** | 6 a) and 6 b) are alternatives: delete whichever is not applicable. In the absence of deletions, alternative 6 a) to apply |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Any such additional documents as may reasonably be required by the competent authorities for the purpose of registering the Vessel, provided the Buyers notify the Sellers of any such documents as soon as possible after the date of this Agreement. |
* | Notes, if any, in the surveyors report which are accepted by the Classification Society without condition/recommendation are not to be taken into account. |
a)* |
This Agreement shall be governed by and construed in accordance with English law and any
dispute arising out of this Agreement shall be referred to arbitration in London in accordance
with the Arbitration Acts
1996
|
|
|
|
|
The laws of shall govern this Agreement. |
|
* | 16 a). 16 b) and 16 c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16 a) to apply. |
FOR BUYERS
|
FOR GUARANTOR | FOR SELLERS | ||
|
||||
|
||||
|
||||
KONSTANTINOS SARRAS
ATTORNEY-IN-FACT |
KONSTANTINOS SARRAS
ATTORNEY-IN-FACT |
[ILLEGIBLE]
MANAGING DIRECTOR |
||
|
||||
12 AUGUST 2008
|
12 AUGUST 2008 |
The Sellers
|
The Guarantor | The Buyers | ||
|
||||
|
||||
|
||||
[ILLEGIBLE]
|
For Freebulkers S.A as | KONSTANTINOS SARRAS | ||
MANAGING
DIRECTOR
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Guarantor of the Buyers | ATTORNEY-IN-FACT | ||
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KONSTANTINOS SARRAS | |||
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ATTORNEY-IN-FACT | |||
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12 August 2008. | 12 August 2008 |
Clause | Heading | Page | ||
1.
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Interpretation | 2 | ||
2.
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Representations and warranties | 6 | ||
3.
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Payment covenants | 7 | ||
4.
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Charging Clause | 7 | ||
5.
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Continuing security and other provisions | 8 | ||
6.
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Covenants | 9 | ||
7.
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Powers of Mortgagee to protect security and remedy defaults | 18 | ||
8.
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Events of Default | 18 | ||
9.
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Enforceability and Mortgagees powers | 21 | ||
10.
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Application of Moneys | 22 | ||
11.
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Omissions or Delay | 22 | ||
12.
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Delegation of Powers | 23 | ||
13.
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Indemnity | 23 | ||
14.
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Power of Attorney | 23 | ||
15.
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Further Assurance | 23 | ||
16.
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Discharge amount; maturity date | 23 | ||
17.
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Partial Invalidity | 24 | ||
18.
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Notices | 24 | ||
19.
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Law and jurisdiction | 24 |
(1) | the Mortgagor is the sole, absolute, legal and beneficial owner of the vessel described and defined in clause 1.1 : | |
(2) | by, and subject to and upon the terms and conditions of a credit agreement signed by the Mortgagee on the 12 th day of August 2008 and by the Borrowers (as hereinafter defined) on the 14th day of August 2008 (as the same may be amended, supplemented or varied from time to time together with the therein referred to HBU General Banking Conditions of 1995 and HBU General Credit Provisions of July 2006 the Financial Agreement ), a copy of which is annexed hereto as Exhibit A, the Mortgagee agreed to make available to the Borrowers (as hereinafter defined) as joint and several obligors: |
(i) | an overdraft facility in the amount of USD 2,500,000 (two million five hundred thousand United States Dollars) (Overdraft I); | ||
(ii) | an overdraft facility in the amount of USD 1,375,000 (one million three hundred seventy-five thousand United States Dollars (Overdraft II); | ||
(iii) | an overdraft facility in the amount of USD 3,000,000 (three million United States Dollars) (Overdraft III); | ||
(iv) | an overdraft facility in the amount of USD 34,600,000 (thirty-four million six hundred thousand United States Dollars) (Overdraft IV); and | ||
(v) | an eight year roll-over loan facility in the principal amount of USD 27,000,000 (twenty-seven million United States Dollars), currently outstanding to the amount of USD 25,250,000 (twenty-five million two hundred fifty thousand United States Dollars) (the Roll-Over Loan) |
(Overdraft I, Overdraft II, Overdraft III, Overdraft IV and the Roll-Over Loan together hereinafter referred to as the Facility ): |
(3) | it is a condition of the Financial Agreement that the Mortgagor shall execute in favour of the Mortgagee a FIRST Preferred Mortgage over the Vessel (as hereinafter defined) for securing the Outstanding Indebtedness (as hereinafter defined) in the form herein set out; | |
(4) | the Mortgagor in order to secure the repayment of the Facility and the payment of interest thereon and all other sums of moneys from time to time owing to the Mortgagee under the Financial Agreement and the performance and observance of and compliance with all the covenants, terms and conditions contained in the Financial Agreement and this Mortgage, has duly authorized the execution and delivery of this FIRST Preferred Mortgage under and pursuant to Chapter 3 of Title 21 of the Liberian Code of Law of 1956 (as amended) |
which is executed by the Mortgagor in consideration of the Mortgagee making available the Facility. |
1 | Interpretation | |
1.1 | In this Mortgage unless the context otherwise requires: | |
Borrowers means the Mortgagor, Adventure Two S.A., Adventure Three S.A. and Adventure Seven S.A., all of Majuro, Marshall Islands; | ||
Business Day means a day on which the banks are open for business in Amsterdam, London and New York (whichever is applicable) for all kinds of business as contemplated herein and/or the Financial Agreement; | ||
DOC means a document of compliance issued to an Operator in accordance with the ISM Code; | ||
Dollars and USD means the lawful currency of the United States of America; | ||
Earnings means all moneys whatsoever from time to time due or payable actually or contingently to the Mortgagor arising out of the use or operation of the Vessel, including without limitation all moneys payable to the Mortgagor under the Time Charter and all other freight, hire and passage moneys, moneys arising under any contract or other agreement or arrangement with any operator, income arising under pooling arrangements, compensation payable to the Mortgagor as a result of, or otherwise in connection with, the requisition of the Vessel for hire, remuneration for salvage and towage serviees, demurrage and detention moneys, and all damages for breach, and all payments for, or otherwise in connection with any variation or termination of any charterparty, contract or other agreement or arrangement in respect of, or otherwise in connection with the employment of the Vessel; |
Environmental Approvals means any and all consents, approvals, licences, permits, exemptions or authorisations required under applicable Environmental Laws; | ||
Environmental Claim means: |
(a) |
any and all enforcement, clean-up, removal or other governmental,
judicial or regulatory action or order or claim instituted or made
pursuant to any Environmental Law or resulting from a Spill; or |
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(b) |
any claim made by any other party howsoever relating to a Spill;
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Environmental Incident means any Spill: |
(a) | from the Vessel; | ||
(b) | from a vessel other than the Vessel in circumstances where: |
(i) | the Vessel or the Mortgagor, the Operator or the Manager may be liable for Environmental Claims arising from the Spill (other than the Environmental Claims arising and fully satisfied before the date of this Mortgage); and/or | ||
(ii) | the Vessel may be arrested or attached in connection with any Environmental Claim arising from such Spill; |
Environmental Law means any and all national and international and state laws, rules, regulations, treaties, conventions and agreements whatsoever relating to the pollution or protection of human health or environment (including, without limitation the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the United States of America); | ||
Environmentally Sensitive Material means pollutions, contaminants, toxic substances, oil and its products and all hazardous substances and any other substance whose release into the environment is regulated, prohibited or penalised by or pursuant to any Environmental Law; | ||
Event of Default means any one of the events of default specified and referred to in the Financial Agreement and/or clause 8 : | ||
Facility has the meaning given in recital (2) hereto; | ||
Financial Agreement has the meaning given in recital (2) hereto; | ||
Insurances means all policies and contracts of insurance, including without limitation all entries of the Vessel in a protection and indemnity or war risks association which are from time to time in place or taken out or entered into by or for the benefit of the Mortgagor in respect of, or otherwise in connection with, the Vessel and/or her Earnings or any part thereof and all the benefits thereof, including without limitation all claims of whatsoever nature and all return of premiums; | ||
ISM Code means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (as amended, including any regulation issued thereunder), as adopted by the Assembly of the International Maritime Organisation on 4 November 1993 by resolution A.741 (18) and incorporated on 19 May 1994 as chapter IX of the Safety of Life at Sea Convention 1974; | ||
ISPS Code means the International Ship and Port Facility Security Code (as amended, including any regulation issued thereunder), as adopted by the Assembly of the International Maritime Organisation; | ||
ISSC means an international ship security certificate issued in respect of the Vessel in accordance with the ISPS Code; | ||
Major Casualty Amount means USD 500,000 (five hundred thousand United States Dollar) or the equivalent thereof in any other currency; | ||
Management Agreement means the agreement dated the 7th day of August 2008 and made between the Mortgagor and the Manager regarding the management of the Vessel; |
Manager means FREE BULKERS S.A. or such other manager of the Vessel as approved by the Mortgagee in writing; | ||
Material Adverse Change means (a) any material adverse change in the business, assets, condition (financial or otherwise), operations, performance or prospects of the Mortgagor or any of the other Security Parties, (b) any material adverse effect on the ability of the Mortgagor or any of the other Security Parties to perform any of its obligations under any of the Security Documents to which it is a party or (c) any material adverse effect on the validity, binding nature, or enforceability of any of the Security Documents; | ||
Operator means any entity who is at any time during the Security Period concerned in the operation of the Vessel and falls within the definition of Company set out in the ISM Code; | ||
Outstanding Indebtedness means (a) the aggregate of all sums of money actual or contingent, present or future due by the Borrowers as joint and several obligors to the Mortgagee under or in connection with the Security Documents or any of them and (b) all costs and expenses incurred in connection with the Security Documents, including any taxes payable by the Mortgagee (other than on net profit), as well as any reasonable costs and expenses incurred by the Mortgagee in connection with the Mortgagors failure to comply with or fulfil any obligation under the Security Documents at the time and in the manner required, including collection charges, disbursements, fees of legal consultants and other experts and costs of proceedings, irrespective against whom brought; | ||
Overdraft I has the meaning given m recital (2) hereto; | ||
Overdraft II
has the meaning given in
recital (2)
hereto;
Overdraft III has the meaning given in recital (2) hereto; |
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Overdraft IV has the meaning given in recital (2) hereto; | ||
Pollutant means and includes oil and its products, any other polluting, toxic or hazardous substance and any other substance whose release into the environment is regulated or penalised by Environmental Laws; | ||
Requisition Compensation means all moneys or other compensation payable by reason of requisition for title or other compulsory acquisition of the Vessel otherwise than by requisition for hire; | ||
Roll-Over Loan has the meaning given in recital (2) hereto; | ||
Security Documents means the Financial Agreement, this Mortgage and any other such document as may be executed from time to time to secure and/or regulate the Outstanding Indebtedness; | ||
Security Interest means a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment or other security interest or arrangement of any kind whatsoever; | ||
Security Parties means the Borrowers and any other party to the Security Documents other than the Mortgagee at any relevant time; |
Security Period means the period commencing on the date of this Mortgage and terminating on the date upon which all moneys payable or to become payable from time to time pursuant to the terms of the Financial Agreement, this Mortgage and/or any of the other Security Documents shall have been paid and discharged in full; | ||
SMC means a safety management certificate issued in respect of the Vessel in accordance with the ISM Code; | ||
Spill means any actual or threatened emission, spill, release or discharge of a Pollutant into the environment; | ||
Time Charter means the time charterparty dated 7 March 2008 and novation agreement dated 12 August 2008 in respect of the Vessel made between the Mortgagor and the Time Charterer; | ||
Time Charterer
means AWB (Geneva) S.A., of Geneva, Switzerland;
Total Loss means: |
(a) | actual or constructive or compromised or arranged total loss of the Vessel; | ||
(b) | requisition for title or other compulsory acquisition of the Vessel otherwise than by requisition for hire; | ||
(c) | capture seizure arrest detention or confiscation of the Vessel by any government or entity or individual acting or purporting to act on behalf of any government unless the Vessel be released and restored to the Mortgagor from such capture seizure arrest detention or confiscation within thirty (30) days after the occurrence thereof; |
Vessel means the Liberian flag vessel FREE MAVERICK with Official Number 13999, gross tonnage approximately 14,397, net tonnage approximately 8.314, built in 1998 at Hiroshima, Japan, by Kanda Shipbuilding Co. Ltd and includes her engines, machinery, boats, tackle, outfit, equipment, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter required. |
1.2 | In clause 6.1 : |
excess risks means the proportion (if any) of claims for general average and salvage charges and under the Institute Collision Clause not recoverable in consequence of the value at which a vessel is assessed for the purpose of such claims exceeding her insured value; | ||
protection and indemnity risks means the usual risks (including pollution and a Freight Demurrage and Defence cover) covered by a protection and indemnity association including the proportion (if any) not recoverable in case of collision under the Institute Collision Clause; |
war risks includes the risks of mines and all risks excluded from the standard form of English marine policy by the Institute War Exclusion Clause. | ||
1.3 | This Mortgage shall be read together with the Financial Agreement, but in the case of conflict between the two instruments the provisions of the Financial Agreement shall prevail in as far as it does not contravene the laws of the Republic of Liberia. | |
1.4 | In this Mortgage: |
(a) | clause headings are inserted for convenience of reference only and shall be ignored in the interpretation of this Mortgage; | ||
(b) | unless the context otherwise requires, words denoting the singular number shall include the plural and vice versa; | ||
(c) | references to clauses and schedules shall be construed as references to clauses of and schedules to this Mortgage; | ||
(d) | an entity shall be construed to include any firm, company, association, partnership (whether or not having separate legal personality), institution, government (local, national or supranational), state, agency or sub division thereof or international organisation; | ||
(e) | reference to any document including this Mortgage shall be construed as reference to such document as amended supplemented or varied from time to time; | ||
(f) | words and expressions defined in the Financial Agreement shall, unless it is stated otherwise herein, have the same meaning when used in this Mortgage; and | ||
(g) | the Mortgagee, the Mortgagor, the Borrowers, the Security Parties and any other entity or individual shall include their respective successors in title, estates and, in the event of an assignment permitted under this Mortgage, assignees. |
2. | Representations and warranties | |
2.1 | The Mortgagor hereby represents and warrants to the Mortgagee that: |
(a) | Entitlement to grant Mortgage | ||
it is fully entitled to grant this Mortgage and further to agree and perform the terms and conditions hereof and that such granting and performance will not cause the Mortgagor to be in breach of any agreement to which it is a party; | |||
(b) | Ownership of Vessel | ||
it is the sole, absolute, legal and beneficial owner of the Vessel; | |||
(c) | Charter and sharing Earnings |
the Vessel, save for the Time Charter, is not subject to any charter which, if entered into after the date of this Mortgage, would have required the consent of the Mortgagee under clause 6.1(k) and there is no existing agreement or arrangement whereby the Earnings may be shared with any other entity or individual; | |||
(d) | Security Interest | ||
the Vessel is not subject to any Security Interest (save as constituted by the Security Documents or otherwise permitted by the terms thereof); and |
(e) | DOC, SMC and ISSC | ||
the Operator has obtained and maintains a DOC (a true copy of which has been delivered to the Mortgagee) and has obtained and maintains a SMC and an ISSC (true copies of which have been delivered to the Mortgagee) in respect of the Vessel, all are in full force and effect and nothing has happened which might cause any of them to be withdrawn, suspended, cancelled or modified. |
2.2 | The Mortgagor hereby further represents and warrants to the Mortgagee that: |
(a) | all applicable Environmental Laws and Environmental Approvals relating to the Vessel, its operation and management and the business of the Mortgagor (as now conducted and as reasonably anticipated to be conducted in the future) have been complied with; | ||
(b) | no Environmental Claim has been made or threatened or is pending against the Mortgagor, the Manager or otherwise in connection with the Vessel and not fully satisfied; and | ||
(c) | no Environmental Incident has occurred. |
3. | Payment covenants | |
The Mortgagor hereby covenants duly to observe and perform all its obligations under the Financial Agreement in accordance with the terms and conditions thereof and in particular: |
(a) | to repay the Facility by the instalments and on the dates referred to and otherwise in the manner and upon the terms set out in the Financial Agreement; | ||
(b) | to pay interest on the Facility and on other moneys payable under the Financial Agreement at the rate or rates from time to time applicable thereto in the manner and upon the terms set out in the Financial Agreement; | ||
(c) | to pay all other moneys payable by the Mortgagor under or in connection with the Security Documents or any of them at the times and in the manner therein specified. |
4. | Charging Clause |
4.1 | In pursuance of the Financial Agreement and in consideration of the premises and by way of security for payment of the Outstanding Indebtedness and the performance of the obligations under the Financial Agreement, this Mortgage and the other Security Documents of the Borrowers as joint and several obligors, the Mortgagor with full title guarantee hereby mortgages and charges and agrees to mortgage and charge to and in favour of the Mortgagee all its right, title and interest (present and future) to and in the Vessel TO HAVE AND HOLD the same unto and in favour of the Mortgagee forever upon the terms set forth in this Mortgage to secure the Outstanding Indebtedness and further to secure the performance and observance of and the compliance with the covenants, terms and conditions in the Financial Agreement, this Mortgage and the other Security Documents contained. | |
4.2 | Notwithstanding anything to the contrary in this Mortgage it is not intended that any provision of this Mortgage shall waive the preferred status of this Mortgage and that if any provision or part thereof in this Mortgage shall be construed as waiving the preferred status of this Mortgage, then such provisions shall to such extent be void and of no effect. | |
4.3 | The Mortgagor shall remain liable to perform all the obligations assumed by it in relation to the Vessel and the Mortgagee shall not be under any obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in event of any failure by the Mortgagor to perform its obligations in respect thereof. | |
5. | Continuing security and other provisions | |
It is declared and agreed that: |
(a) | the security created by this Mortgage and the other Security Documents shall be held by the Mortgagee as a continuing security for the payment of the Outstanding Indebtedness and the performance and observance of and compliance with all obligations of the Mortgagor under the Security Documents or any of them, express or implied; | ||
(b) | the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the Outstanding Indebtedness and shall be in addition to and shall not in any way prejudice or affect and may be enforced by the Mortgagee without prior recourse to the security created by any other of the Security Documents or by any other security now or hereafter held by the Mortgagee and shall not in any way be prejudiced or affected thereby or by the invalidity or unenforceability thereof or by the Mortgagee releasing, modifying or refraining from perfecting or enforcing any of the same or granting time or indulgence or compounding with any liable entity or individual; | ||
(c) | all the rights, remedies and powers vested in the Mortgagee under this Mortgage shall be in addition to and not a limitation of any and every other right, power or remedy vested in the Mortgagee under any other of the Security Documents or at law (whether Liberia or otherwise) and that all the powers so vested in the Mortgagee may be exercised from time to time and as often as the Mortgagee may deem expedient; and |
(d) | the Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Mortgage or to make any claim or to take any action or to enforce any rights and benefits hereby assigned to the Mortgagee or to which the Mortgagee may at any time be entitled under this Mortgage. |
6. | Covenants | |
6.1 | The Mortgagor further covenants with the Mortgagee throughout the Security Period: |
(a) | Insurance |
(i) | Type of insurances | ||
to insure and keep the Vessel insured at the expense of the Mortgagor against: |
(A) | fire and usual marine risks (including excess risks); | ||
(B) | war risks; | ||
(C) | protection and indemnity risks (including pollution risks and a freight demurrage and defence cover); | ||
(D) | where the Vessel shall, at any time enter waters under the jurisdiction of the United States of America and/or the Exclusive Economic Zone (as defined in the United States Oil Pollution Act of 1990) oil pollution liability risks in excess of the cover for oil pollution liability risks included within the cover for protection and indemnity risks; |
and, at the option of the Mortgagee, either (i) to effect and keep effected, in the name and for the benefit of the Mortgagee, but at the expense of the Mortgagor or (ii) to reimburse the Mortgagee on demand for any and all costs incurred by it in effecting and maintaining such insurance in relation to the Vessel: |
(E) | a mortgagees interest insurance; and | ||
(F) | where the Vessel shall, at any time enter waters under the jurisdiction of the United States of America and/or the Exclusive Economic Zone (as defined in the United States Oil Pollution Act of 1990) an insurance against the possible consequences of pollution due to, without limitation, oil or any other substance involving the Vessel including, without limitation, the risk of expropriation or sequestration of the Vessel or the imposition of any Security Interest having priority over the Mortgage (Mortgagees Interest Insurance - Additional Perils (Pollution)); |
(ii) | Currency and amounts | ||
to effect and keep effected the Insurances (if not effected by the Mortgagee) in such amounts and in such currency and upon such terms and through such brokers (hereinafter called the approved brokers ) and with such insurance companies, underwriters, war risks and protection and indemnity associations (hereinafter called the approved associations ) as shall from time to time be approved in writing by the Mortgagee PROVIDED HOWEVER that the insurances against war risks and protection and indemnity risks may be effected by the entry of the Vessel with such war risks and protection and indemnity risks associations as shall from time to time be approved in writing by the Mortgagee and if so required by the Mortgagee (but without, as between the Mortgagor and the Mortgagee, liability on the part of the Mortgagee for premiums or calls) with the Mortgagee named as co-assured; | |||
(iii) | Fleet cover | ||
if any of the Insurances forms part of a fleet cover, to procure that the approved brokers and (as the case may be) the approved associations shall undertake to the Mortgagee that they shall neither set off against any claims in respect of the Vessel any premiums due in respect of other vessels under such fleet cover or any premiums due for other insurances, nor cancel such insurance in respect of the Vessel for reason of non-payment of premiums for other vessels under such fleet cover or of premiums for such other insurances and shall undertake to issue a separate policy in respect of the Vessel if and when so requested by the Mortgagee; | |||
(iv) | Renewals | ||
at least fourteen (14) days before the relevant policies, contracts or entries expire, to notify the Mortgagee in writing of the names of the brokers and/or the war risks and protection and indemnity risks associations proposed to be employed by the Mortgagor for the purposes of the renewal of such insurances (subject to the Mortgagees approval of such brokers and/or associations) and of the amounts in which such insurances are proposed to be renewed and the risks to be covered and, (subject to compliance with any requirements of the Mortgagee pursuant to this clause 6.1(a) , to renew (or procure the renewal of) such Insurances at least ten (10) days before the relevant policies, contracts or entries expire and to procure that such brokers and (as the case may be) such associations will at least seven (7) days before such expiry confirm such renewals in writing to the Mortgagee; | |||
(v) | Payments | ||
punctually to pay all premiums, calls, contributions or other sums payable in respect of the Insurances and to produce all relevant receipts or other evidence if and when so required by the Mortgagee; | |||
(vi) | Guarantees, indemnities |
to arrange for the execution of such guarantees or indemnities as may from time to time be required by or in connection with any protection and indemnity or war risks association or required by or in connection with a usual marine risks policy (including excess risks and war risks); | |||
(vii) | Loss payable clause, notice of assignment | ||
to procure that the interest of the Mortgagee shall be duly endorsed upon all slips, cover notes, policies, certificates of entry or other instruments of insurance issued or to be issued in connection with the Insurances by means of a loss payable and notice of cancellation clause and a notice of assignment (signed by the Mortgagor) in such forms as from time to time required by the Mortgagee; | |||
(viii) | Instruments of insurance | ||
to procure that all instruments of the Insurances shall be deposited with the approved brokers and that such brokers shall (if so required by the Mortgagee) furnish the Mortgagee with pro forma copies thereof and a letter or letters of undertaking in such form as may from time to time be required by the Mortgagee; | |||
(ix) | Letter(s) of undertaking | ||
to procure that the protection and indemnity and/or war risks associations wherein the Vessel is entered shall (if so required by the Mortgagee) furnish the Mortgagee with a letter or letters of undertaking in such form as may from time to time be required by the Mortgagee; | |||
(x) | Use of the Vessel | ||
not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the instruments of the Insurances (including any warranties express or implied therein) without first obtaining the consent to such employment of the insurers and complying with such requirements as to extra premium or otherwise as the insurers may prescribe; | |||
(xi) | Reimbursement | ||
to reimburse to the Mortgagee on demand any costs or expenses incurred by the Mortgagee in obtaining (if and when so required by the Mortgagee) reports from an independent marine insurance broker appointed by the Mortgagee as to the adequacy of the insurances effected or proposed to be effected pursuant to this clause 6 and procure that there is delivered to such broker any and all such information in relation to such insurances as such broker may require; | |||
(xii) | No consent, acts or omissions |
not to make, do, consent or agree to any act or omission which would or might render any instrument of insurance invalid, void, voidable or unenforceable or render any sum paid thereunder repayable in whole or in part; | |||
(xiii) | Co-operation with collecting insurance moneys | ||
to do all things necessary and provide all documents, evidence and information to enable the Mortgagee to collect or recover any moneys which shall at any time become due in respect of the Insurances; | |||
(xiv) | Application insurance moneys | ||
to apply such sums receivable in respect of the Insurances other than in respect of a Total Loss and any major casualty (that is to say any casualty the claim in respect of which exceeds the Major Casualty Amount inclusive of any deductible) which shall be payable to the Mortgagee as are paid to the Mortgagor for the purpose of making good the loss and fully repairing all damage in respect whereof the insurance moneys shall have been received; |
(xv) | Voyage declaration | ||
to make all such quarterly or other voyage declaration as may from time to time be required by the protection and indemnity risks association to maintain cover for trading (including, without limitation, trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990)) |
PROVIDED ALWAYS THAT the Mortgagee shall be entitled to review the requirements of this clause 6.1(a) from time to time in order to take account of significant changes in circumstances after the date of this Mortgage (such changes in circumstances include, without limitation, changes in the availability or the cost of insurance coverage). The Mortgagee may notify the Mortgagor in writing from time to time of any proposed modification to the requirements of this clause 6.1(a) which it deems appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Mortgagor as an amendment to this clause 6.1 (a) and shall bind the Mortgagor accordingly; |
(b) | Name and Registration |
not to change the name of the Vessel and to keep the Vessel registered with full registration as a Liberian ship in the Republic of Liberia at the Port of Monrovia in the name of the Mortgagor and not do or suffer to be done anything, or omit to do anything, the doing or omission of which could or might result in the Vessel being required to be registered otherwise than as a Liberian ship in the Republic |
of Liberia at the Port of Monrovia and not to do or suffer to be done anything, or omit to do anything, the doing or omission of which could or might result in such registration being forfeited, terminated or imperilled and not to register the Vessel or permit its registration under any other name, flag or at any other port or with any other numbers without the prior written consent of the Mortgagee and to procure the renewal of such registration of the Vessel as a Liberian ship with full registration at least one month before the same shall expire; |
(c) | Operator |
(i) | to comply and to procure that the Operator will comply with and ensure that the Vessel and the Operator at all times comply with the requirements of the ISM Code and the ISPS Code; | ||
(ii) | immediately to inform and to procure that the Operator will inform the Mortgagee if there is any threatened or actual withdrawal, suspension, cancellation or modification of its or the Operators DOC, the Vessels SMC or the Vessels ISSC; and | ||
(iii) | promptly to inform and to procure that the Operator will promptly inform the Mortgagee upon the issue to the Mortgagor or the Operator of a DOC and to the Vessel of a SMC and an ISSC; |
(d) | Employment |
not knowingly to employ the Vessel or suffer its employment in any trade or business whieh is forbidden by international law or is otherwise illegal or in earrying illegal or prohibited goods or in any manner whatsoever which may render the Vessel or its cargo liable to condemnation in a Prize Court or to penalty, destruction, seizure or confiscation and in the event of any major political confrontation or hostilities (whether or not war shall have been formally declared) or during any civil war or insurrection, not to carry or permit to be carried on or in the Vessel any cargo that is or may be declared contraband of war or that may render the Vessel or its cargo liable to penalty, destruction, seizure, or confiscation unless special war risks policies previously approved by the Mortgagee shall have been effected prior to undertaking any such risk and to deliver the signed cover notes in respect thereof forthwith to the Mortgagee; |
(e) | Encumbrances, sale or other disposal |
(i) | not without the previous consent in writing of the Mortgagee to create or suffer the creation of any Security Interest on or in respect of the Vessel to or in favour of any entity or individual other than the Mortgagee; | ||
(ii) | not without the previous consent in writing of the Mortgagee (and then only subject to such terms as the Mortgagee may impose) to sell agree to sell transfer or abandon or otherwise dispose of the Vessel or any share or interest therein; |
(f) | Prevention of and release from arrest |
to pay and discharge all debts and liabilities which may give rise to maritime statutory or possessory liens on the Vessel or to claims enforceable by actions in rem against the Vessel or similar process so as to keep her free from arrest or detention and in the event of arrest or detention of the Vessel being threatened or effected forthwith to notify the Mortgagee thereof and to take all steps and to make all payments necessary to obtain the release of the Vessel from such arrest or detention within thirty days from receiving notice thereof; |
(g) | Repair and Class |
(i) | to maintain the Vessel in her present class and to comply with the provisions of all regulations and requirements (statutory or otherwise) from time to time applicable to the Vessel and to comply with all class recommendations of its classification society in accordance with their terms; and | ||
(ii) | to keep the Vessel in good and efficient state of repair and procure that all repairs to or replacement of any damaged, worn or lost parts or equipment are effected in such manner (both as regards workmanship and quality of materials) as not to diminish the value of the Vessel; |
(h) | Surveys |
to submit the Vessel to such periodical or other surveys as may be required for classification purposes and if so required to supply to the Mortgagee copies of all survey reports issued in respect thereof; |
(i) | Inspections |
to permit the Mortgagee to inspect the condition of the Vessel at all reasonable times and to give the Mortgagee sufficient notice whenever practicable of dry-dockings, surveys and major repairs so as to enable the Mortgagees surveyors or other entity or individual appointed by it to attend thereat and if so required to supply to the Mortgagee copies of survey reports on the Vessel; |
(j) |
Modification, Removal of Parts, Equipment owned by third parties
not without the prior written consent of the Mortgagee to: |
(i) | make any modification to the Vessel in consequence of which her structure, type or performance characteristics could or might materially be altered or her value materially reduced; or | ||
(ii) | remove any material part of the Vessel or any equipment the value of which is such that its removal from the Vessel would materially reduce the value of the Vessel without replacing the same with equivalent parts or equipment owned by the Mortgagor free from encumbrances; or | ||
(iii) | install on the Vessel any equipment owned by a third party which cannot be removed without causing damage to the structure or fabric of the Vessel and not to permit any of the foregoing by any third party; |
(k) | Chartering |
(i) | not without the prior written consent of the Mortgagee, which shall not unreasonably be withheld, to: |
(a) | let the Vessel on demise charter for any period; or | ||
(b) | save for the Time Charter let the Vessel on time or consecutive voyage charter or otherwise dispose of the Vessel, except for a time or consecutive voyage charter agreement for a period which does not exceed or which by virtue of any optional extensions therein contained is not likely to exceed six (6) months duration; or | ||
(c) | charter the Vessel on terms whereby more than three (3) months hire is payable in advance; |
(ii) | to maintain the Time Charter materially unamended and renew or extend the Time Charter on terms and conditions identical to the Time Charter, but in any case for charter rates acceptable to the Mortgagee; |
(1) | Information | ||
to supply to the Mortgagee on request full information regarding the Vessel, her employment, position and engagements, particulars of all towages and salvages and copies of all charters and other contracts concerning the Vessel; | |||
(m) | Notification of certain events | ||
to notify the Mortgagee forthwith by letter or in case of urgency by-telefax of any accident to the Vessel involving repairs the cost whereof is likely to exceed the Major Casualty Amount, of any occurrence whereby the Vessel has or is likely to become a Total Loss, of any actual or threatened arrest, detention, seizure, confiscation or requisition of the Vessel, of any requirement of insurers, classification society or any competent authority which is not immediately carried out and of any petition or notice or meeting to consider any resolution to dissolve wind-up or liquidate the Mortgagor; | |||
(n) | Reimbursement | ||
to pay to the Mortgagee on demand all moneys whatsoever which the Mortgagee shall or may expend be put to or become liable for in or about the protection maintenance or enforcement of the security created by this Mortgage and the other Security Documents or in or about the exercise by the Mortgagee of any of the powers vested in it hereunder or thereunder and to pay interest thereon at the default rate as per the Financial Agreement; | |||
(o) | Costs | ||
to pay on demand to the Mortgagee (or as it may direct) the amount of all investigation and legal expenses of any kind whatsoever stamp duties (if any) registration fees and any other charges incurred by the Mortgagee in connection with the preparation completion registration and discharge of the Security Documents or otherwise in connection with the Outstanding Indebtedness and the security therefor and to pay interest thereon at the default rate as per the Financial Agreement; | |||
(p) | Manager | ||
not without the previous consent in writing of the Mortgagee (and then only on and subject to such terms as the Mortgagee may impose) to appoint a manager of the Vessel other than the Manager or amend or terminate the Management Agreement; | |||
(q) | Repairers liens | ||
not without the previous consent in writing of the Mortgagee to put the Vessel into the possession of any entity or individual for the purpose of work being done upon her in an amount exceeding or likely to exceed the Major Casualty Amount, unless such entity or individual shall first have given to the Mortgagee and in terms satisfactory to it a written undertaking not to exercise any lien on the Vessel or her Earnings for the cost of such work or otherwise; | |||
(r) | Payment of outgoings and evidence of payment |
promptly to pay all tolls dues and other outgoings whatsoever in respect of the Vessel and her Earnings and Insurances and to keep proper books of account in respect of the Vessel and her Earnings and as and when the Mortgagee may so require to make such books available for inspection on behalf of the Mortgagee and furnish satisfactory evidence that the wages allotments the premiums for social insurances and pension contributions of the master and crew are being regularly paid and that all deductions from crews wages in respect of Liberian tax liability are being properly accounted for and that the master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; | |||
(s) | Notice on board Vessel | ||
to carry a certified copy of this Mortgage with the Vessels papers on board and exhibit it on demand to any person having business with the Vessel or to any representative of the Mortgagee and to place and keep prominently displayed in the chartroom and in the masters cabin of the Vessel a notice, printed in plain type of such size that the paragraph of reading matter shall cover a space not less than six inches wide by nine inches high, framed, reading as follows: | |||
NOTICE OF MORTGAGE | |||
This Vessel is covered by a FIRST PREFERRED SHIP MORTGAGE in favour of HOLLANDSCHE BANK-UNIE N.V. under the authority of Title 21 of the Liberian Code of Law of 1956 (as amended). Under the terms of said Mortgage, neither the Owner, any charterer nor the Master of the Vessel nor any other person has any right, power or authority to create, incur or permit to be imposed upon this vessel any lien whatsoever other than for crews wages or salvage.; and | |||
(t) | Libel | ||
if a libel be filed against the Vessel or the Vessel be otherwise attached, levied upon or taken into custody by virtue of any legal proceedings in any Court, to promptly notify the Mortgagee thereof by telex or fax confirmed by a letter at its office as herein referred to and within thirty (30) days cause the Vessel to be released and all liens thereon to be discharged except for this Mortgage and promptly notify the Mortgagee within 48 (forty-eight) hours after is has become known to the Mortgagor of any average or salvage incurred by the Vessel. |
6.2 | Environmental Matters | |
The Mortgagor hereby further covenants with the Mortgagee that throughout the Security Period and unless the Mortgagee shall have otherwise agreed in writing it will: |
(a) | comply, or procure compliance with, all Environmental Laws and Environmental Approvals relating to the Vessel, its operation or management and the business of the Mortgagor from time to time; | ||
(b) | notify the Mortgagee forthwith upon: |
(i) | any Environmental Claim being made against the Mortgagor, the Manager or otherwise in connection with the Vessel; and | ||
(ii) | any Environmental Incident occurring; and |
(c) | keep the Mortgagee advised, in writing on such regular basis and in such detail as the Mortgagee shall require, of the Mortgagors response to any such Environmental Claim or Environmental Incident. |
7. | Powers of Mortgagee to protect security and remedy defaults | |
7.1 | The Mortgagee shall without prejudice to its other rights and powers under this Mortgage and the other Security Documents be entitled (but not bound) at any time and as often as may be necessary to take any such action as it may in its discretion think fit for the purpose of protecting or maintaining the security created by this Mortgage (including, without limitation, such action as is referred to in clause 7.2) and each and every expense, liability, or loss (including, without limitation, legal fees) so incurred by the Mortgagee in or about the protection or maintenance of the said security together with default interest as per the Financial Agreement payable thereon shall be repayable to it by the Mortgagor on demand. | |
7.2 | Without prejudice to the generality of clause 7.1 : |
(a) | if the Mortgagor does not comply with the provisions of clause 6.1 (a) the Mortgagee shall be entitled (but not bound) to effect or to replace and renew and thereafter to maintain the Insurances in such manner as in its discretion it may think fit and to require that all policies, contracts and other records relating to the Insurances (including details of any correspondence concerning outstanding claims) be forthwith delivered to such brokers as the Mortgagee may nominate and to collect, recover, compromise and give a good discharge for all claims then outstanding or thereafter arising under the Insurances or any of them and to take over or institute (if necessary using the name of the Mortgagor) all such proceedings in connection therewith as the Mortgagee in its absolute discretion may think fit and to permit the brokers through whom the collection or recovery is effected to charge the usual brokerage therefor; and | ||
(b) | if the Mortgagor does not comply with the provisions of clauses 6.1(g), 6.1(h) and 6.1(i) or any of them the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such repairs to and/or surveys of the Vessel as it deems expedient or necessary; and | ||
(c) | if the Mortgagor does not comply with the provisions of clauses 6.1(f) and 6.l(r) or any of them the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages and liabilities and all such tolls, dues, taxes, assessments, charges, fines, penalties and other outgoings as are therein mentioned and/or to take any such measures as it deems expedient or necessary for the purpose of seeuring the release of the Vessel. |
8. | Events of Default | |
Upon the happening of any of the following events the Outstanding Indebtedness shall immediately become due and payable to the Mortgagee without notice and without the necessity of any Court declaration to the effect that an Event of Default has taken place: |
(a) | Non-payment | ||
any of the Security Parties shall fail to pay on the due date (or before the expiry of any grace period applicable thereto) any sum due under any Security Document; or | |||
(b) | Misrepresentation |
any representation or warranty made by any of the Security Parties in any Security Document or any notice, certificate or statement made or delivered hereunder or thereunder is or proves to have been incorrect in any material respect when made, or if replaced at any time during the continuance of this Mortgage with reference to the facts subsisting at such time, would no longer be correct and accurate in all material respects; or | |||
(c) | Other obligations | ||
any of the Security Parties defaults in the due performance and observance of any of the terms, undertakings or conditions of or the due compliance with its obligations under any Security Document and, if and only if such default other than set out under clause 8(a) is capable of remedy, such default is not remedied within 30 (thirty) days; or | |||
(d) | Cross-default | ||
any loan, debt, guarantee or other obligation constituting indebtedness of any of the Security Parties becomes due prior to its specified maturity by reason of default (unless such default is caused solely by the Vessel becoming a Total Loss) or is not paid when due or any of the Security Parties is otherwise in material breach of or default under any agreement, deed or mortgage under or pursuant to which such indebtedness was incurred unless in any such case the non-payment, breach or default is remedied within 30 (thirty) days; or | |||
(e) | Distress | ||
a distress or other execution is levied or sued out upon or against any part of the property of any of the Seeurity Parties and is not discharged within 30 (thirty) days of having been so levied or sued out; or | |||
(f) | Insolvency | ||
any of the Security Parties suspends or threatens to suspend its operations or transfers or disposes of all or a substantial part of its undertakings or assets or transfers its business to another country or ceases to pursue its corporate objeets or changes its corporate statute in any material way; or | |||
(g) | any of the Security Parties (i) is unable or admits in writing their inability to pay its lawful debts as they mature, or (ii) makes a general assignment or pledge for the benefit of or a composition with its creditors; or | ||
(h) | an application is made to, or any proceedings are commenced in or any order or judgement is given by any court for the liquidation, winding-up, reorganisation or reconstruetion (where, in the opinion of the Mortgagee, such reorganisation or reconstruction might prejudice the Mortgagees position hereunder or under any of the Security Documents) of any of the Security Parties or for the appointment of a receiver, trustee, liquidator, administrator or administrative receiver or similar officer of any of the Security Parties or any part of its assets; or | ||
(i) | any of the Security Parties is adjudicated bankrupt or insolvent or files a voluntary petition in bankruptcy or insolvency; or |
(j) | Authorisation | ||
any authorisation, approval, consent, licence, exemption, registration, notification or other requirement of any governmental or public body necessary for the validity, enforceability or legality of any Security Document or the performance thereof is not being obtained or, if obtained, ceases for any reason to be in full force and effect; or | |||
(k) | Total Loss, change ownership or registration of the Vessel | ||
the Vessel becomes Total Loss, there is any change in the ownership of the Vessel or the Vessel ceases to be registered under the Liberian flag; or | |||
(1) | Change shareholder or control; material change of directorship or management | ||
without the prior written consent of the Mortgagee there is after the date hereof any change in the shareholding or control in or any material change in the directorship or management of any of the Security Parties; or | |||
(m) | Breach or termination charterpartv | ||
the Mortgagor defaults in the performance of any charterparty of the Vessel in any material way or any charterparty of the Vessel terminates for any reason other than the due performance in accordance with its terms or as a result of a Total Loss unless (i) the Mortgagor has entered into a new charter party on terms and conditions acceptable to the Mortgagee within 14 (fourteen) days after the charter party has been terminated or (ii) the Mortgagee has prior to the termination approved in writing the termination of the charter party by the Mortgagor; or | |||
(n) | Unenforceability | ||
any of the Mortgagees rights or powers of enforcement against or in respect of the Vessel under any Security Document becomes unenforceable; or | |||
(o) | Unlawfulness | ||
the due performance in accordance with its terms of any Security Document becomes illegal or impossible under the law of the country of incorporation of any party thereto; or | |||
(p) | Change of law and governmental measure | ||
the law or its interpretation changes or a governmental measure is taken which affects or may affect any of the Security Documents, and/or the underlying value thereof, and the parties to such documents and the Mortgagee shall not have reached within a reasonable period a written agreement adjusting the relevant provisions and/or securities, on such a basis that the position of the Mortgagee is not detrimentally affected; or |
(q) | Material Adverse Change | ||
a Material Adverse Change occurs, or any events or circumstances arise which, in the reasonable opinion of the Mortgagee, give grounds for belief that a Material Adverse Change will occur; unless such events or circumstances are |
capable of remedy and are remedied within 30 (thirty) days of the day the Mortgagee was given notice to any of the Security Parties; or | |||
(r) | Other events of default | ||
if the Outstanding Indebtedness becomes immediately due and payable to the Mortgagee in accordance with the provisions of the Financial Agreement or any of the other Security Documents. |
9 | Enforceability and Mortgagees powers | |
Upon the happening of any Event of Default the Mortgagee shall become forthwith entitled to enforce the security created by this Mortgage without prior notiee and in any manner available to it and in such sequence as the Mortgagee may in its absolute discretion prefer and when it may see fit to put into force and to exercise all or any of the rights powers and remedies conferred upon mortgagees by law and/or possessed by it as mortgagee and chargee of the Vessel by virtue of this Mortgage and in particular (without limiting the generality of the foregoing): |
(a) | to take possession of the Vessel; | ||
(b) | to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be forthwith delivered to such brokers as the Mortgagee may nominate; | ||
(c) | to collect, recover, compromise and give a good discharge for all claims then outstanding or thereafter arising under the Insurances or any of them or in respect of the Earnings or any Requisition Compensation and to take over or institute (if necessary using the name of the Mortgagor) all such proceedings in connection therewith as the Mortgagee in its absolute discretion thinks fit and to permit the brokers through whom collection or recovery is effected to charge the usual brokerage therefor; | ||
(d) | to discharge compound release or compromise claims against the Mortgagor in respect of the Vessel which have given or may give rise to any charge or lien on the Vessel or which are or may be enforceable by proceedings against the Vessel; | ||
(e) | to terminate any charterparty in respect of the Vessel without being responsible for any loss thereby occurred; | ||
(f) | to sell the Vessel or any share therein with or without prior notice to the Mortgagor and with or without the benefit of any charterparty or other contract for her employment by public auction or private contract at such place and upon such terms as the Mortgagee in its absolute discretion may determine with power to postpone any such sale and without being answerable for any loss occasioned by such sale or resulting from postponement thereof; | ||
(g) | to manage, insure, maintain and repair the Vessel and to employ or lay up the Vessel in such manner and for such period as the Mortgagee in its absolute discretion deems expedient and for the purposes aforesaid the Mortgagee shall be entitled to do all acts and things incidental or conducive thereto and in particular to enter into such arrangement respecting the Vessel her insurance management maintenance repair |
classification and employment in all respects as if the Mortgagee was the owner of the Vessel and without being responsible for any loss thereby incurred; | |||
(h) | to recover from the Mortgagor on demand any such losses as may be incurred by the Mortgagee in or about the exercise of the power vested in the Mortgagee under sub-clause (g) of this clause with interest thereon at the default rate as per the Financial Agreement from the date when such losses were incurred by the Mortgagee until the date of payment whether before or after any relevant judgment; | ||
(i) | to recover from the Mortgagor on demand all expenses payments and disbursements incurred by the Mortgagee in or about or incidental to the exercise by it of any of the powers aforesaid together with interest thereon at the default rate as per the Financial Agreement from the date when such expenses payments or disbursements were incurred by the Mortgagee until the date of payment whether before or after any relevant judgment |
PROVIDED ALWAYS that (i) the Mortgagee shall not be liable as mortgagee in possession in respect of the Vessel to account or be liable for any loss upon realisation or for any neglect or default of any nature whatsoever in connection therewith for which a mortgagee in possession may be liable as such and (ii) upon any sale of the Vessel or any share therein by the Mortgagee pursuant to sub-clause (f) of this clause the purchaser shall not be bound to see or enquire whether the Mortgagees power of sale has arisen in the manner herein provided and the sale shall be deemed to be within the power of the Mortgagee and the receipt of the Mortgagee for the purchase money shall effectively discharge the purchaser who shall not be concerned with the manner of application of the proceeds of sale or be in any way answerable therefor. | ||
10 | Application of Moneys | |
Upon the happening of any Event of Default the Mortgagee shall become forthwith entitled as and when it may see fit to apply any amounts received by it from the Mortgagor and the Mortgagee shall similarly be entitled to apply any amounts received by it in respect of: |
(a) | sale of the Vessel or any share therein; | ||
(b) | recovery under the Insurances; | ||
(c) | any Earnings or moneys received pursuant to the provisions of clause 9.(g); | ||
(d) | any Requisition Compensation, |
in the manner as specified in the Financial Agreement. |
11 | Omissions or Delay | |
No delay, indulgence or omission of the Mortgagee to exercise any right power or remedy vested in it under the Security Documents or any of them shall in any way prejudice or impair such right power or remedy or be construed as a waiver of or as acquiescence in any default by the Mortgagor and in event of the Mortgagee at any time agreeing to waive any such right power or remedy such waiver shall be revocable by the Mortgagee at any time and the right power or remedy shall thereafter be again exercisable as though there had been no such waiver. |
12
Delegation of Powers
The Mortgagee shall be entitled at any time and as often as may be expedient to delegate
all or any of the powers and discretions vested in it by the Security Documents or any of
them (including the powers vested in it by virtue of
clause 7.2(a)
and
clause
14
) in such manner upon such terms and to such entities or individuals as the
Mortgagee in its absolute discretion may think fit.
13
Indemnity
13.1
The Mortgagor hereby agrees and covenants to indemnify the Mortgagee against all losses
actions claims expenses demands obligations and liabilities whatsoever and whensoever arising
which the Mortgagee may incur in respect of, in relation to or in connection with the Vessel
or otherwise, howsoever, in relation to or in connection with any of the matters dealt with in
the Security Doeuments or any of them.
13.2
The Mortgagor hereby agrees and undertakes to indemnify the Mortgagee on demand against all
losses, actions, claims, expenses, demands, obligations and liabilities sustained or incurred
as result of or in connection with any Environmental Claim being made against the Mortgagee or
otherwise howsoever arising out of any Environmental Incident.
14
Power of Attorney
14.1
The Mortgagor, by way of security and in order more fully to secure the performance of the
Mortgagors obligations under this Mortgage, hereby irrevocably appoints the Mortgagee as its
attorney during the Security Period for the purposes of:
(a)
doing in its name all acts and executing, signing and (if required)
registering in its name all documents which the Mortgagor itself could do,
execute, sign or register in relation to the Vessel (including without limitation,
transferring title to the Vessel to a third party and deleting the Vessel from the
Liberian Ships Registry); provided, however, that such power shall not be
exercisable by or on behalf of the Mortgagee until this Mortgage shall have become
immediately enforceable pursuant to
clause 9
; and
(b)
executing, signing, perfecting, doing and (if required) registering every
such further assurance document, act or thing as is referred to in
clause 15.
14.2
The exercise of such power as is referred to in
clause 14.1 (a)
by or on behalf of
the Mortgagee shall not put any entity or individual dealing with the Mortgagee upon any
enquiry as to whether this Mortgage has become enforceable nor shall such entity or individual
be in any way affected by notice that this Mortgage has not become enforceable and, in
relation to both
clauses 14.1(a) and 14.1(b)
, the exercise by the Mortgagee of such
power shall be conclusive evidence of its right to exercise the same.
15
Further Assurance
The Mortgagor hereby further covenants at its own expense from time to time to execute,
sign, perfect, do and (if required) register any such further assurance, document, act or
thing as in the opinion of the Mortgagee may be necessary or desirable for the purpose of
more effectually mortgaging and charging the Vessel or perfecting the security constituted
or intended to be constituted by the Security Documents.
16
Discharge amount; maturity date
For the purpose of recording this Mortgage as required by Chapter 3 of Title 21 of the Liberian Code of Law of 1956 (as amended), the total amount of this Mortgage is USD 66,725,000 (sixty-six million seven hundred and twenty-five thousand United States Dollars) together with interest thereon, fees, commissions and performance of mortgage covenants, and the date of maturity is the 31st day of August day of 2018, and the discharge amount is the same as the total amount. | ||
17 | Partial Invalidity | |
If at any time any one or more of the provisions in this Mortgage is or becomes invalid, illegal or unenforceable in any respect under any law or regulation, the validity, legality and enforceability of the remaining provisions of this Mortgage shall not be in any way affected or impaired thereby. | ||
18 | Notices | |
18.1 | Any notice or other communication under or in connection with this Mortgage shall be in writing and delivered by hand or sent by facsimile, by courier, or by registered mail to: | |
the Mortgagor: |
| ADVENTURE ELEVEN S.A. | ||
| c/o FREE BULKERS S.A. | ||
| Akti Miaouli 93 | ||
| Piraeus 185 382 | ||
| Greece | ||
| telephone: +30 210 4528770 | ||
| fax: +30 210 4291100 |
the Mortgagee: |
| HOLLANDSCHE BANK-UNIE N.V. | ||
|
Coolsingel 104
3011 AG Rotterdam |
||
|
the Netherlands
or |
||
| P.O. Box 249 | ||
| 3000 AE Rotterdam | ||
|
the Netherlands
telephone: +31 10 2820282 |
||
| fax: +31 10 2820399. |
18.2 | Any such notice or other communication shall be deemed to have been duly given or made as follows: |
(a) | if sent by personal delivery, upon delivery at the address of the relevant party; | ||
(b) | if sent by courier service or registered mail three (3) Business Days after the date of dispatch; and | ||
(c) | if sent by facsimile, when dispatched. |
Any communication by facsimile sent by the Mortgagor to the Mortgagee shall be confirmed by letter if so required by the Mortgagee. |
19 | Law and jurisdiction | |
19.1 | This Mortgage shall be governed by and construed in accordance with the laws of the Republic of Liberia. |
19.2 | Subject to clause 19.3 , the courts of Rotterdam, the Netherlands shall have exclusive jurisdiction in relation to all matters which may arise out of or connection with this Mortgage with the exclusion of any other court of law. | |
19.3 | For the exclusive benefit of the Mortgagee the Mortgagor agrees that the Mortgagee reserves the right to commence proceedings in relation to any matter which arises out of or in connection with this Mortgage in the courts of any place in the Netherlands other than Rotterdam or any country other than the Netherlands and which have jurisdiction to that matter. | |
19.4 | In this clause 19 proceedings means proceedings of any kind, including an application for a provisional or protective measure. | |
19.5 | The Mortgagor hereby agrees that any writ, judgment or other notice of process shall be sufficiently and effectively served on it, if served on it at the address specified in clause 18.1 . |
SIGNED
by: /s/ Kurt B. Plankl as: attorney-in-fact for ADVENTURE ELEVEN S.A. in the presence of: |
)
) ) ) ) |
/s/ Kurt B. Plankl
|
STATE OF NEW YORK
|
) | |||||
|
) | ss.: | ||||
COUNTY OF NEW YORK
|
) |
|
/s/ Kassandra Savicki | |
|
||
|
KASSANDRA SAVICKI | |
|
Notary Public, State of New York | |
|
No. 02SL6110523 Qualified in New York County | |
|
Commission Expires May 24, 2012 | |
|
1. |
Adventure Two S.A.. established in Majuro, Marshall
Islands,
Adventure Three S.A., established in Majuro, Marshall Islands, Adventure Seven S.A.. established in Majuro, Marshall Islands, Adventure Eleven S.A.. established in Monrovia, Liberia, hereinafter (together and individually) referred to as the Borrower, |
(new) | |
2. | HOLLANDSCHE BANK-UNIE N.V., having its registered office in Rotterdam, the Netherlands, hereinafter referred to as HBU. |
Facility amount
|
USD | 66,725,000 | (was USD 32,125,000) | ||||||
|
|||||||||
Breakdown of facility amount
|
|||||||||
Overdraft facility I
|
USD | 2,500,000 | |||||||
Overdraft
facility II
|
USD | 1,375,000 | |||||||
Overdraft facility III
|
USD | 3,000,000 | |||||||
Overdraft facility IV
|
USD | 34,600,000 | (new) | ||||||
8-year rollover loan
|
USD | 25,250,000 | (outstanding amount) |
| Current variable USD debit interest rate, based on the market rate, will be 3.76%. | |
| Short term loans: libor + 1.30%. | |
| Short term loans: libor + 1.25%, when Borrower will conclude an IRS or CAP. |
Upfront fee:
0.6% of the principal amount
|
Commitment fee
0.65% per annum
|
|
First preferred mortgage, on the vessel m.v. Voge Kacja to be renamed
m.v. Free Maverick, registered under the flag of Liberia.
IMO number 9157416. Fuller
details will be included in the mortgage deed. On this mortgage the laws of Liberia will be
applicable.
(new)
|
|
| First preferred mortgage of USD 3,700,000 on the vessel m.v. Free Destiny, registered under the flag of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details are included in the mortgage deed. On this mortgage the laws of the Marshall Islands are applicable. | |
| Second preferred mortgage on the vessel m.v. Free Destiny, registered under the flag of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details are included in the mortgage deed. On this mortgage the Jaws of the Marshall Islands are applicable. | |
|
Third preferred mortgage on the vessel m.v. Free
Destiny, registered under the flag
of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details will he
included in the mortgage deed. On this mortgage the laws of the Marshall Islands are
applicable,
(new)
|
|
a right of pledge on the rights of recourse and the subrogated rights arising pursuant
to the joint and several liability referred to in 1.4.3 of the HBU General Credit
Provisions. In order to effectuate the above, the Borrower hereby pledges to HBU, to the extent not already
pledged to HBU in accordance with 1.4.3. of the HBU General Credit Provisions, his
aforementioned rights of recourse as security as stated above. If the Borrower is subrogated to
the rights of HBU, HBU reserves a pledge on the subrogated rights as security as stated above.
HBU hereby accepts the above rights of pledge. This Credit Agreement constitutes a notice of these pledges to the other parties referred to as the Borrower and to HBU. |
| With a view to the continuity of the Borrowers business, HBU deems it necessary that, as from the end 2008: |
| the Interest Coverage Ratio of Freeseas Inc. must amount to at least 2.5; | ||
| the Debt Service Cover Ratio of Freeseas Die. is not less than l.l. | ||
| the Gearing of Freeseas Inc. must amount to maximum 2.5; | ||
|
out of the Excess Cash of the Borrowers 50% has to be used to save as extra repayment
on overdraft facility IV.
(new)
|
| All definitions concerning this Credit Agreement are stated in the Appendix B. | |
| In case of a sale of the m.v. Free Envoy or the m.v. Free Destiny any outstanding balance under Borrowers |
| the corresponding overdraft facility I or II will be fully repaid, | ||
| the balance will be repaid on the overdraft facility IV. and | ||
|
any remaining balance will be repaid on the rollover loan.
(amendment)
|
| The vessels will be safely operated and maintained and will in any case always be in class (acceptable IACS members) during the loan period. | |
|
Borrower will give HBU a time charter agreement with respect to the new vessel
for inspection. The contents, a contract of at least 1 year at a rate of at least USD 30,000 a
day. must be acceptable to HBU.
(new)
|
|
| Borrower will give HBU the time charter agreements for inspection. The contents thereof must be acceptable to HBU. | |
|
Borrower will give HBU the time charter agreement with respect to the m.v.
Free Envoy for inspection. The contents, a contract of at
least 1 year at a
rate of at least USD 25.000 a
day, must he acceptable to HBU.
(new)
|
|
| The loan to value ratio must not exceed 70% at any moment. The loan to value ratio means the total outstanding facilities of the Borrower with HBU divided by actual valuation results of the vessels mortgaged in favour of HBU. |
| The Borrower will submit once a year to HBU a valuation report of the mortgaged vessels. The contents must be acceptable to HBU. | |
| All relations between the Borrower and HBU shall be subject to the General Banking Conditions of HBU. in addition, the credit relationship concerned shall also be subject to the HBU General Credit Provisions of July 2006, attached to this Credit Agreement. By signing this Credit Agreement the Borrower declares that he has received a copy of the General Banking Conditions and the HBU General Credit Provisions and is fully aware of the contents thereof. |
HOLLANDSCHE
BANK-UNIE N.V.
|
||||
|
||||
/s/ [ILLEGIBLE]
|
14/8/2008 | |||
|
||||
/s/ Ion Varouxakis
|
/s/ Ion Varouxakis
|
|||
|
||||
/s/ Ion Varouxakis
|
||||
|
||||
Liberia, Monrevia
|
14/8/2008 |
/s/ Ion Varouxakis
|
|
| any indebtedness for or in respect of indebtedness for borrowed money; | ||
| any documentary credit facility; | ||
| any treasury transaction or any other transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and the amount of the financial indebtedness in relation to any such transaction shall be calculated by reference to the marked-to-market valuation of such transaction at the relevant time; and | ||
| any guarantee, indemnity, bond, standby letter of credit or any other instrument issued in connection |
| any decrease in the amount of Working Capital: | ||
| any cash receipt in respect of any exceptional or extraordinary item (including, without limitation, the proceeds of the sale of any assets other than material part of the business disposal proceeds or the proceeds from the disposal of a material asset); | ||
| any increase in provisions, other non-cash debits and other non-cash charges taken into account in establishing Consolidated EBITDA; |
| any amount of Capital Expenditure actually made by FreeSeas Inc.; | ||
| any increase in the amount of Working Capital; | ||
| any cash payment in respect of any exceptional or extraordinary item; | ||
| any amount actually paid or due and payable in respect of taxes on the profits of FreeSeas Inc.; | ||
| any decrease in provisions and other non-cash credits taken into account in establishing Consolidated EBITDA; |
| gross interest and arrangement fee on any form of such Financial Indebtedness which lias accrued as an obligation of FreeSeas Inc. during that Relevant Period, including the interest element of finance leases; and | ||
| the consideration given by FreeSeas Inc. during that Relevant Period by way of discount in connection with such Financial Indebtedness by way of acceptance credit, bill discounting or other like arrangement. |
| Net Interest Expense for such Relevant Period; and | ||
| all scheduled repayments of capital or principal under the terms of any Financial Indebtedness of FreeSeas Inc. (excluding any Financial Indebtedness owed by FreeSeas Inc. to any other member of FreeSeas Inc.) in each case which fall due during that Relevant Period. |
Official
Number: 13999
|
|
|
|
||
|
GIVEN under my hand and seal
this 1
day of September, 2008 /s/ [ILLEGIBLE] of Maritime Affairs of the Republic of Liberia |
|
||
|
Coolsingel 104 | |
|
3011 AG Rotterdam | |
|
||
|
Mailing address | |
|
P.O. Box 249 | |
|
3000 AE Rotterdam | |
|
||
|
Telephone +31 10 2B2 02 82
Fax +31 10 282 03 99 |
CONFIDENTIAL
|
Bankaccount 52.52.30.025 | |
FreeSeas Inc.
|
||
For the attention of the Management
|
Swift HBUANL2R | |
89 Akti Miaouli & 4 Gr Mavrokordatou street
|
www.HBU.nl | |
PIRAEUS 185 38
|
||
Griekenland
|
Reference
|
Telephone | Fax | Date | |||
L.J.M. Bloemheuvel/je
|
31-10-2820146 | 31-10-2820149 | 12 August2008 |
Re: | credit arrangement Adventure Two S.A. / Adventure Three S.A. / Adventure Seven S.A./ Adventure Eleven S.A. |
|
[ILLEGIBLE] | |||
|
HOLLANDSCHE BANK UNIE N.V. | |||
|
||||
|
Register of Commerce Rotterdam no 33259495 | |||
|
||||
|
VAT no NL003027144B01 |
Encl: |
Credit Agreement in twofold HBU General
Credit Provisions General Banking Conditions of HBU Short term Loan Agreement in twofold Text of the Independent Corporate Guarantee |
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
1.
|
Adventure Two S.A., established in Majuro, Marshall Islands, | |||
|
Adventure Three S.A., established in Majuro, Marshall Islands, | |||
|
Adventure Seven S.A., established in Majuro, Marshall Islands, | |||
|
Adventure Eleven S.A., established in Monrovia, Liberia, | (new) | ||
|
hereinafter (together and individually) referred to as the Borrower, | |||
|
||||
2.
|
HOLLANDSCHE BANK-UNIE N.V., having its registered office in Rotterdam, the Netherlands, hereinafter referred to as HBU. |
Facility amount
|
USD | 66,725,000 | (was USD 32,125,000) | ||||||
|
|||||||||
Breakdown of facility amount
|
|||||||||
Overdraft facility I
|
USD | 2,500,000 | |||||||
Overdraft
facility II
|
USD | 1,375,000 | |||||||
Overdraft facility III
|
USD | 3,000,000 | |||||||
Overdraft facility IV
|
USD | 34,600,000 | (new) | ||||||
8-year rollover loan
|
USD | 25,250,000 | (outstanding amount) | ||||||
(principal amount USD 27,000,000)
|
Reduction scheme overdraft facility II
|
[ILLEGIBLE] |
Reduction scheme overdraft facility III
|
(amendment) |
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
Reduction scheme overdraft facility IV
|
(new) |
[ILLEGIBLE]
|
(amendment)
|
Overdraft facility I, II, III and IV
|
(amendment) |
|
Current variable USD debit interest rate, based on the market rate, will be 3.76%. | |
|
||
|
Short term loans: libor+ 1.30%. | |
|
||
|
Short term loans: libor + 1.25%, when Borrower will conclude an IRS or CAP. |
Overdraft facility IV
|
(new) |
|
Upfront fee: | 0.6% of the principal amount |
|
Commitment fee | 0.65% per annum |
|
First preferred mortgage, on the vessel m.v. Voge Katja to be renamed m.v. Free Maverick, registered under the flag of Liberia. IMO number 9157416. Fuller details will be included in the mortgage deed. On this mortgage the laws of Liberia will be applicable. (new) | |
|
||
|
First preferred mortgage of USD 3,700,000 on the vessel m.v. Free Destiny, registered under the flag of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details are included in the mortgage deed. On this mortgage the laws of the Marshall Islands are applicable. | |
|
||
|
Second preferred mortgage on the vessel m.v. Free Destiny, registered under the flag of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details are included in the mortgage deed. On this mortgage the laws of the Marshall Islands are applicable. | |
|
||
|
Third preferred mortgage on the vessel m.v. Free Destiny, registered under the flag
of the Marshall Islands. IMO number 8128157, call letters V7GD9. Fuller details will be
included in the mortgage deed. On this mortgage the laws of the Marshall Islands are
applicable.
(new)
|
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
|
With a view to the continuity of the Borrowers business, HBU deems it necessary that, as from the end 2008: |
|
| the Interest Coverage Ratio of Freeseas Inc. must amount to at least 2.5; | ||
|
||||
|
| the Debt Service Cover Ratio of Freeseas Inc. is not less than 1.1. | ||
|
||||
|
| the Gearing of Freeseas Inc. must amount to maximum 2.5; | ||
|
||||
|
|
out of the Excess Cash of the Borrowers 50% has to be used to save as extra repayment on
overdraft facility IV.
(new)
|
|
All definitions concerning this Credit Agreement are stated in the Appendix B. | |
|
||
|
In case of a sale of the m.v. Free Envoy or the m.v. Free Destiny any outstanding balance under Borrowers | |
|
the corresponding overdraft facility I or II will be fully repaid, | |
|
||
|
the balance will be repaid on the overdraft facility IV, and | |
|
||
|
any remaining balance will be repaid on the rollover loan.
(amendment)
|
|
The vessels will be safely operated and maintained and will in any case always be in class (acceptable IACS members) during the loan period. |
|
Borrower will give HBU a time charter agreement with respect to the new vessel
for inspection. The contents, a contract of at least 1 year at a rate of at least USD 30,000 a
day, must be acceptable to HBU.
(new)
|
|
|
||
|
Borrower will give HBU the time charter agreements for inspection. The contents thereof must be acceptable to HBU. | |
|
||
|
Borrower will give HBU the time charter agreement with respect to the m.v. Free Envoy for inspection.
The contents, a contract of at least 1 year at a rate of at least USD 25,000 a
day, must be acceptable to HBU.
(new)
|
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
Marshall Islands, Majuro,
|
2008 | |||||
|
||||||
/s/
Ion G. Varouxakis
|
/s/ Ion G. Varouxakis
|
|||||
|
||||||
/s/ Ion G. Varouxakis
|
||||||
|
||||||
/s/
|
2008 | |||||
|
||||||
/s/ Ion G. Varouxakis
|
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
|
| any indebtedness for or in respect of indebtedness for borrowed money; | ||
|
||||
|
| any documentary credit facility; | ||
|
||||
|
| any treasury transaction or any other transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and the amount of the financial indebtedness in relation to any such transaction shall be calculated by reference to the marked-to-market valuation of such transaction at the relevant time; and | ||
|
||||
|
| any guarantee, indemnity, bond, standby letter of credit or any other instrument issued in connection |
|
| any decrease in the amount of Working Capital; | ||
|
||||
|
| any cash receipt in respect of any exceptional or extraordinary item (including, without limitation, the proceeds of the sale of any assets other than material part of the business disposal proceeds or the proceeds from the disposal of a material asset); | ||
|
||||
|
| any increase in provisions, other non-cash debits and other non-cash charges taken into account in establishing Consolidated EBITDA; |
|
| any amount of Capital Expenditure actually made by FreeSeas Inc.; | ||
|
||||
|
| any increase in the amount of Working Capital; | ||
|
||||
|
| any cash payment in respect of any exceptional or extraordinary item; | ||
|
||||
|
| any amount actually paid or due and payable in respect of taxes on the profits of FreeSeas Inc.; | ||
|
||||
|
| any decrease in provisions and other non-cash credits taken into account in establishing Consolidated EBITDA; |
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
|
| gross interest and arrangement fee on any form of such Financial Indebtedness which has accrued as an obligation of FreeSeas Inc. during that Relevant Period, including the interest element of finance leases; and | ||
|
||||
|
| the consideration given by FreeSeas Inc. during that Relevant Period by way of discount in connection with such Financial Indebtedness by way of acceptance credit, bill discounting or other like arrangement. |
|
| Net Interest Expense for such Relevant Period; and | ||
|
||||
|
| all scheduled repayments of capital or principal under the terms of any Financial Indebtedness of FreeSeas Inc. (excluding any Financial Indebtedness owed by FreeSeas Inc. to any other member of FreeSeas Inc.) in each case which fall due during that Relevant Period. |
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
|
HOLLANDSCHE BANK-UNIE N.V. | |
|
||
|
Handelsregister K. v.K. Rotterdam nr 33259495 | |
|
||
|
B.T.W. ident nr. NL 00.30.27.144,B01 |
Private & Confidential |
Clause | Page |
1 Definitions
|
3 | |||
|
||||
2 Agreement of Bank
|
4 | |||
|
||||
3 Amendments to Principal Agreement
|
5 | |||
|
||||
4 Representations and warranties
|
5 | |||
|
||||
5 Conditions
|
6 | |||
|
||||
6 Relevant Parties confirmation
|
6 | |||
|
||||
7 Fees and Expenses
|
7 | |||
|
||||
8 Miscellaneous and notices
|
7 | |||
|
||||
9 Applicable law
|
7 | |||
|
||||
Schedule 1 Documents and evidence required as conditions precedent
|
9 | |||
|
||||
Schedule 2 Form of Amended and Restated Facility Agreement
|
11 | |||
|
||||
Schedule 3 Form of Mortgage Addendum
|
60 |
(1) | FREESEAS INC., a company incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960 (the Borrower); | |
(2) | ADVENTURE FIVE S.A. {the Free Goddess Owner), ADVENTURE SIX S.A. (the Free Hero Owner) and ADVENTURE EIGHT S.A. (the Free Jupiter Owner and, together with the Free Goddess Owner and the Free Hero Owner, the Initial Owners), each a company incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960; | |
(3) | FREE BULKERS S.A. a company incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH96960 (the Manager); and | |
(4) | CREDIT SUISSE, a company incorporated in Switzerland with its registered office at Paradeplatz 8, 8070 Zurich, Switzerland acting for the purposes of this Agreement through its branch at St. Alban-Graben 1-3, 4002 Basel. Switzerland (the Bank). |
(A) | this Agreement is supplemental to a facility agreement dated 24 December 2007 (the Principal Agreement) made between the Borrower and the Bank pursuant to which the Bank agreed to make a reducing revolving credit facility of up to $87,000,000 Dollars available to the Borrower upon the terms and conditions set out therein; and | |
(B) | this Agreement now sets out the terms and conditions upon which the Bank shall, at the request of the Borrower, provide its consent to (inter alia): |
(a) | the increase of the Commitment by the amount of $4,000,000 to a total amount of $91,000,000; | ||
(b) | the consolidation of the Additional Tranches into one Additional Tranche and the increase of the aggregate amount of such Additional Tranche by the amount of $4,000,000 to a total amount of $42,300,000; and | ||
(c) | certain other amendments to the Principal Agreement. |
1 | Definitions |
1.1 | Defined expressions |
Words and expressions defined in the Principal Agreement shall unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Agreement. |
1.2 | Definitions | |
In this Agreement, unless the context otherwise requires: | ||
Effective Date means the date, being no later than 31 July 2008, on which the Bank notifies the Borrower in writing that the Bank has received the documents and evidence specified in clause 5 and schedule 1 in a form and substance satisfactory to it; | ||
Facility Agreement means the Principal Agreement as amended and restated by this Agreement; | ||
Free Goddess Mortgage Addendum means the addendum executed or {as the context may require) to be executed by the Free Goddess Owner in favour of the Bank substantially in the form set out in schedule 3 and supplemental to the Mortgage dated 28 December 2007 executed by the Free Goddess Owner in favour of the Bank; |
1
Free Hero Mortgage Addendum means the addendum executed or (as the context may require) to be executed by the Free Hero Owner in favour of the Bank substantially in the form set out in schedule 3 and supplemental to the Mortgage dated 28 December 2007 executed by the Free Hero Owner in favour of the Bank; | ||
Free Jupiter Mortgage Addendum means the addendum executed or (as the context may require) to be executed by the Free Jupiter Owner in favour of the Bank substantially in the form set out in schedule 3 and supplemental to the Mortgage dated 14 April 2008 executed by the Free Jupiter Owner in favour of the Bank; | ||
Mortgage Addenda means, together, the Free Goddess Mortgage Addendum, the Free Hero Mortgage Addendum and the Free Jupiter Mortgage Addendum and Mortgage Addendum means any of them; | ||
Relevant Documents means this Agreement and the Mortgage Addenda; and | ||
Relevant Parties means the Borrower, the Initial Owners, the Manager or, where the context so requires or permits, means any or all of them. |
1.3 | Principal Agreement | |
References in the Principal Agreement to this Agreement shall, with effect from the Effective Date and unless the context otherwise requires, be references to the Principal Agreement as amended and restated by this Agreement and words such as herein, hereof, hereunder, hereafter, hereby and hereto, where they appear in the Principal Agreement, shall be construed accordingly. | ||
1.4 | Headings | |
Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. | ||
1.5 | Construction of certain terms | |
Clause 1.4 of the Principal Agreement shall apply to this agreement (mutatis mutandis) as if set out herein and as if references therein to this Agreement were references to this Agreement. |
2 | Agreement of Bank |
The Bank, relying upon the representations and warranties made by each of the Relevant Parties in clause 4, agree with the Borrower that, subject to the terms and conditions of this Agreement and in particular, but without prejudice to the generality of the foregoing, fulfilment on or before 31 July 2008 of the conditions contained in clause 5 and schedule 1, the Bank agrees to the increase of the Commitment by the amount of $4,000,000 to a total amount of $91,000,000, the other matters referred to in Recital (B) and to the amendment of the Principal Agreement on the terms set out in clause 3. |
2
3 | Amendments to Principal Agreement |
3.1 | Amendments | |
The Principal Agreement shall, with effect on and from the Effective Date, be {and it is hereby) amended so as to read in accordance with the form of the amended and restated Facility Agreement set out in schedule 2 and (as so amended) will continue to be binding upon each of the Bank and the Borrower in accordance with its terms as so amended and restated. | ||
3.2 | Continued force and effect | |
Save as amended and restated by this Agreement, the provisions of the Principal Agreement shall continue in full force and effect and the Principal Agreement and this Agreement shall be read and construed as one instrument. |
Each of the Relevant Parties represents and warrants to the Bank that: |
4.1.1 | Existing representations and warranties | |
the representations and warranties set out in clause 7 of the Principal Agreement, clause 4 of each Owners Guarantee and clause 3 of each Managers Undertaking were true and correct on the date of the Principal Agreement and are true and correct, including to the extent that they may have been or shall be amended by this Agreement, as if made at the date of this Agreement with reference to the facts and circumstances existing at such date; | ||
4.1.2 | Corporate power | |
each of the Relevant Parties has power to execute, deliver and perform its obligations under the Relevant Documents to which it is or is to be a party; all necessary corporate, shareholder and other action has been taken by each of the Relevant Parties to authorise the execution, delivery and performance of the Relevant Documents to which it is or is to be a party; | ||
4.1.3 | Binding obligations | |
the Relevant Documents to which it is or is to be a party constitute valid and legally binding obligations of each of the Relevant Parties enforceable in accordance with their terms; | ||
4.1.4 | No conflict with other obligations | |
the execution, delivery and performance of the Relevant Documents to which it is or is to be a party by each of the Relevant Parties will not (i) contravene any existing law, statute, rule or regulation or any judgment, decree or permit to which any of the Relevant Parties is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which any of the Relevant Parties is a party or is subject or by which it or any of its property is bound or (iii) contravene or conflict with any provision of the constitutional documents of any of the Relevant Parties or (iv) result in the creation or imposition of or oblige any of the Relevant Parties to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertaking, assets, rights or revenues of any of the Relevant Parties; | ||
4.1.5 | No filings required | |
save for the registration of the Mortgage Addenda with the relevant Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Relevant Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to the Relevant Documents and each of the Relevant Documents is in proper form for its enforcement in the courts of each Relevant Jurisdiction; | ||
4.1.6 | Choice of law |
3
the choice of English law to govern this Agreement and the choice of the laws of the Republic of the Marshall Islands to govern the Mortgage Addenda and the submissions by the Relevant Parties to the non-exclusive jurisdiction of the English courts, are valid and binding; and |
4.1.7 | Consents obtained | |
every consent, authorisation, licence or approval of, or registration or declaration to, governmental or public bodies or authorities or courts required by any of the Relevant Parties in connection with the execution, delivery, validity, enforceability or admissibility in evidence of the Relevant Documents to which it is or will become a party or the performance by any of the Relevant Parties of their respective obligations under such documents has been obtained or made and is in full force and effect and there has been no default in the observance of any conditions or restrictions (if any) imposed in, or in connection with, any of the same. | ||
4.2 | Repetition of representations and warranties | |
Each of the representations and warranties contained in clause 4,1 of this Agreement, clause 4 of each Owners Guarantee, clause 3 of each Managers Undertaking and clause 7 of the form of the amended and restated Facility Agreement set out in schedule 2 shall be deemed to be repeated by each of the Relevant Parties on the Effective Date as if made with reference to the facts and circumstances existing on such day. |
5 | Conditions |
5.1 | Documents and evidence | |
The agreement of the Bank referred to in clause 2 shall be subject to the receipt by the Bank or its duly authorised representative of the documents and evidence specified in schedule 1 in form and substance satisfactory to the Bank. | ||
5.2 | General conditions precedent | |
The agreement of the Bank referred to in clause 2 shall be further subject to: | ||
5.2.1 | the representations and warranties in clause 4 being true and correct on the Effective Date as if each was made with respect to the facts and circumstances existing at such time; and | |
5.2.2 | no Default having occurred and continuing at the time of the Effective Date. | |
5.3 | Waiver of conditions precedent | |
The conditions specified in this clause 5 are inserted solely for the benefit of the Bank and may be waived by the Bank in whole or in part with or without conditions. |
6 | Relevant Parties confirmation |
Each of the Relevant Parties hereby confirms its consent to the amendments to the Principal Agreement contained in this Agreement and agrees that: |
6.1 | each of the Security Documents to which it is a party, and its obligations thereunder, shall remain in full force and effect notwithstanding the amendments made to the Principal Agreement by this Agreement (including, without limitation, the increase of the Commitment as provided herein and in the Facility Agreement); | |
6.2 | its obligations under the relevant Security Documents to which it is a party includes any and all amounts owing by the Borrower under the Principal Agreement as amended and restated by this Agreement including, without limitation, any amounts of principal advanced by the Bank to the Borrower as a result of the increase of the Commitment to $91,000,000, interest and commitment commission thereon and any other amounts whatsoever owing by the Borrower under the Principal Agreement as amended and restated by this Agreement; and | |
6.3 | with effect from the Effective Date, references to the Agreement or the Facility Agreement or the the Loan Agreement in any of the Security Documents to which it is a party shall henceforth be references to the Principal Agreement as amended and restated by this Agreement and as from time to time hereafter amended. |
4
7 | Fees and Expenses |
7.1 | Expenses | |
The Borrower agrees to pay to the Bank on a full indemnity basis on demand all expenses (including legal and out-of-pocket expenses) incurred by the Bank: | ||
7.1.1 | in connection with the negotiation, preparation, execution and, where relevant, registration of this Agreement and the other Relevant Documents and of any amendment or extension of or the granting of any waiver or consent under this Agreement or the other Relevant Documents; and | |
7.1.2 | in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under this Agreement or the other Relevant Documents or otherwise in respect of the monies owing and obligations incurred under this Agreement and the other Relevant Documents, | |
together with interest at the rate referred to in clause 3.2 of the Principal Agreement from the date on which such expenses were incurred to the date of payment (as well after as before judgment). | ||
7.2 | Value Added Tax | |
All expenses payable pursuant to this clause 7 shall be paid together with value added tax or any similar tax (if any) properly chargeable thereon. | ||
7.3 | Stamp and other duties | |
The Borrower agrees to pay to the Bank on demand all stamp, documentary, registration or other like duties or taxes (including any duties or taxes payable by the Bank) imposed on or in connection with this Agreement and the other Relevant Documents and shall indemnify the Bank against any liability arising by reason of any delay or omission by the Borrower to pay such duties or taxes. | ||
7.4 | Fee | |
The Borrower shall pay to the Bank on the date of this Agreement an arrangement fee in the amount of $30,000. |
8 | Miscellaneous and notices | |
8.1 | Notices |
The provisions of clause 15.1 of the Principal Agreement shall extend and apply to the giving or making of notices or demands hereunder as if the same were expressly stated herein. |
8.2 | Counterparts | |
This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, each of which when so executed and delivered shall be an original but all counterparts shall together constitute one and the same instrument. |
9 | Applicable law |
9.1 | Law | |
This Agreement is governed by, and shall be construed in accordance with, English law. | ||
9.2 | Submission to jurisdiction |
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Each of the Relevant Parties agrees, for the benefit of the Bank, that any legal action or proceedings arising out of or in connection with this Agreement against any of the Relevant Parties or any of its assets may be brought in the English courts. Each of the Relevant Parties irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Messrs Atlas Maritime Services Ltd. at present of Enterprise House, 113-115 George Lane, London E18 1AB, England to receive for it and on its behalf, service of process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Relevant Parties in the courts of any other competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the Courts of England and not those of any other State shall have jurisdiction to determine any claim which any of the Relevant Parties may have against the Bank arising out of or in connection with this Agreement. |
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1 | Corporate authorisation | |
In relation to each of the Relevant Parties: |
(a) | Constitutional documents | ||
copies certified by an officer of each of the Relevant Parties, as a true, complete and up to date copies, of ail documents which contain or establish or relate to the constitution of that party or a secretarys certificate confirming that there have been no changes or amendments to the constitutional documents certified copies of which were previously delivered to the Bank pursuant to the Principal Agreement; | |||
(b) | Resolutions | ||
copies of resolutions of each of its board of directors and its shareholders approving such of the Relevant Documents to which it is or is to be a party and the terms and conditions hereof and thereof and authorising the signature, delivery and performance of each such partys obligations thereunder, certified (in a certificate dated no earlier than fifteen (15) Banking Days prior to the date of this Agreement) by an officer of the Relevant Parties: |
(1) | being true and correct; | ||
(2) | being duly passed at meetings of the directors of such Relevant Party and of the shareholders of such Relevant Party each duly convened and held; | ||
(3) | not having been amended, modified or revoked; and | ||
(4) | being in full force and effect |
together with originals or certified copies of any powers of attorney issued by any party pursuant to such resolutions; and |
(c) | Certificate of incumbency | ||
a list of directors and officers of each Relevant Party specifying the names and positions of such persons, certified (in a certificate dated no earlier than fifteen (15) Banking Days prior to the date of this Agreement) by an officer of such Relevant Party to be true, complete and up to date; |
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2 | Mortgage Addenda | |
the Mortgage Addenda, each duly executed by the relevant Initial Owner; | ||
3 | Consents | |
a certificate (dated no earlier than fifteen (15) Banking Days prior to the date of this Agreement) from an officer of each of the Relevant Parties stating that no consents, authorisations, licences or approvals are necessary for such Relevant Party to authorise, or are required by each of the Relevant Parties or any other party (other than the Bank) in connection with, the execution, delivery and performance of the Relevant Documents to which they are or will be a party; | ||
4 | Legal opinions | |
an opinion of Messrs Reeder & Simpson, special legal advisers on matters of Marshall Island law to the Bank; | ||
5 | Fees | |
payment by the Borrower of the fee payable by the Borrower to the Bank under clause 7.4; and | ||
6 | Process agent | |
an original or certified true copy of a letter from each of the Relevant Parties agent for receipt of service of proceedings accepting its appointment under this Agreement or any other Relevant Document as each of the Relevant Parties process agent. |
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9
FACILITY AGREEMENT for a
Reducing Revolving Credit Facility of up to US$91,000,000 to FREESEAS INC. provided by CREDIT SUISSE |
NORTON ROSE |
Clause | Page |
1 Purpose and definitions
|
1 | |||
|
||||
2 The Commitment and the Advances
|
12 | |||
|
||||
3 Interest
|
13 | |||
|
||||
4 Repayment, reduction and cancellation
|
15 | |||
|
||||
5 Fees, commission and expenses
|
19 | |||
|
||||
6 Payments and taxes; accounts and calculations
|
19 | |||
|
||||
7 Representations and warranties
|
20 | |||
|
||||
8 Undertakings
|
24 | |||
|
||||
9 Conditions
|
29 | |||
|
||||
10 Events of Default
|
30 | |||
|
||||
11 Indemnities
|
34 | |||
|
||||
12 Unlawfulness and increased costs
|
35 | |||
|
||||
13 Security and set-off
|
36 | |||
|
||||
14 Assignment, transfer and lending office
|
37 | |||
|
||||
15 Notices and other matters
|
38 | |||
|
||||
16 Governing law and jurisdiction
|
39 | |||
|
||||
Schedule 1 Form of Drawdown Notice
|
41 | |||
|
||||
Schedule 2 Documents and evidence required as conditions precedent to the Commitment being
made available
|
42 | |||
|
||||
Schedule 3 Form of Owners Guarantee
|
55 | |||
|
||||
Schedule 4 Form of Mortgage
|
56 | |||
|
||||
Schedule 5 Form of General Assignment
|
57 | |||
|
||||
Schedule 6 Form of Managers Undertaking
|
58 | |||
|
||||
Schedule 7 Form of Charter Assignment
|
59 |
1 | Purpose and definitions | |
1.1 | Purpose | |
This Agreement sets out the terms and conditions upon and subject to which the Bank agrees to make available to the Borrower a reducing revolving credit facility of up to Ninety one million Dollars ($91,000,000) for the purpose of: |
(a) | assisting the Borrower in advancing intra-Group loans to the Initial Owners for the purpose of refinancing in full the Initial Owners existing Indebtedness secured on the Initial Ships; and | ||
(b) | assisting the Borrower in advancing an intra-Group loan to the Additional Owner for the acquisition by it of the Additional Ship. |
1.2 | Definitions | |
In this Agreement, unless the context otherwise requires: | ||
Additional Charter means a time charter or other contract of employment in respect of the Additional Ship entered into or (as the context may require) to be entered into by the Additional Owner, as owner, and with such person or company acceptable to the Bank in its discretion, as charterer, and which shall meet the following requirements: |
(a) | it has a minimum tenor (without taking into account any options to extend) eighteen (18) months commencing from the drawdown of the first Advance to be drawn down under the Additional Tranche; and | ||
(b) | it provides for a minimum net daily charter hire in all respects acceptable to the Bank; and | ||
(c) | it is otherwise on such other terms and conditions, as shall be in all respects acceptable to the Bank; |
Additional Funds Repayment Date means, subject to clause 6.3, the date falling six (6) months after the Drawdown Date of the first Advance to be drawn down under the Additional Tranche; | ||
Additional Owner means, Adventure Ten S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title; | ||
Additional Ship means the motor vessel Snow Falcon, a 50,246 dwt 2003-built bulk carrier owned on the date of this Agreement by the Seller and registered under the laws and flag of Singapore with IMO Number 9266188 and to be registered on the Delivery Date in the ownership of the Additional Owner through the relevant Registry under the laws and flag of the relevant Flag State with the name Free Lady, |
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Additional Tranche means the Tranche of up to $42,300,000 which is made or (as the context may require) to be made available to the Borrower for the purpose of assisting the Borrower in advancing an intra-Group loan to the Additional Owner for the acquisition by it of the Additional Ship; | ||
Advance means, in relation to a Tranche and the part of the Commitment relating thereto, each borrowing by the Borrower of a portion of such part of the Commitment or (as the context may require) the principal amount of such borrowing for the time being outstanding and Advances means any or all of them; | ||
Applicable Accounting Principles means generally accepted international accounting principles and practices; | ||
Assignee has the meaning ascribed thereto in clause 14.3; | ||
Availability Period means the period commencing on the date of this Agreement and ending on the earlier of (a) the date falling three (3) months prior to the Final Maturity Date, (b) the date on which the Commitment is reduced to zero pursuant to clauses 4.4, 10.2 or 12 and (c) the date on which the Commitment is cancelled in full pursuant to clause 4.7; | ||
Available Amount means, at any relevant time and in relation to a Tranche, the amount by which the part of the Commitment relating to such Tranche exceeds the aggregate of all Advances of such Tranche outstanding at such time; | ||
Bank means Credit Suisse, a company incorporated in Switzerland with its registered office at Paradeplatz 8, 8070 Zurich, Switzerland acting for the purposes of this Agreement through its branch at St. Alban-Graben 1-3, 4002 Basel, Switzerland (or of such other address as may last have been notified to the other parties to this Agreement pursuant to clause 15.1.3) and includes its successors in title, Assignees or Transferees; | ||
Banking Day means a day on which dealings in deposits in Dollars are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London (England), Athens (Greece), Basel (Switzerland) and New York City (U.S.A.) (or any other relevant place of payment under clause 6); | ||
Borrowed Money means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange contracts, futures and other derivatives, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person failing within any of (i) to (viii) above; | ||
Borrower means FreeSeas Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title; | ||
Borrowers Security Documents means, at any relevant time, such of the Security Documents as shall have been executed by the Borrower at such time; | ||
Charter Assignment means, in relation to a Ship, a first priority specific assignment of any Security Charter of such Ship executed or (as the context may require) to be executed by the relevant Owner in favour of the Bank in the form set out in schedule 7 and Charter Assignments means any of all of them; | ||
Charterer means, in relation to a Security Charter, such person as shall be acceptable to the Bank which is the charterer of the relevant Ship under such Security Charter; | ||
Charters means: |
(a) | in relation to an Initial Ship, the Initial Charter relating to such Initial Ship; or |
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(b) | in relation to the Additional Ship, the Additional Charter, |
and Charter means any or all of them; |
Classification means, in relation to a Ship, the highest class available to a vessel of that Ships type with the relevant Classification Society or such other classification as the Bank shall, at the request of the Owner of such Ship, has agreed in writing shall be treated as the Classification in relation to such Owners Ship for the purposes of the relevant Ship Security Documents; | ||
Classification Society means, in relation to a Ship, such classification society (being a member of the International Association of Classification Societies (lACS)) which the Bank shall, at the request of an Owner, agree in writing shall be treated as the Classification Society in relation to such Owners Ship for the purposes of the relevant Ship Security Documents; | ||
Code means the International Management Code for the Safe Operation of Ships and for Pollution Prevention constituted pursuant to Resolution A. 741 (18) of the International Maritime Organisation and incorporated into the International Convention for the Safety of Life at Sea 1974 (as amended) and includes any amendments or extensions thereto and any regulation issued pursuant thereto; | ||
Commitment means the aggregate amount which the Bank has agreed to lend to the Borrower under clause 2.1 under all Tranches as reduced or cancelled by any relevant term of this Agreement and: |
(a) | in respect of the Initial Tranche, means $48,700,000; | ||
(b) |
in respect of the Additional Tranche, means $42,300,000,
|
||
in each case as reduced or cancelled by any relevant term of this Agreement; |
Compulsory Acquisition means, in relation to a Ship, requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of such Ship by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; | ||
Confirmation shall have, in relation to any continuing Designated Transaction, the meaning given to it in the Master Swap Agreement; | ||
Contract means, in respect of the Additional Ship, the memorandum of agreement dated 10 March 2008 made between the Seller and the Additional Owner as amended and supplemented by Addendum No. 1 thereto dated 21 May 2008 made between the Seller and the Additional Owner, relating to the sale by the Seller and the purchase by the Additional Owner of the Additional Ship; | ||
Contact Price means the purchase price for the Additional Ship payable under the Contract, being Sixty five million two hundred thousand Dollars ($65,200,000) or such other lower amount determined by the Bank to be the purchase price for the Additional Ship pursuant to the Contract; | ||
Default means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default; | ||
Delivery Date means the date on which the Additional Ship is delivered to, and accepted by, the Additional Owner under the Contract; |
3
Designated Transaction means a Transaction which is entered into by the Borrower with the Bank as contemplated by clause 2.7; | ||
DOC means a document of compliance issued to an Operator in accordance with rule 13 of the Code; | ||
Dollars and $ mean the lawful currency of the United States of America and, in respect of all payments to be made under any of the Security Documents, mean funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other U.S. dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in U.S. dollars); | ||
Drawdown Date means, in relation to each Advance, any date, being a Banking Day falling within the Availability Period, on which an Advance is, or is to be, made available; | ||
Drawdown Notice means, in relation to each Advance, a notice substantially in the form of schedule 1 in respect of such Advance; | ||
Early Termination Date shall have, in relation to any continuing Designated Transaction, the meaning given to it in the Master Swap Agreement; | ||
Earnings means, in relation to a Ship, all moneys whatsoever from time to time due or payable to the Owner owning such Ship during the Security Period arising out of the use or operation of such Ship including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising under pooling arrangements, compensation payable to the Owner of such Ship in the event of the requisition of such Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (of payments for variation or termination) of any charterparty or other contract for the employment of such Ship; | ||
Encumbrance means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest or other encumbrance of any kind securing any obligation of any person or any type of preferential arrangement (including without limitation title transfer and/or retention arrangements) having a similar effect; | ||
Environmental Affiliate means any agent or employee of any Security Party or any other Relevant Party or any person having a contractual relationship with a Security Party or any other Relevant Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship; | ||
Environmental Approval means any consent, authorisation, licence or approval of any governmental or public body or authorities or courts applicable to any Relevant Ship or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from such Relevant Ship required under any Environmental Law; | ||
Environmental Claim means any and all enforcement, clean-up, removal or other governmental or regulatory actions or orders instituted or completed pursuant to any Environmental Law or any Environmental Approval together with claims made by any third party relating to damage, contribution, loss or injury, resulting from any actual or threatened emission, spill, release or discharge of a Pollutant from any Relevant Ship; | ||
Environmental Laws means all national, international and state laws, rules, regulations, treaties and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human health or the environment including, without limitation, the carriage of Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants; | ||
Event of Default means any of the events or circumstances described in clause 10.1; | ||
Final Maturity Date means 31 October 2015; | ||
First
Reduction Date
means 31 January 2008;
Flag State means: |
(a) | in relation to each Initial Ship, the Marshall Islands; or | ||
(b) | in relation to the Additional Ship, the Republic of Liberia, |
4
or, in each case, such other state or territory designated in writing by the Bank at the request of an Owner, as being the Flag State of such Owners Ship for the purposes, of the relevant Ship Security Documents; | ||
Free Goddess means the motor vessel Free Goddess, a 1995-built, 22,051 dwt bulk carrier, registered in the ownership of the Free Goddess Owner under the laws and flag of the relevant Flag State under Official Number 3030; | ||
Free Goddess Owner means Adventure Five S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title; | ||
Free Wero means the motor vessel Free Hero, a 1995-built, 24,318 dwt bulk carrier registered in the ownership of the Free Hero Owner under the laws and flag of the relevant Flag State under Official Number 2540; | ||
Free Hero Owner means Adventure Six S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title; | ||
Free Jupiter means the motor vessel Free Jupiter, a 2002-built, 47,777 dwt bulk carrier, registered in the ownership of the Free Jupiter Owner under the laws and flag of the relevant Flag State under Official Number 2506; | ||
Free Jupiter Owner means Adventure Eight S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title; | ||
General Assignment means: |
(a) | in relation to each Initial Ship, each general assignment dated 28 December 2007 or (in the case of Free Jupiter 14 April 2008, executed by the relevant Owner in favour of the Bank; or | ||
(b) | in relation to the Additional Ship, a general assignment executed or (as the context may require) to be executed by the Additional Owner in favour of the Bank in the form set out in schedule 5, |
and General Assignments means any or all of them; | ||
Government Entity means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; | ||
Group means, together, the Borrower and its Subsidiaries from time to time (which, for the avoidance of doubt, shall include the Owners and the Manager) and member of the Group shall be construed accordingly; | ||
Indebtedness means any obligation for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent; | ||
Initial Charter means: |
(a) | in relation to Free Goddess, the charterparty contract made between the Free Goddess Owner and Navision Shipping Company A.S. as charterer (the Free Goddess Charterer) to be documented in a BHTME form time charterparty to be entered into between the Free Goddess Owner and the Free Goddess Charterer which contract is, as of 24 December 2007, incorporated in a final fixture recap agreed between the parties dated 23 August 2007; | ||
(b) | in relation to Free Hero, the charterparty dated 4 December 2006 and made between (1) Ocean Phoenix Shipping Ltd. (the Original Owner) and (2) Armada Pacific Carriers (Singapore) Pte. Ltd. as charterer (the Free Hero Charterer) as amended and novated by a tripartite agreement dated 4 May 2007 and made between the Free Hero Owner, the Original Owner and the Free Hero Charterer; or |
5
(c) | in relation to Free Jupiter, the charterparty contract made between (1) Korea Line Corporation (the Free Jupiter Charterer) and (2) the Free Jupiter Owner to be documented in a BHPTIME form time charterparty to be entered into between the Free Jupiter Owner and the Free Jupiter Charterer which contract is, as of 24 December 2007, incorporated in a confirmation email dated 26 June 2006 from the Free Jupiter Charterers brokers (Falcon Enterprises Inc.), addressed to the Free Jupiter Owner and responding to the Free Jupiter Owners message recapitulating the relevant fixture recap, |
and Initial Charters means any or all of them; | ||
Initial Owner means: |
(a) | in relation to Free Goddess, the Free Goddess Owner; | ||
(b) | in relation to Free Hero, the Free Hero Owner; or | ||
(c) | in relation to Free Jupiter, the Free Jupiter Owner, |
and Initial Owners means any or all of them; | ||
Initial Ship means: |
(a) | in relation to the Free Goddess Owner, Free Goddess; | ||
(b) | in relation to the Free Hero Owner, Free Hero; or | ||
(c) | in relation to the Free Jupiter Owner, Free Jupiter, |
and Initial Ships means any or all of them; | ||
Initial Tranche means the Tranche of up to $48,700,000 made or (as the context may require) to be made available to the Borrower for the purpose of assisting the Borrower in advancing intra-Group loans to the Initial Owners for the refinancing in full of the existing Indebtedness of the Initial Owners secured on the Initial Ships; | ||
Insurances means, in relation to a Ship, all policies and contracts of insurance (which expression includes all entries of such Ship in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of the Owner of such Ship (whether in the sole name of such Owner, or in the joint names of such Owner and the Bank or otherwise) in respect of such Ship and her Earnings or otherwise howsoever in connection with such Ship and all benefits thereof (including claims of whatsoever nature and return of premiums); | ||
Interest Payment Date means the last day of an Interest Period; | ||
Interest Period means, in relation to an Advance, each period for the calculation of interest in respect of such Advance ascertained in accordance with clauses 3.2 and 3.3; | ||
ISPS Code means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924{22) of the International Maritime Organization now set out in Chapter XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic conference of the International Maritime Organisation on Maritime Security in December 2002 and includes any amendments or extensions thereto and any regulation issued pursuant thereto; | ||
ISSC means, in relation to a Ship, an International Ship Security Certificate issued in respect of such Ship pursuant to the ISPS Code; | ||
LIBOR means, in relation to any amount and for any period, the offered rate (if any) for deposits of Dollars for such amount and for such period which is: |
(a) | the rate for such period, appearing on Reuters page LIBOR 01 (British Bankers Association Interest Settlement Rates) (or such other page as may replace such page LIBOR 01 on such |
6
system or on any other system of the information vendor for the time being designated by the British Bankers Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers Associations Recommended Terms and Conditions (BBAIRS terms), at or about 11:00 a.m. (London time) on the Quotation Date; or | |||
(b) | if on such date no such rate is displayed, the Banks offered rate for deposits of Dollars in an amount approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such period to prime banks in the London Interbank Market at or about 11:00 a.m. (London time) on the Quotation Date for such period; |
Loan means the aggregate principal amount owing to the Bank under this Agreement at any relevant time; | ||
Management Agreement means: |
(a) | in relation to each Initial Ship, the management agreement dated 1 May 2007 made between the relevant Initial Owner and the Manager in respect of that Ship; or | ||
(b) | in relation to the Additional Ship, the management agreement made or (as the context may require) to be made between the Additional Owner and the Manager in respect of that Ship in a from previously agreed in writing by the Bank, |
in each case, providing for (inter alia) the Manager to carry out the technical and commercial management of the relevant Ship and Management Agreements means any or all of them; | ||
Manager means, in relation to a Ship, Free Bulkers S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, or such other person or persons as may be appointed from time to time as technical and commercial manager of such Ship with the prior written consent of the Bank and includes its successors in title; | ||
Managers Undertaking means: |
(a) |
in relation to each Initial Ship, the undertaking and assignment in respect of
that Initial Ship dated 28 December 2007
or (in respect of Free Jupiter) 14 April 2008 executed by the Manager in favour of the Bank; |
||
(b) |
in relation to the Additional Ship, the undertaking and assignment executed or
(as the context may require) to be
executed by the Manager in favour of the Bank, in the form set out in schedule 6, |
and Managers Undertakings means any or all of them; | ||
Margin means: |
(a) | subject to paragraph (b) below, one point two five per cent (1.25%) per annum; or | ||
(b) | for any period determined by the Bank during which the Security Value is higher than one hundred and sixty seven per cent (167%) of the aggregate of (i) the Loan and (ii) the Swap Exposure minus (iii) any balance then standing to the credit of Security Accounts, one per cent (1%) per annum; |
Master Agreement Security Deed means the security deed dated 24 December 2007 executed by the Borrower in favour of the Bank; | ||
Master Swap Agreement means the agreement dated 24 December 2007 made between the Bank and the Borrower comprising a 2002 ISDA Master Agreement (including the Schedule) and includes any Designated Transactions from time to time entered into and any Confirmations from time to time exchanged thereunder and governed thereby; | ||
month means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (a) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (b) if such numerically corresponding day is not a Banking Day, the period shall end on the next following |
7
Banking Day in the same calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and months and monthly shall be construed accordingly; |
Mortgage means: |
(a) | in relation to each Initial Ship, the first preferred Marshall Islands mortgage over that Initial Ship dated 28 December 2007 or (in respect of Free Jupiter) 14 April 2008 executed by the relevant Initial Owner in favour of the Bank; | ||
(b) | in relation to the Additional Ship, the first preferred Liberian mortgage executed or (as the context may require) to be executed by the Additional Owner in favour of the Bank in the form set out in schedule 4, |
and Mortgages means any or all of them; | ||
Mortgage Addendum means, in relation to each Initial Ship, the addendum executed or (as the context may require) to be executed by the relevant Initial Owner in favour of the Bank in the form set out in schedule 3 to the Supplemental Agreement and supplemental to the relevant Mortgage and Mortgage Addenda means any or all of them; | ||
Mortgaged Ship means, at any relevant time, any Ship which is at such time subject to a Mortgage and/or the Earnings, Insurances and Requisition Compensation of which are subject to an Encumbrance pursuant to the relevant Ship Security Documents and a Ship shall for the purposes of this Agreement be deemed to be a Mortgaged Ship as from the date that the Mortgage of that Ship shall have been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the payment in full of the amount required by the Bank to be paid pursuant to clause 4.4 following the sale or Total Loss of such Ship and (ii) the date on which all moneys owing under the Security Documents have been repaid in full; | ||
Operating Account means, in relation to each Owner and its Ship, a Dollar account of that Owner opened or (as the context may require) to be opened with the Bank and includes any sub-accounts thereof and any other account designated in writing by the Bank to be an Operating Account for that Owner and its Ship and Operating Accounts means any or all of them; | ||
Operating Account Pledge means, in relation to each Operating Account, a first priority account pledge over (inter alia) that Operating Account, executed or (as the context may require) to be executed by the relevant Owner and the Bank in such form as the Bank may require in its sole discretion and Operating Account Pledges means any or all of them; | ||
Operator means any person who is from time to time during the Security Period concerned in the operation of a Ship and falls within the definition of Company set out in rule 1.1.2 of the Code; | ||
Owner means, in relation to a Ship, the Owner of that Ship and it includes each Initial Owner and the Additional Owner and Owners means any or all of them; | ||
Owners Guarantee means: |
(a) | in relation to each Initial Owner, the guarantee dated 28 December 2007 or (in respect of Free Jupiter) 14 April 2008 executed by that Initial Owner in favour of the Bank; or | ||
(b) | in relation to the Additional Owner, the guarantee executed or (as the context may require) to be executed by the Additional Owner in favour of the Bank in the form set out in schedule 3, |
and Owners Guarantees means all of them; | ||
Permitted Encumbrance means any Encumbrance in favour of the Bank created pursuant to the Security Documents and Permitted Liens; | ||
Permitted Liens means, in relation to a Ship, any lien on such Ship for masters, officers or crews wages outstanding in the ordinary course of trading, any lien for salvage, and any ship repairers or outfitters possessory lien for a sum not (except with the prior written consent of the Bank) exceeding the Casualty Amount (as defined in the Ship Security Documents for such Ship) for such Ship; |
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Pollutant means and includes pollutants, contaminants, toxic substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the United States Comprehensive Environmental Response, Compensation and Liability Act 1980; | ||
Quotation Date means, in relation to any period for which LIBOR is to be determined under this Agreement, the day falling two (2) Banking Day before the first day of such period, unless market practice differs in the London Interbank Market, which case the Quotation Date will be determined by the Bank in accordance with market practice in the London Interbank Market; | ||
Reduction Dates means, subject to clause 6.3: |
(a) | in relation to the Initial Tranche (and the part of the Commitment relating thereto), the First Reduction Date and each of the dates falling at three (3) monthly intervals thereafter up to and including the Final Maturity Date; | ||
(b) | in relation to the Additional Tranche (and the part of the Commitment relating thereto); |
(i) | each of the dates falling at one (1) monthly intervals after the Drawdown Date of the first Advance to be drawn down under such Tranche up to and including the Additional Funds Repayment Date; and | ||
(ii) | each of the dates falling at three (3) monthly intervals after the Additional Funds Repayment Date, up to and including the Final Maturity Date; |
Registry means, in relation to a Ship, such registrar, commissioner or representative of the relevant Flag State who is duly authorised and empowered to register such Ship, the relevant Owners title to such Ship and the relevant Mortgage under the laws and flag of the relevant Flag State; |
Related Company of a person means any Subsidiary of such person, any company or other entity of which such person is a Subsidiary and any Subsidiary of any such company or entity; | ||
Relevant Jurisdiction means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of business or is otherwise effectively connected; | ||
Relevant Party means the Borrower, each of the Owners, any other Security Party and each member of the Group from time to time; | ||
Relevant Ship means the Ships and any other vessel from time to time (whether before or after the date of this Agreement) owned, managed or crewed by, or chartered to, any Relevant Party; | ||
Requisition Compensation means, in relation to a Ship, all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of such Ship; | ||
Restis Family means each of Mr Victor Restis and any of Mrs Bella Resti and/or Ms Claudia Resti and/or Ms Katia Resti and includes their direct lineal descendants; | ||
Security Accounts means, at any relevant time, the Operating Accounts and any bank accounts of the Borrower opened with the Bank, which are subject to an Encumbrance in favour of the Bank and designated by the Bank as Security Accounts for the purposes of this Agreement; | ||
Security Charter means, in relation to a Ship, any time charter or other contract of employment for such Ship for a term which exceeds or, by virtue of any optional extensions therein contained, may exceed twelve (12) months duration which is entered into at any relevant time by the relevant Owner with a Charterer and which is in a form and substance acceptable to the Bank in all respects (including, for the avoidance of doubt, the Charters); | ||
Security Documents means this Agreement, the Supplemental Agreement, the Master Swap Agreement, the Owners Guarantees, the Mortgages, the Mortgage Addenda, the General Assignments, the Operating Accounts Pledges, the Managers Undertakings, the Master Agreement Security Deed, any Charter Assignment and any other documents as may have been or shall from |
9
time to time after the date of this Agreement be executed to guarantee and/or secure all or any part of any moneys from time to time owing by the Borrower to the Bank pursuant to this Agreement, interest thereon and other moneys from time to time owing by the Borrower or any other Security Party pursuant to this Agreement and/or any other Security Document (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement); | ||
Security Party means the Borrower, each Owner, the Manager or any other person who may at any time be a party to any of the Security Documents (other than the Bank); | ||
Security Period means the period commencing on the date of this Agreement and terminating upon discharge of the security created by the Security Documents by payment of all moneys payable thereunder; | ||
Security Requirement means the amount in Dollars (as certified by the Bank whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower) which is, at any relevant time, One hundred and thirty five per cent (135%) of the aggregate of: |
(a) | the Loan at such time; plus | ||
(b) | the Swap Exposure at such time; minus | ||
(c) | the aggregate amount, if any, standing to the credit of the Security Accounts at such time; |
Security Value means the amount in Dollars (as certified by the Bank whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower) which, at any relevant time, is the aggregate of (a) the market value of the Mortgaged Ships as most recently determined in accordance with clause 8.2.2 and (b) market value of any additional security for the time being actually provided to the Bank pursuant to clause 8.2; | ||
Seller means Melodia Maritime Pte. Ltd. of Singapore and includes its successors in title; | ||
Ship means, in relation to an Owner, the Ship owned by that Owner and it includes each Initial Ship and the Additional Ship, and Ships means any or all of them; | ||
Ship Security Documents means, in relation to a Ship, the Mortgage, the General Assignment, any Charter Assignment and the Managers Undertaking in respect of such Ship; | ||
SMC means, in relation to a Ship, a safety management certificate issued in respect of such Ship in accordance with rule 13 of the Code; | ||
Subsidiary of a person means any company or entity directly or indirectly controlled by such person, and for this purpose control means either the ownership of more than fifty per cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise; | ||
Supplemental Agreement means the agreement dated June 2008 supplemental to this Agreement made between (inter alios) the Borrower and the Bank; | ||
Swap Exposure means, as at any relevant time, the amount certified by the Bank to be the aggregate net amount in Dollars which would be payable by the Borrower to the Bank under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Swap Agreement if an Early Termination Date had occurred at the relevant time in relation to all continuing Designated Transactions thereunder; | ||
Taxes includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof and Taxation shall be construed accordingly; | ||
Total Loss in relation to a Ship means: |
(a) | the actual, constructive, compromised or arranged total loss of such Ship; or |
10
(b) | the Compulsory Acquisition of such Ship; or | ||
(c) | the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Ship (other than where the same amounts to the Compulsory Acquisition of such Ship) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless such Ship be released and restored to the relevant Owner from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof; |
Tranche means each of the tranches into which the Commitment and/or the Loan is subdivided (being the Initial Tranche and the Additional Tranche) or (as the context may require) the principal amount thereof outstanding at any relevant time, and: |
(a) | in relation to the Initial Ships, it means the Initial Tranche; or | ||
(b) | in relation to the Additional Ship, it means the Additional Tranche made available for the financing of the acquisition of the Additional Ship by the Additional Owner, |
and
Tranches
means any or all of them;
Transaction has the meaning given to it in the Master Swap Agreement; Transferee has the meaning given to it in clause 14.4; |
||
Underlying Documents means, together, any Security Charters, the Contract and the Management Agreements and Underlying Document means any of them; and | ||
Varouxakis Family means each of Mr Ion Varouxakis and/or his siblings and/or his parents and/or his wife and/or his direct lineal descendants. |
1.3 | Headings | |
Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. | ||
1.4 | Construction of certain terms | |
In this Agreement, unless the context otherwise requires: | ||
1.4.1 | references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules; | |
1.4.2 | references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as amended in accordance with the terms thereof, or, as the case may be, with the agreement of the relevant parties; | |
1.4.3 | references to a regulation include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority; | |
1.4.4 | words importing the plural shall include the singular and vice versa; | |
1.4.5 | references to a time of day are to London time; | |
1.4.6 | references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; | |
1.4.7 | references to a guarantee include references to an indemnity or other assurance against financial loss including, without limitation, an obligation to purchase assets or services as a |
11
consequence of a default by any other person to pay any Indebtedness and guaranteed shall be construed accordingly; and | ||
1.4.8 | references to any enactment shall be deemed to include references to such enactment as re-enacted, amended or extended. | |
2 | The Commitment and the Advances | |
2.1 | Agreement to lend | |
Upon and subject to the terms of this Agreement, the Bank, relying upon each of the representations and warranties in clause 7, agrees to make available to the Borrower, during the Availability Period, a reducing revolving credit facility of up to Ninety one million Dollars ($91,000,000) in two (2) Tranches, comprising the Initial Tranche and the Additional Tranche. | ||
2.2 | Drawdown | |
Subject to the terms and conditions of this Agreement, each Advance shall be made available to the Borrower following receipt by the Bank from the Borrower of a Drawdown Notice for such Advance not later than 10:00 a.m. on the third Banking Day before the date on which the Borrower proposes such Advance is made. A Drawdown Notice shall be effective on actual receipt by the Bank shall specify the Tranche under which it is to be made and once given shall, subject as provided in clause 3.6.1, be irrevocable. | ||
2.3 | Timing and limitations of Tranches and Advances | |
2.3.1 | The aggregate amount of the Loan shall not exceed $91,000,000. | |
2.3.2 | The Borrower shall be entitled to draw down the Commitment in two (2) Tranches, comprising the Initial Tranche and the Additional Tranche. | |
2.3.3 | The aggregate amount available under the Initial Tranche shall not exceed the lower of (a) $48,700,000 and (b) 50% of the acquisition cost of the Initial Ships by the Initial Owners (as evidenced by the relevant executed memoranda of agreement for such Ships) and shall be drawn down in up to two (2) Advances only, for the purpose of assisting the Borrower to advance intra-Group loans to the Initial Owners for the refinancing in full of their existing Indebtedness secured on the Initial Ships. | |
2.3.4 | The aggregate amount available under the Additional Tranche shall not exceed the lower of (a) $42,300,000, (b) 64.87% of the Contract Price and (c) 75% of the market value of the Additional Ship as evidenced by the valuation made under schedule 2, Part 4 and shall be made available to the Borrower for the purpose of assisting the Borrower to advance an intra-Group loan to the Additional Owner for the acquisition of the Additional Ship under the Contract. | |
2.3.5 | The Additional Tranche shall not be made available unless the Initial Tranche has been made available and (whether partly or fully) drawn down. | |
2.3.6 | The Additional Tranche shall be drawn down originally in a single Advance and the Initial Tranche may be drawn down originally in two (2) Advances. | |
2.3.7 | Each Advance of a Tranche shall be a minimum of Five million Dollars ($5,000,000) or the balance of the Available Amount for such Tranche, provided that no Advance of a Tranche may be drawn down on any day: |
(a) | of an amount exceeding the Available Amount for such Tranche on such day; or | ||
(b) | of an amount which, when added to the aggregate amount of the Loan outstanding on such day, would exceed sixty per cent (60%) of the Security Value; or | ||
(c) | if a Default has occurred and is continuing on such day; or |
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(d) | if the number of Advances of such Tranche outstanding (taking into account the proposed Advance to be drawn down) would exceed three (3). |
2.3.8 | No Advance may be drawn down after 31 December 2007 if no Advance has been drawn down to that date. | |
2.3.9 | No Advance may be drawn down after the last day of the Availability Period. | |
2.4 | Availability | |
Upon receipt of a Drawdown Notice for an Advance complying with the terms of this Agreement, the Bank shall make such Advance available to the Borrower on the Drawdown Date for such Advance in accordance with clause 6.2. The Borrower acknowledges that payment in accordance with clause 6.2 of any Advance (or part thereof) to any lender of the existing Indebtedness of the Initial Owners secured on the Initial Ships or, as the case may be, to the Seller or the Borrower, shall satisfy the obligations of the Bank to lend such Advance (or the relevant part thereof) to the Borrower. | ||
2.5 | Termination of Commitment | |
Any part of the Commitment which remains undrawn and uncancelled by the last day of the Availability Period shall thereupon be automatically cancelled. The Commitment shall be reduced to zero (0) if no Advance has been drawn down by 31 December 2007. | ||
2.6 | Application of proceeds | |
Without prejudice to the Borrowers obligations under clause 8.1.3, the Bank shall not have any responsibility for the application of the proceeds of the Loan or any part thereof by the Borrower. | ||
2.7 | Derivative transactions | |
2.7.1 | If, at any time during the Security Period, the Borrower wishes to enter into any derivative transaction for any purpose whatsoever (including, without limitation, interest rate swap transactions so as to hedge all or any part of its exposure under this Agreement to interest rate fluctuations), it shall advise the Bank in writing. | |
2.7.2 | Any such derivative transaction shall be concluded with the Bank under the Master Swap Agreement provided however that no such derivative transaction shall be concluded unless the Bank first agrees to it in writing. If and when any such derivative transaction has been concluded, it shall constitute a Designated Transaction, and the Borrower shall sign a Confirmation with the Bank. | |
3 | Interest | |
3.1 | Normal interest rate | |
The Borrower shall pay interest on each Advance in respect of each Interest Period relating thereto on each Interest Payment Date (or, in the case of Interest Periods of more than three (3) months, by instalments, the first such instalment payable three (3) months from the commencement of the Interest Period and the subsequent instalments payable at intervals of three (3) months or, if shorter, the period from the date of the preceding instalment until the Interest Payment Date relative to such period) at the rate per annum determined by the Bank to be the aggregate of (a) the Margin and (b) LIBOR for such Interest Period. | ||
3.2 | Selection of Interest Periods | |
The Borrower may by notice received by the Bank not later than 10:00 a.m. on the second Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of three (3) months, six (6) months, nine (9) months or twelve (12) months or such other period which the Bank determines (in its absolute discretion) is available in the London Interbank Market as the Borrower may select and the Bank may agree. |
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3.3 | Determination of Interest Periods | |
Every Interest Period shall be of the duration specified by the Borrower pursuant to clause 3.2 but so that: | ||
3.3.1 | the initial Interest Period in respect of each Advance shall commence on the date such Advance is made and each subsequent Interest Period for such Advance shall commence on the last day of the previous Interest Period for such Advance; | |
3.3.2 | if any Interest Period in respect of an Advance of a Tranche would otherwise overrun a Reduction Date for such Tranche, then, in the case of the last Reduction Date for such Tranche, such Interest Period shall end on such Reduction Date, and in the case of any other Reduction Date or Reduction Dates for such Tranche on which the Borrower will be required to make a prepayment pursuant to clause 4.3, the relevant Tranche (or any Advance thereof) shall be divided into parts so that there is one part in the amount of the prepayment amount due on each such Reduction Date falling during that Interest Period and having an Interest Period ending on the relevant Reduction Date and another part in the amount of the balance of the relevant Tranche (or Advance thereof) having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3; and | |
3.3.3 | if the Borrower fails to specify the duration of an Interest Period in accordance with the provisions of clause 3.2 and this clause 3.3 such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause 3.3. | |
3.4 | Default interest | |
If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents (other than the Master Swap Agreement), the Borrower shall pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Bank pursuant to this clause 3.4. The period beginning on such due date and ending on such date of payment shall be divided into successive periods of not more than six (6) months as selected by the Bank, each of which (other than the first, which shall commence on such due date) shall commence on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Bank) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such period. Default interest shall be due and payable on the last day of each such period as determined by the Bank pursuant to this clause 3.4 or, if earlier, on the date on which the sum in respect of which such default interest is accruing shall actually be paid. If, for the reasons specified in clause 3.6.1, the Bank is unable to determine a rate in accordance with the foregoing provisions of this clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Bank to be two per cent (2%) per annum above the aggregate of the Margin and the cost of funds to the Bank. | ||
3.5 | Notification of interest rate | |
The Bank shall notify the Borrower promptly of each rate of interest (or, as the case may be default interest) determined by it under this clause 3. | ||
3.6 | Market disruption; non-availability | |
3.6.1 | If and whenever, at any time prior to the commencement of any Interest Period: |
(a) | the Bank shall have determined (which determination shall, in the absence of manifest error, be conclusive) that adequate and fair means do not exist for ascertaining LIBOR during such Interest Period or that LIBOR does not accurately reflect the cost to the Bank of obtaining such deposits; or | ||
(b) | that deposits in Dollars are not available to the Bank in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan for such Interest Period; |
14
the Bank shall forthwith give notice (a Determination Notice) thereof to the Borrower. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. After the giving of any Determination Notice the undrawn and uncancelled amount of the Commitment shall not be borrowed until notice to the contrary is given to the Borrower by the Bank. | ||
3.6.2 | During the period of ten (10) days after any Determination Notice has been given by the Bank under clause 3.6.1, the Bank shall certify an alternative basis (the Alternative Basis) for funding the Commitment or maintaining the Loan. The Alternative Basis may, at the Banks sole unfettered discretion include (without limitation) alternative interest periods, alternative currencies or alternative rates of interest but shall include a margin above the cost of funds to the Bank equivalent to the Margin. The Alternative Basis so certified shall be binding upon the Borrower and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Bank notifies the Borrower that none of the circumstances specified in clause 3.6.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall apply. | |
4 | Repayment, reduction and cancellation | |
4.1 | Repayment | |
Without prejudice to the provisions of clause 4.3, the Borrower shall repay all the Advances under all Tranches in full on the Final Maturity Date. | ||
4.2 | Voluntary prepayment | |
The Borrower may, upon giving to the Bank prior notice in writing of its intention to make such prepayment, prepay the Loan in whole or part (such part being in an amount of One million Dollars ($1,000,000) or any larger sum which is an integral multiple of One million Dollars ($1,000,000)) at any time without premium or penalty but subject always to its obligations under clauses 4.5 and 11.1. | ||
4.3 | Reductions of the Commitment and prepayment of the Advances and Tranches | |
4.3.1 | The Commitment in respect of each Tranche shall be reduced on each of the Reduction Dates for the relevant Tranche. | |
4.3.2 | Subject to the provisions of this Agreement, the amount of each such reduction for the Initial Tranche shall be (a) $1,250,000 on each of the first to the thirty first (inclusive) Reduction Dates for the Initial Tranche and (b) $9,950,000 on the final Reduction Date for the Initial Tranche. For the avoidance of doubt, on the final Reduction Date for the Initial Tranche, the Commitment in respect of the Initial Tranche shall be reduced to zero. | |
4.3.3 | Subject to the other provisions of this Agreement, the amount of each such reduction for the Additional Tranche shall be (a) $700,000 on each of the first and second Reduction Dates for the Additional Tranche, (b) $1,450,000 on the third Reduction Date for the Additional Tranche, (c) $700,000 on each of the fourth and fifth Reduction Dates for the Additional Tranche, (d) $1,250,000 on the sixth Reduction Date for the Additional Tranche, (e) $750,000 on each of the seventh to the thirty third (inclusive) Reduction Dates for the Additional Tranche and (f) $16,550,000 on the thirty fourth and final Reduction Date for the Additional Tranche. For the avoidance of doubt, the final Reduction Date for the Additional Tranche, the Commitment in respect of the Additional Tranche shall be reduced to zero. | |
4.3.4 | The Borrower shall prepay on each Reduction Date for a Tranche such part of such Tranche as shall ensure that: |
(a) |
the outstanding amount of the Advances under such Tranche (taking
into account
such prepayment),
will not exceed |
15
(b) | the amount of the Commitment in respect of such Tranche (taking into account the reduction thereof on such Reduction Date in accordance with clause 4.3.2 or (as the case may be) 4.3.3). |
4.3.5 | Without prejudice to the other provisions of this Agreement, on the final Maturity Date the Borrower shall repay to the Bank in full any outstanding amount of the Advances. | |
4.4 | Prepayment and cancellation on Total Loss or sale; other mandatory prepayments | |
4.4.1 | Before first drawdown | |
On an Initial Ship becoming a Total Loss (or suffering damage or being involved in an incident which in the opinion of the Bank may result in such Initial Ship being subsequently determined to be a Total Loss) or sold before any Advance of the Initial Tranche is drawn down, the obligation of the Bank to make available the Commitment (or part thereof) shall immediately cease and the Commitment shall be reduced to zero (0). | ||
4.4.2 | Mortgaged Ships |
(a) | Subject to clause 4.4.2(b), if a Mortgaged Ship becomes a Total Loss or is sold (with the prior written consent of the Bank pursuant to the relevant Ship Security Documents), the Relevant Fraction of the Commitment shall be cancelled and/or the Borrower shall prepay the Relevant Fraction of the Advances, | ||
(b) | Notwithstanding sub-paragraph (a) of this clause 4.4.2, if a Mortgaged Ship becomes a Total Loss or is sold (with the prior written consent of the Bank pursuant to the relevant Security Documents) and at that time an Event of Default shall have occurred and be continuing, then: |
(i) | the Borrower shall prepay, on the Disposal Reduction Date for such Mortgaged Ship, such proportion of the Loan; and/or | ||
(ii) | such part of the Commitment shall be forthwith cancelled, |
in each case, as the Bank may require in its absolute discretion (and the provisions of this clause 4.4.2(b) shall prevail over the provisions of clause 4.4.2(a) as to the amounts to be cancelled and/or prepaid). |
(c) | For the avoidance of doubt, it is hereby agreed that, for the purposes of clauses 4.4.2(a) and 4.4.2(b), the Borrower shall be required to make a prepayment of the Advances (or part thereof) in accordance with either of such clauses, only if, and to the extent that, following the Total Loss or sale of the relevant Mortgaged Ship, the mere cancellation of part of the Commitment required by either of such clauses, shall not be sufficient to ensure that the aggregate amount of the Advances then outstanding does not exceed the Commitment (taking into account the relevant reduction thereof). |
4.4.3 | Defined terms | |
For the purposes of this clause 4.4: |
(a) | Disposal Reduction Date means: |
(i) | in relation to a Mortgaged Ship which has become a Total Loss, its Total Loss Reduction Date; or | ||
(ii) | in relation to a Mortgaged Ship which is sold in accordance with the provisions of the relevant Ship Security Documents, the date of (and immediately prior to) completion of such sale by the transfer of title to such Mortgaged Ship to the purchaser in exchange for payment of the relevant purchase price; |
(b) | Relevant Fraction means, in relation to a Mortgaged Ship which has become a Total Loss or is sold, the fraction having (i) as numerator the market value of the relevant Mortgaged Ship lost or sold as most recently determined in accordance with clause 8.2.2 and (ii) as a denominator the market value of all the Mortgaged Ships (including |
16
the relevant Mortgaged Ship lost or sold) as most recently determined in accordance with clause 8.2.2; and | |||
(c) | Total Loss Reduction Date means, in relation to a Mortgaged Ship which has become a Total Loss, the date which is the earlier of: |
(i) | the date falling one hundred and twenty (120) days after that on which such Mortgaged Ship becomes a Total Loss; and | ||
(ii) | the date upon which insurance proceeds are, or Requisition Compensation is, received in respect of such Total Loss by the Borrower (or the Bank pursuant to the relevant Ship Security Documents). |
4.4.4 | Interpretation | |
For the purpose of this Agreement, a Total Loss shall be deemed to have occurred in relation to a Ship: |
(a) | in the case of an actual total loss of such Ship, on the actual date and at the time such Ship was lost or, if such date is not known, on the date on which such Ship was last reported; | ||
(b) | in the case of a constructive total loss of such Ship, upon the date and at the time notice of abandonment of such Ship is given to the insurers of such Ship for the time being; | ||
(c) | in the case of a compromised or arranged total loss of such Ship, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the insurers of such Ship; | ||
(d) | in the case of Compulsory Acquisition of such Ship, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and | ||
(e) | in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Ship (other than where the same amounts to Compulsory Acquisition of such Ship) by any Government Entity, or by persons purporting to act on behalf of any Government Entity, which deprives the Borrower of the use of such Ship for more than thirty (30) days, upon the expiry of the period of thirty (30) days after the date upon which the relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation occurred. |
4.5 | Amounts payable on prepayment | |
Any prepayment of all or part of the Loan under this Agreement shall be made together with: | ||
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 6.6 or 12.2; and | |
4.5.3 |
all other sums payable by the Borrower to the Bank under this Agreement or any of the
other Security Documents including, without limitation, any accrued commitment
commission payable under clause 5.1.2 and any amounts payable under
clause 11. |
|
4.6 | Notice of prepayment; reduction of repayment instalments; re-borrowing | |
4.6.1 | No prepayment may be effected under clause 4.2 unless the Borrower shall have given the Bank at least fifteen (15) days notice of its intention to make such payment. Every notice of prepayment shall be effective only on actual receipt by the Bank, shall be irrevocable, shall specify the Tranche (or Tranches), the Advance (or Advances) and the amount thereof to be prepaid, the manner of application of such prepayment pursuant to clause 4.6.2, and shall oblige the Borrower to make such prepayment on the date specified. |
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4.6.2 | Any amount to be prepaid pursuant to clause 4.2 shall be applied in prepayment of such Tranche (or Tranches), Advance (or Advances), and in such manner between them, as specified by the Borrower. | |
4.6.3 | Any prepayment of the Advances made pursuant to clause 4.4.2 as a result of the Total Loss or sale of a Ship, shall be applied, first, in prepayment of the Tranche (and the Advances thereof) relevant to the Ship lost or sold and, secondly, prepayment of all other Tranches (and Advances thereof) proportionately as between them. | |
4.6.4 | The Borrower may not prepay the Loan or any part thereof save as expressly provided in this Agreement. | |
4.6.5 | Unless and to the extent that the Commitment has been cancelled or reduced on or prior to the date of any such prepayment and subject to the other terms of this Agreement, amounts prepaid under this Agreement may be re-borrowed. | |
4.6.6 |
For the avoidance of doubt, any amounts of the Commitment reduced or cancelled pursuant to
clause 4.4 may not be
re-instated. |
|
4.6.7 | Any reduction of the Commitment made pursuant to clause 4.4.2 as a result of the Total Loss or sale of a Ship, shall be applied, first, in reduction of the part of the Commitment relating to the Tranche relevant to the Ship lost or sold and, secondly, in proportionate reduction of the Commitment in respect of all other Tranches and any part of the Commitment not yet allocated to a Tranche. | |
4.6.8 | Any reduction of the Commitment in respect of a Tranche shall reduce proportionately the amounts thereof still required to be reduced on each Reduction Date for such Tranche pursuant to clause 4.3. | |
4.7 | Cancellation of Commitment | |
The Borrower may, at any time during the Availability Period, by notice to the Bank cancel, with effect from a date not less than three (3) Banking Days after the receipt by the Bank of such notice, the whole or any part (being One million Dollars ($1,000,000)) or any larger sum which is an integral multiple of One million Dollars ($1,000,000)) of the Commitment, which is then available for drawing. Any such notice of cancellation, once given, shall be irrevocable and upon such cancellation taking effect the Commitment shall be reduced accordingly. On the date when any such cancellation takes effect, the Borrower shall pay to the Bank any accrued commitment commission on the part of the Commitment being cancelled and any other amounts then payable under clause 11. | ||
4.8 | Unwinding of Designated Transactions | |
On or prior to any repayment of all or part of the Loan (including, without limitation, pursuant to clauses 4.2, 4.3. 4.4 or 8.2.1(a) or any other provision of this Agreement), the Borrower shall, upon the request of the Bank wholly or partially reverse, offset, unwind, cancel, close out, net out or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not, and will not in the future, exceed the amount of the Loan as may be reducing from time to time thereafter. |
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6.3 | Non-Banking Days | |
When any payment under any of the Security Documents would otherwise be due on a day which is not a Banking Day, the due date for payment shall be extended to the next following Banking Day unless the Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day. |
6.4 | Calculations | |
All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year, | ||
6.5 | Certificates conclusive | |
Any certificate or determination of the Bank as to any rate of interest or any other amount pursuant to and for the purposes of any of the Security Documents shall, in the absence of manifest error, be conclusive and binding on the Borrower. | ||
6.6 | Grossing-up for Taxes | |
6.6.1 | If at any time the Borrower is required to make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of the Bank, the sum due from the Borrower in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Bank receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrower shall indemnify the Bank against any losses or costs incurred by it by reason of any failure of the Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrower shall promptly deliver to the Bank any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. | |
6.6.2 | For the avoidance of doubt, clause 6.6.1 does not apply in respect of sums due from the Borrower to the Bank under or in connection with the Master Swap Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Swap Agreement shall apply. | |
6.7 | Loan account | |
The Bank shall maintain, in accordance with its usual practice, an account evidencing the amounts from time to time lent by, owing and paid to it under the Security Documents. Such account shall, in the absence of manifest error, be conclusive as to the amount from time to time owing by the Borrower under the Security Documents. | ||
7 | Representations and warranties | |
7.1 | Continuing representations and warranties |
The Borrower represents and warrants to the Bank that: |
7.1.1 | Due incorporation | |
each of the Borrower, the Owners and each of the other Security Parties is duly incorporated and validly existing in good standing under the laws of their respective countries of incorporation as a Marshall Islands corporation or as a limited liability company (in the case of each of the other Security Parties), and have power to carry on their respective businesses as they are now being conducted and to own their respective property and other assets; | ||
7.1.2 | Corporate power |
the Borrower has power to execute, deliver and perform its obligations under the relevant Underlying Documents and the Security Documents to which it is or is to be a party and to borrow the Commitment and each of the other Security Parties has power to execute and deliver and perform its obligations under the Security Documents and the Underlying Documents to which it is or is to be a party; all necessary corporate, shareholder and other action has been taken to authorise the execution, delivery and performance of the same and no limitation on the powers of the Borrower to borrow will be exceeded as a result of borrowing the Advances or any of them; |
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7.1.3 | Binding obligations | |
the Underlying Documents and the Security Documents constitute or will, when executed, constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms; | ||
7.1.4 | No conflict with other obligations | |
the execution and delivery of, the performance of its obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which the Borrower or any other Security Party is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which the Borrower or any other Security Party is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of the Borrower or any other Security Party or (iv) result in the creation or imposition of or oblige the Borrower or any of its Related Companies or any other Security Party or any of its Related Companies to create any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of the Borrower or any of its Related Companies or any other Security Party; | ||
7.1.5 | No litigation | |
no litigation, arbitration or administrative proceeding is taking place, pending or, to the knowledge of the officers of the Borrower, threatened against the Borrower or any of its Related Companies or any other Security Party or any of its Related Companies which could have a material adverse effect on the business, assets or financial condition of the Borrower or any other Security Party or any other member of the Group or the Group as a whole; | ||
7.1.6 | No filings required | |
save for the registration of each Mortgage under the laws of the relevant Flag State through the relevant Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Relevant Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Relevant Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Relevant Jurisdiction; | ||
7.1.7 | Choice of law | |
the choice of (a) English law to govern the Underlying Documents and the Security Documents (other than the Mortgages and the Operating Account Pledges), (b) the laws of the relevant Flag State to govern each Mortgage and (c) the laws of Switzerland to govern the Operating Account Pledges, and the submissions by the Security Parties to the non-exclusive jurisdiction of the English courts or, in the case of the Operating Account Pledges, the courts or Zurich, are valid and binding; | ||
7.1.8 | No immunity | |
neither the Borrower nor any other Security Party nor any of their respective assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgement, execution or other enforcement); | ||
7.1.9 | Consents obtained | |
every consent, authorisation, licence or approval of, or registration with or declaration to, governmental or public bodies or authorities or courts required by any Security Party to authorise, or required by any Security Party in connection with, the execution, delivery, validity, enforceability or admissibility in evidence of each of the Underlying Documents and each of the Security Documents to which it is a party or the performance by each Security Party of its obligations under the Underlying Documents and the Security Documents to which it is a party, has been obtained or made and is in full force and effect and there has been no default in the observance of any of the conditions or restrictions (if any) imposed in, or in connection with, any of the same; |
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7.1.10 | Shareholdings |
(a) | each of the Owners is a wholly-owned direct Subsidiary of the Borrower and each of Mr Ion Varouxakis and the Restis Family are the ultimate beneficial owners of no less than ten per cent (10%) each of the total issued voting share capital of the Borrower; | ||
(b) | no person or persons acting in concert (other than Mr Ion Varouxakis and the Restis Family), is the ultimate beneficial owner of more than thirty per cent (30%) of the total issued voting share capital of the Borrower (and for the purposes of this paragraph (b) persons acting in concert shall have the meaning given to a syndicate or a group of persons in Section 13(d)(3) of the Securities Exchange Act 1934 (as amended) of the United States of America); and | ||
(c) | all of the shares in the Manager are ultimately beneficially owned by Mr Ion Varouxakis and/or the Varouxakis Family; |
7.1.11 | Financial statements correct and complete | |
the audited consolidated financial statements of the Group in respect of the financial year ended on 31 December 2006 as delivered to the Bank have been prepared in accordance with the Applicable Accounting Principles and present fairly and accurately the consolidated financial position of the Group as at such date and the consolidated results of the operations of the Group for the financial year ended on such date and, as at such date, neither the Group nor any member thereof had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statement. |
7.2 | Initial representations and warranties | |
The Borrower further represents and warrants to the Bank that: | ||
7.2.1 | Pari passu | |
the obligations of the Borrower under this Agreement are direct, general and unconditional obligations of the Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrower with the exception of any obligations which are mandatorily preferred by law and not by contract; | ||
7.2.2 | No default under other Indebtedness | |
neither the Borrower nor any other Security Party nor any other member of the Group is (nor would with the giving of notice or lapse of time or the satisfaction of any other condition or combination thereof be) in breach of or in default under any agreement relating to Indebtedness to which it is a party or by which it may be bound; | ||
7.2.3 | Information | |
the information, exhibits and reports furnished by any Security Party to the Bank in connection with the negotiation and preparation of the Security Documents are true and accurate in all material respects and not misleading, do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein; there are no other facts the omission of which would make any fact or statement therein misleading; | ||
7.2.4 | No withholding Taxes | |
no Taxes are imposed by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents; | ||
7.2.5 | No Default |
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no Default has occurred and is continuing; | ||
7.2.6 | The Ships | |
each Ship will, on the date when the Mortgage over such Ship is registered, be: |
(a) | in the absolute ownership of the relevant Owner who will, on and after such date, be the sole, legal and beneficial owner of such Ship; | ||
(b) | permanently registered through the relevant Registry as a ship under the laws and flag of the relevant Flag State; | ||
(c) | operationally seaworthy and in every way fit for service; and | ||
(d) | classed with the relevant Classification free of all requirements and recommendations of the relevant Classification Society; |
7.2.7 | Ships employment | |
save for the relevant Charter, no Ship is nor will, on or before the date when the Mortgage over such Ship is registered, be subject to any charter or contract or to any agreement to enter into any charter or contract which, if entered into after the date of the relevant Ship Security Documents, would have required the consent of the Bank and, on or before the date when the Mortgage over such Ship is registered, there will not be any agreement or arrangement whereby the Earnings of such Ship may be shared with any other person; | ||
7.2.8 | Freedom from Encumbrances | |
none of the Ships, nor its Earnings, Insurances, Requisition Compensation nor the Operating Accounts relevant to such Ship nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be, on the date when the Mortgage over such Ship is registered, subject to any Encumbrance (other than Permitted Liens); | ||
7.2.9 | Compliance with Environmental Laws and Approvals | |
except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Bank: |
(a) | the Borrower and the other Relevant Parties and, to the best of the Borrowers knowledge and belief (having made due enquiry), their respective Environmental Affiliates have complied with the provisions of all Environmental Laws; | ||
(b) | the Borrower and the other Relevant Parties and, to the best of the Borrowers 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; and | ||
(c) | neither the Borrower nor any other Relevant Party nor, to the best of the Borrowers knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates have received notice of any Environmental Claim that the Borrower or any other Relevant Party or any such Environmental Affiliate is not in compliance with any Environmental Law or any Environmental Approval; |
7.2.10 | No Environmental Claims | |
except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Bank, there is no Environmental Claim pending or, to the best of the Borrowers knowledge and belief, threatened against the Borrower or any of the Ships or any other Relevant Party or any other Relevant Ship or, to the best of the Borrowers knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates; |
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7.2.11 | No potential Environmental Claims | |
except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Bank, there has been no emission, spill, release or discharge of a Pollutant from any of the Ships or any other Relevant Ship owned by, managed or crewed by or chartered to any Relevant Party nor, (having made due enquiry) to the best of the Borrowers knowledge and belief, from any Relevant Ship owned by, managed or crewed by or chartered to any other Relevant Party, which could give rise to an Environmental Claim; | ||
7.2.12 | ISPS Code | |
on the date when the Mortgage over a Ship is registered, the Owner of such Ship shall have a valid and current ISSC in respect of such Ship and such Ship shall be in compliance with the ISPS Code; | ||
7.2.13 | No material adverse change | |
there has been no material adverse change in the financial position of the Security Parties or any of them or the consolidated financial position of the Group, from that described by the Borrower to the Bank in the negotiation of this Agreement; | ||
7.2.14 | Borrowers own account | |
in relation to the borrowing by the Borrower of each Advance, the performance and discharge of its obligations and liabilities under the Security Documents and the transactions and other arrangements effected or contemplated by this Agreement, the Borrower is acting for its own account and that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented by any relevant regulatory authority or otherwise to combat money laundering (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities (as amended)); and | ||
7.2.15 | Copies true and complete | |
the copies of the Underlying Documents delivered or to be delivered to the Bank pursuant to clause 9.1 are or will, when delivered, be true and complete copies of such documents; such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their terms and there have been no amendments or variations thereof or defaults thereunder. | ||
7.3 | Repetition of representations and warranties | |
On and as of each Drawdown Date and (except in relation to the representations and warranties in clause 7.2) on each Interest Payment Date, the Borrower shall: |
(a) | be deemed to repeat the representations and warranties in clauses 7.1 and 7.2 as if made with reference to the facts and circumstances existing on such day; and | ||
(b) | be deemed to further represent and warrant to the Bank that the then latest audited financial statements delivered to the Bank under clause 8.1.5 (if any) have been prepared in accordance with the Applicable Accounting Principles and practices which have been consistently applied and present fairly and accurately the consolidated financial position of the Group as at the end of the financial period to which the same relate and the consolidated results of the operations of the Group for the financial period to which the same relate and, as at the end of such financial period, neither the Borrower nor any other member of the Group had any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements. |
8 | Undertakings | |
8.1 | General |
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The Borrower undertakes with the Bank that, from the date of this Agreement and so long as any moneys are owing under any of the Security Documents and while all or any part of the Commitment remains outstanding, it will: |
(a) | consolidated financial statements of the Group in accordance with the Applicable Accounting Principles consistently applied in respect of each financial year and cause the same to be reported on by its auditors; and | ||
(b) | unaudited consolidated financial statements of the Group in respect of each financial half-year, on the same basis as the audited statements, |
and deliver to the Bank as many copies of the same as the Bank may reasonably require as soon as practicable but not later than one hundred and eighty (180) days (in the case of annual statements) or ninety (90) days (in the case of semi-annual statements) after the end of the financial period to which they relate; | ||
8.1.6 | Delivery of reports | |
deliver to the Bank as many copies as the Bank may reasonably require of every report, circular, notice, notification, filing or like document issued by the Borrower to its shareholders or creditors in general or filed, issued or submitted to NASDAQ or any related authority, at the same time as the same is issued, filed or submitted; | ||
8.1.7 | Provision of further information |
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provide the Bank with such financial and other information concerning the Borrower, the other Security Parties, any other member of the Group, any Charterers, the Group and their respective commitments, operations and affairs, as the Bank may from time to time reasonably require; | ||
8.1.8 | Obligations under Security Documents | |
and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents and the Underlying Documents to which it is a party; | ||
8.1.9 | Compliance with Code | |
and will procure that any Operator will, comply with and ensure that each Ship and any Operator at all times complies with the requirements of the Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period; | ||
8.1.10 | Withdrawal of DOC and SMC | |
and will procure that any Operator will, immediately inform the Bank if there is any threatened or actual withdrawal of its Operators DOC or the SMC in respect of any Ship; | ||
8.1.11 | Issuance of DOC and SMC | |
and will procure that any Operator will, promptly inform the Bank upon the issuance to any Operator of a DOC and to each Ship of an SMC or the receipt by the relevant Owner or any Operator of notification that its application for the same has been refused; | ||
8.1.12 | ISPS Code compliance | |
and will procure that the Manager or any Operator will, |
(a) | from the date when the Mortgage over a Ship is registered and at all times thereafter, maintain a valid and current ISSC respect of such Ship; | ||
(b) | immediately notify the Bank in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC in respect of any Ship; and | ||
(c) | procure that, from the date when the Mortgage over a Ship is registered and at all times thereafter, such Ship complies with the ISPS Code; |
8.1.13 | KYC requirements | |
deliver to the Bank such documents and evidence as the Bank shall from time to time require based on applicable laws and regulations or the Banks own internal guidelines, in each case relating to the verifications of identity and knowledge of the Banks customers; | ||
8.1.14 | Employment | |
without prejudice to the rights of the Bank under the provisions of the other Security Documents, advise the Bank promptly of any Security Charter being entered into in respect of a Ship and: |
(a) | deliver a certified copy of each such Security Charter forthwith after its execution; | ||
(b) | procure that the relevant Owner shall, forthwith after its execution: |
(i) | execute a Charter Assignment of such Security Charter; and |
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(ii) | procure the service of any notice of assignment on the relevant Charterer or other counterparty and the acknowledgement of such notice by the relevant Charterer or other counterparty; |
(c) | deliver to the Bank on demand made by it, such documents and evidence of the type referred to in schedule 2 to any such Charter Assignment, Security Charter or Charterer or any other related matter referred to in this clause 8.1.14, as the Bank may in its sole discretion require; and | ||
(d) | pay on the Banks demand all legal and other costs incurred by the Bank in connection with or in relation to any such assignment or any other related matter referred to in this clause 8.1.14; and |
8.1.15 | Minimum cash balances | |
procure that, at all times during the Security Period, there are maintained in the Operating Accounts or any other Security Account minimum cash balances of no less than $375,000 per Mortgaged Ship. | ||
8.2 | Security value maintenance | |
8.2.1 | Security Shortfall | |
If at any time the Security Value shall be less than the Security Requirement, the Bank shall give notice to the Borrower requiring that such deficiency be remedied and then the Borrower shall either: |
(a) | prepay, within a period of fifteen (15) days of the date of receipt by the Borrower of the Banks said notice, such sum in Dollars as will result in the Security Requirement after such prepayment (taking into account any other prepayment of the Loan (or part thereof) made between the date of the notice and the date of such prepayment) being equal to the Security Value; or | ||
(b) | within fifteen (15) days of the date of receipt by the Borrower of the Banks said notice, constitute to the satisfaction of the Bank such further security for the Loan and any amounts owing under the Master Swap Agreement as shall be acceptable to the Bank, having a value for security purposes (as determined by the Bank in its absolute discretion) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Security Requirement as at such date. |
The provisions of clauses 4.5 and any relevant provisions of 4,6 shall apply to
prepayments made under this
clause 8.2.1(a). |
||
8.2.2 | Valuation of Ships |
(a) | Each of the Mortgaged Ships shall, for the purposes of this Agreement, be valued in Dollars as and when the Bank shall require (and at least twice in each calendar year), by an independent and internationally recognised firm of shipbrokers appointed by the Bank in its sole discretion. Each such valuation shall be addressed to the Bank and made without, unless required by the Bank, physical inspection and on the basis of a sale for prompt delivery for cash at arms length on normal commercial terms as between a willing buyer and a willing seller without taking into account the benefit of any charterparty or other engagement concerning the Mortgaged Ship. Such valuation shall constitute the value of such Mortgaged Ship for the purposes of this clause 8.2. | ||
(b) | The Borrower shall be entitled to request the Bank to obtain a second valuation of a Mortgaged Ship by another independent and internationally recognised firm of shipbrokers appointed by the Bank in its sole discretion, such valuation to be made on the same basis described in paragraph (a) above. In the event of the Bank so obtaining a second such |
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valuation for a Mortgaged Ship, the arithmetic mean of the two (2) valuations shall constitute the value of such Mortgaged Ship for the purposes of this clause 8.2. |
(c) | The value of each Mortgaged Ship determined in accordance with the provisions of this clause 8.2 shall be binding upon the parties hereto until such time as any such further valuation shall be obtained. |
8.2.3 | Information | |
The Borrower undertakes with the Bank to supply to the Bank and to any such firm of shipbrokers such information concerning each Mortgaged Ship and its condition as such firm of shipbrokers may require for the purpose of making any such valuation. | ||
8.2.4 | Costs | |
All costs in connection with the Bank obtaining any valuation of each of the Mortgaged Ships referred to in clause 8.2.2 and all costs in connection with any valuation of the Ships obtained pursuant to schedule 2, and any valuation either of any additional security for the purposes of ascertaining the Security Value at any time or necessitated by the Borrower electing to constitute additional security pursuant to clause 8.2.1(b), shall be borne by the Borrower Provided that if no Default shall have occurred which is continuing, the Borrower shall only bear the cost of up to two (2) (or, in the case of application of clause 8.2.2(b), four (4)) such valuations for each Mortgaged Ship pursuant to clause 8.2.2 in each calendar year. | ||
8.2.5 | Valuation of additional security | |
For the purpose of this clause 8.2, the market value of any additional security provided or to be provided to the Bank shall be determined by the Bank in its absolute discretion without any necessity for the Bank assigning any reason thereto. | ||
8.2.6 | Documents and evidence | |
In connection with any additional security provided in accordance with this clause 8.2, the Bank shall be entitled to receive such evidence and documents of the kind referred to in schedule 2 as may in the Banks opinion be appropriate and such favourable legal opinions as the Bank shall in its absolute discretion require. | ||
8.3 | Negative undertakings | |
The Borrower undertakes with the Bank that, from the date of this Agreement and so long as any moneys are owing under the Security Documents and while all or any part of the Commitment remains outstanding, the Borrower will not: | ||
8.3.1 | Negative pledge | |
permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of its present or future undertaking, assets (including without limitation the shares of the Owners), rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any of the Security Parties or any other person; | ||
8.3.2 | No merger | |
merge or consolidate with any other company or person or enter into any de-merger, amalgamation, corporate reconstruction or corporate redomiciliation of any kind whatsoever; | ||
8.3.3 | Disposals | |
sell, transfer, abandon, lend or otherwise dispose of or cease to exercise direct control over any part of its present or future undertaking, assets (including without limitation the shares of the Owners), rights or revenues (otherwise than, by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not; | ||
8.3.4 | Other business |
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undertake any business other than the ownership of shares of companies owning and operating ocean-going vessels and chartering the same to third parties; | ||
8.3.5 | No borrowing | |
incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents; | ||
8.3.6 | Repayment of borrowings | |
repay or prepay the principal of, or pay interest on or any other sum in connection with, any of its Borrowed Money except for (a) Borrowed Money pursuant to the Security Documents and (b) Borrowed Money existing on the date of this Agreement advised by the Borrower to the Bank in writing prior to the date of this Agreement; | ||
8.3.7 | Loans | |
make any loans or grant any credit to any person or agree to do so save for normal trade credit in the ordinary course of business, or loans or advances made to any other member of the Group on an arms length basis and in the ordinary course of business; |
8.3.8 | Share capital and distribution |
(a) | subject to paragraph (b) below, purchase or otherwise acquire for value any shares of its capital or declare or pay any dividends or distribute any of its present or future assets, undertaking, rights or revenues to any of its shareholders; | ||
(b) | the Borrower may declare or pay dividends to its shareholders if no Default shall have occurred at the time of declaration or payment of such dividends nor would occur as a result of the declaration or payment of such dividends; |
8.3.9 | Shareholdings | |
change, cause, permit any change in, the legal ownership of any Owner, such that any of them ceases to be a wholly-owned direct Subsidiary of the Borrower; | ||
8.3.10 | Change of management | |
change, cause or permit any change in, its senior management; or | ||
8.3.11 | Constitutional documents | |
agree to any amendments or variation of its constitutional documents. | ||
9 | Conditions | |
9.1.1 | Commitment | |
The obligation of the Bank to make the Commitment available shall be subject to the condition that the Bank or its duly authorised representative shall have received, not later than two (2) Banking Days before the date of this Agreement, the documents and evidence specified in Part 1 of schedule 2 in form and substance satisfactory to the Bank. | ||
9.1.2 | Initial Tranche first Advance | |
The obligation of the Bank to make available the first Advance to be drawn down under the Initial Tranche, shall be subject to the condition that the Bank or its duly authorised representative shall have received, on or prior to the drawdown of such Advance, the documents and evidence specified in Part 2 of schedule 2, in form and substance satisfactory to the Bank. | ||
9.1.3 | Initial Tranche second Advance |
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The obligation of the Bank to make available the second Advance to be drawn down under the Initial Tranche, shall be subject to the condition that the Bank or its duly authorised representative shall have received, on or prior to the drawdown of such Advance, the documents and evidence specified in Part 3 of schedule 2, in form and substance satisfactory to the Bank | ||
9.1.4 | Additional Tranche | |
The obligation of the Bank to make available the first Advance to be drawn down under the Additional Tranche, shall be subject to the condition that the Bank or its duly authorised representative shall have received, on or prior to the drawdown of such Advance, the documents and evidence specified in Part 4 of schedule 2 in respect of the Additional Ship in form and substance satisfactory to the Bank. | ||
9.2 | General conditions precedent | |
The obligation of the Bank to make any Advance available shall be subject to the further conditions that, at the time of the giving of the Drawdown Notice for such Advance, and at the time of the making of such Advance: | ||
9.2.1 | the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3(b) and (ii) clause 4 of each Owners Guarantee, are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; | |
9.2.2 | no Default shall have occurred and be continuing or would result from the making of such Advance; and | |
9.2.3 | in the case of Advances under the Additional Tranche, that the conditions set out in clauses 9.1.1, 9.1.2 and 9.1.3 have been satisfied. | |
9.3 | Waiver of conditions precedent | |
The conditions specified in this clause 9 are inserted solely for the benefit of the Bank and may be waived by the Bank in whole or in part and with or without conditions. | ||
9.4 | Further conditions precedent | |
Not later than five (5) Banking Days prior to each Drawdown Date of an Advance and not later than five (5) Banking Days prior to each Interest Payment Date, the Bank may request and the Borrower shall, not later than two (2) Banking Days prior to such date, deliver to the Bank on such request further favourable certificates and/or favourable opinions as to any or all of the matters which are the subject of clauses 7, 8, 9 and 10, | ||
10 | Events of Default | |
10.1 | Events | |
There shall be an Event of Default if: | ||
10.1.1 | Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents or the Underlying Documents 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 on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or | |
10.1.2 | Master Swap Agreement: (a) an Event of Default or Potential Event of Default (in each case as defined in the Master Swap Agreement) has occurred and is continuing with the Borrower as the Defaulting Party (as defined in the Master Swap Agreement) under the Master Swap Agreement or (b) an Early Termination Date has occurred or been or become capable of being effectively designated under the Master Swap Agreement by the Bank or (c) the Master Swap Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason; or |
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10.1.3 | Breach of Insurances and certain other obligations: the relevant Owner or, as the case may be, the Manager fails to obtain and/or maintain the Insurances (in accordance with the requirements of the relevant Ship Security Documents) for any of the Mortgaged Ships or if any insurer in respect of any such Insurances cancels such Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for such Insurances or for any other failure or default on the part of any of the Owners or any other person, or the Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clauses 8.2 or 8.3 of this Agreement or any of the Owners commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clause 5 of the relevant Owners Guarantee; or | |
10.1.4 | Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents to which it is a party or any of the Underlying Documents (other than those referred to in clauses 10.1.1, 10.1.2 and 10.1.3 above) and, in respect of any such breach or omission which in the opinion of the Bank is capable of remedy, such action as the Bank may require shall not have been taken within fourteen (14) days of the Bank notifying the relevant Security Party of such default and of such required action; or | |
10.1.5 | Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party to which it is a 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 to which it is a party or any of the Underlying Documents, is or proves to have been incorrect or misleading in any material respect; or | |
10.1.6 | Cross-default: any Indebtedness of any Relevant Party is not paid when due or any Indebtedness of any Relevant Party becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant Relevant Party of a voluntary right of prepayment), or the creditor of any Relevant Party becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to any Relevant Party relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (howsoever described) of the person concerned unless the Relevant Party shall have satisfied the Bank that such withdrawal, suspension or cancellation will not affect or prejudice in any way such Relevant Partys ability to pay its debts as they fall due and fund its commitments, or any guarantee given by any Relevant Party in respect of Indebtedness is not honoured when due and called upon; or | |
10.1.7 | Legal process: any judgment or order made against any Relevant Party is not stayed or complied with within fourteen (14) days (except where that Relevant Party is not obliged by law to comply with such order or judgment and is contesting it in good faith) 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 Relevant Party and is not discharged within fourteen (14) days; or | |
10.1.8 | Insolvency: any Relevant Party 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; has assets the value of which is less than the value of its liabilities (taking into account contingent and prospective liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or | |
10.1.9 | Reduction or loss of capital: a meeting is convened by any Relevant Party for the purpose of passing any resolution to reduce or redeem any of its share capital or, in the case of any of the Owners or the Manager, to purchase any of its share capital; or | |
10.1.10 | Winding up: any corporate action, legal proceedings or other procedure or step is taken for the purpose of winding-up any Relevant Party or an order is made or resolution passed for the winding up of any Relevant Party or a notice is issued convening a meeting for the purpose of passing any such resolution; or | |
10.1.11 | Administration: any petition is presented, notice given or other step is taken for the purpose of the appointment of an administrator of any Relevant Party or the Bank believes that any such petition or other step is imminent or an administration order is made in relation to any Relevant Party; or |
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10.1.12 | Appointment of receivers and managers: any administrative or other receiver is appointed of any Relevant Party or any part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any part of the assets of any Relevant Party; or | |
10.1.13 | Compositions: any corporate action, legal proceedings or other procedures or steps are taken, or negotiations commenced, by any Relevant Party or by any of its creditors with a view to the general readjustment or rescheduling of all or part of its indebtedness or to proposing any kind of composition, compromise or arrangement involving such person and any of its creditors; or | |
10.1.14 | Analogous proceedings: there occurs, in relation to any Relevant Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Bank, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.7 to 10.1.13 (inclusive) or any Relevant Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or | |
10.1.15 | Cessation of business: any Relevant Party suspends or ceases or threatens to suspend or cease to carry on its business; or | |
10.1.16 | Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any other Relevant Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government; or | |
10.1.17 | Invalidity: any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or | |
10.1.18 | Unlawfulness: it becomes impossible or unlawful at any time for any Security Party to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for the Bank to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or | |
10.1.19 | Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or | |
10.1.20 | Encumbrances enforceable: any Encumbrance (other than Permitted Liens) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or | |
10.1.21 | Material adverse change: there occurs, in the reasonable opinion of the Bank, a material adverse change in the financial condition of any Security Party or any other member of the Group, or the Group as a whole, by reference to the financial statements of the Group referred to in clause 7.1.11 or from that described by any Security Party to the Bank in the negotiation of this Agreement, which, would in the opinion of the Bank materially impair the ability of the Security Parties (or any of them) to perform their respective obligations under this Agreement and to the Security Documents to which they are a party; or | |
10.1.22 | Arrest: any Mortgaged Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the relevant Owner and the relevant Owner shall fail to procure the release of such Mortgaged Ship within a period of five (5) Banking Days thereafter; or | |
10.1.23 | Registration: the registration of any Ship under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Bank or if such registration of such Ship is not renewed at least forty-five (45) days prior to the expiry of such registration; or |
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10.1.24 | Unrest: the Flag State of any Ship becomes involved in hostilities or civil war or there is a seizure of power in such Flag State by unconstitutional means if, in any such case, such event could in the opinion of the Bank reasonably be expected to have a material adverse effect on the security constituted by any of the Security Documents; or | |
10.1.25 | Environment: the Borrower, any of the Owners and/or any other Relevant Party and/or any of their respective Environmental Affiliates fails to comply with any Environmental Law or any Environmental Approval or any of the Ships or any other Relevant Ship is involved in any incident which gives rise or may give rise to an Environmental Claim if, in any such case, such non-compliance or incident or the consequences thereof could, in the opinion of the Bank, reasonably be expected to have a material adverse effect on the business, assets, operations, property or financial condition of the Borrower or any of its Related Companies or any other Relevant Party or the Group as a whole or on the security constituted by any of the Security Documents; or | |
10.1.26 | P &l: the Borrower or any of the Owners or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which any Ship is entered for insurance or insured against protection and indemnity risks (including all P&l risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where any Ship operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or | |
10.1.27 | Shareholdings: |
(a) | any Owner ceases to be a wholly-owned direct Subsidiary of the Borrower; or | ||
(b) | there is any change in the ultimate beneficial ownership of any of the shares in the Borrower such that (i) Mr Ion Varouxakis ceases to be the ultimate beneficial owner of at least 10% of the total issued voting share capital of the Borrower at any relevant time or (ii) the Restis Family cease to be the ultimate beneficial owner of at least 10% of the total issued voting share capital of the Borrower at any relevant time or (iii) any person or persons acting in concert (other than Mr Ion Varouxakis and the Restis Family) becomes the ultimate beneficial owner of more than 30% of the total issued voting share capital of the Borrower at any relevant time (and for the purposes of this paragraph (b) persons acting in concert shall have the meaning given to a syndicate or group of persons in Section 13(d)(3) of the Securities Exchange Act 1934 (as amended) of the United States of America); or | ||
(c) | any of the shares of the Manager ceases to be ultimately beneficially owned by Mr Ion Varouxakis and/or the Varouxakis Family; or |
10.1.28 | Accounts: moneys are withdrawn from any Operating Account other than in accordance with clause 5 of the relevant Owners Guarantee; or |
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10.1.29 | Manager: any Ship ceases to be managed by the Manager without the prior written consent of the Bank; or | |
10.1.30 | De-listing etc.: the shares of the Borrower are de-listed, or cease to trade or are suspended from trading (whether permanently or temporarily for longer than ten (10) consecutive days) on, NASDAQ; or | |
10.1.31 | Charters: any Charter is cancelled, repudiated or terminated for any reason (other than by mere effluxion of time or the Total Loss of the relevant Ship); or | |
10.1.32 | Free Jupiter : the second Advance of the Initial Tranche is not made and the conditions precedent specified in Part 3 of schedule 2 have not been delivered by the Borrower to the Bank by 30 May 2008; or | |
10.1.33 | Licenses, etc: any license, authorisation, consent or approval at any time necessary to enable any Security Party to comply with its obligations under the Security Documents or the Underlying Documents is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect or if any exchange control or other law or regulation shall exist which would make any transaction under the Security Documents or the Underlying Documents or the continuation thereof, unlawful or would prevent the performance by any Security Party of any term of any of the Security Documents or the Underlying Documents; or | |
10.1.34 | Material events: any other event occurs or circumstance arises which, in the reasonable opinion of the Bank, is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents to which it is a party or (ii) the security created by any of the Security Documents. | |
10.2 | Acceleration | |
The Bank shall, without prejudice to any other rights of the Bank, at any time after the happening of an Event of Default by notice to the Borrower declare that: | ||
10.2.1 | the obligation of the Bank to make the Commitment available shall be terminated, whereupon the Commitment at the time shall be reduced to zero forthwith; and/or | |
10.2.2 | the Loan and all interest and commitment commission accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable. | |
10.3 | Demand basis | |
If, pursuant to clause 10.2.2, the Bank declares the Loan to be due and payable on demand, the Bank may by written notice to the Borrower (a) call for repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable on the date so specified together with all interest and commitment commission accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice. | ||
11 | Indemnities | |
11.1 | Miscellaneous indemnities | |
The Borrower shall on demand indemnify the Bank, without prejudice to any of the Banks other rights under any of the Security Documents, against any loss (including loss of Margin) or expense which the Bank shall certify as sustained or incurred by it as a consequence of: |
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11.1.1 | any default in payment of any sum under any of the Security Documents when due; | |
11.1.2 | the occurrence of any other Event of Default; | |
11.1.3 | any prepayment of the Loan (or any part thereof) being made under clauses 4.2, 4.3, 4.4, 8.2.1(a) or 12.1 or any other prepayment or repayment of an Advance (or part thereof) being made otherwise than on an Interest Payment Date relating to the part of the Advance being prepaid or repaid; or | |
11.1.4 | any Advance not being made for any reason (excluding any default by the Bank) after the Drawdown Notice for such Advance has been given, | |
including, in any such case, but not limited to any loss or expense sustained or incurred by the Bank in maintaining or funding the Commitment or any part thereof or in liquidating or re-employing deposits from third parties acquired to effect or maintain the Commitment or any part thereof or any other amount owing to the Bank. | ||
11.2 | Currency indemnity | |
If any sum due from the Borrower under any of the Security Documents or any order or judgment given or made in relation thereto has to be converted from the currency (the first currency) in which the same is payable under the relevant Security Document or under such order or judgment into another currency (the second currency) for the purpose of (a) making or filing a claim or proof against the Borrower, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to any of the Security Documents, the Borrower shall indemnify and hold harmless the Bank from and against any loss suffered as a result of any difference between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which the Bank may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. | ||
Any amount due from the Borrower under this clause 11.2 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term rate of exchange includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. | ||
11.3 | Environmental indemnity | |
The Borrower shall indemnify the Bank on demand and hold it harmless from and against all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings (whether civil or criminal), penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be suffered, incurred or paid by, or made or asserted against the Bank at any time, whether before or after the repayment in full of principal and interest under this Agreement, relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of an Environmental Claim made or asserted against the Bank if such Environmental Claim would not have been, or been capable of being, made or asserted against the Bank if it had not entered into any of the Security Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or performed any of its obligations thereunder and/or been involved in any of the transactions contemplated by the Security Documents. | ||
11.4 | Central Bank or European Central Bank reserve requirements indemnity | |
The Borrower shall on demand promptly indemnify the Bank against any cost incurred or loss suffered by the Bank as a result of its complying with the minimum reserve requirements of the European Central Bank and/or with respect to maintaining required reserves with the relevant national central bank to the extent that such compliance relates to the Commitment or the Loan or part thereof or deposits obtained by it to fund or maintain the whole or part of the Loan and such cost or loss is not recoverable by the Bank under clause 12.2. | ||
12 | Unlawfulness and increased costs | |
12.1 | Unlawfulness | |
If it is or becomes contrary to any law or regulation for the Bank to make an Advance or maintain its Commitment or fund the Loan, the Bank shall promptly give notice to the Borrower whereupon (a) the Commitment shall be reduced to zero and (b) the Borrower shall be obliged to prepay the Loan either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrower under this Agreement and/or the Master Swap Agreement or either of them. | ||
12.2 | Increased costs | |
If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the Bank or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to: | ||
12.2.1 | subject the Bank to Taxes or change the basis of Taxation of the Bank with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of the Bank imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or | |
12.2.2 | increase the cost to, or impose an additional cost on, the Bank or its holding company in making or keeping the Loan available or maintaining or funding all or part of the Loan; and/or |
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12.2.3 | reduce the amount payable or the effective return to the Bank under any of the Security Documents; and/or | |
12.2.4 | reduce the Banks or its holding companys rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to the Banks obligations under any of the Security Documents; and/or | |
12.2.5 | require the Bank or its holding company to make a payment or forego a return on or calculated by reference to any amount received or receivable by the Bank under any of the Security Documents; and/or | |
12.2.6 | require the Bank or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Loan from its capital for regulatory purposes, | |
then and in each such case (subject to clause 12.3): |
(a) | the Bank 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 the Advances outstanding have been repaid, pay to the Bank the amount which the Bank specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which the Bank or its holding company regards as confidential) is required to compensate the Bank and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment, foregone return or loss. |
For the purposes of this clause 12.2 holding company means the company or entity (if any) within the consolidated supervision of which the Bank is included. | ||
12.3 | Exception | |
Nothing in clause 12 .2 shall entitle the Bank to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause 6.6. | ||
13 | Security and set-off | |
13.1 | Application of moneys | |
All moneys received by the Bank under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 shall be applied in the following manner: | ||
13.1.1 | first, in or toward payment of all unpaid costs, expenses, fees and commitment commissions which may be owing to the Bank under any of the Security Documents; | |
13.1.2 | secondly, in or towards payment of any arrears of interest owing in respect of the Loan or any part thereof; | |
13.1.3 | thirdly, in or towards repayment of the Loan (whether the same is due and payable or not); | |
13.1.4 | fourthly, in or towards payment to the Bank of any sum owing to it under the Master Swap Agreement; | |
13.1.5 | fifthly, in or towards payment to the Bank for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid or prepaid and which amounts are so payable under this Agreement; | |
13.1.6 | sixthly, in or towards payment to the Bank of any other sums owing to it under any of the Security Documents; and |
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13.1.7 | seventhly, the surplus (if any) shall be paid to the Borrower or to whomsoever else may be entitled to receive such surplus. | |
13.2 | Set-off | |
13.2.1 | The Borrower authorises the Bank (without prejudice to any of the Banks rights at law, in equity or otherwise), at any time and without notice to the Borrower, to apply any credit balance to which the Borrower is then entitled standing upon any account of such Borrower with any branch of the Bank in or towards satisfaction of any sum due and payable from the Borrower to the Bank under any of the Security Documents. For this purpose, the 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 | The Bank shall not be obliged to exercise any right given to it by this clause 13.2. The Bank shall notify the Borrower forthwith upon the exercise or purported exercise of any right of set-off giving full details in relation thereto. | |
13.2.3 | Nothing in this clause 13.2 shall be effective to create an Encumbrance or any other security interest. | |
13.3 | Further assurance | |
The Borrower undertakes that the Security Documents shall, both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Security Documents, be valid and binding obligations of the respective parties thereto and rights of the Bank enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Bank may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents. | ||
13.4 | Conflicts | |
In the event of any conflict between this Agreement and any of the other Borrowers Security Documents, the provisions of this Agreement shall prevail. | ||
14 | Assignment, transfer and lending office | |
14.1 | Benefit and burden | |
This Agreement shall be binding upon, and enure for the benefit of, the Bank and the Borrower and their respective successors in title. | ||
14.2 | No assignment by Borrower | |
The Borrower may not assign or transfer any of its rights or obligations under this Agreement. | ||
14.3 | Assignment by Bank | |
The Bank may assign all or any part of its rights under this Agreement or under any of the other Security Documents to any other bank or financial institution (an Assignee) with the prior written consent of the Borrower (such consent not to be unreasonably withheld and the request for which to be promptly responded to) unless the Assignee shall be a Related Company of the Bank (in which case no such consent shall be required, the Borrower consenting to such assignment by its execution of this Agreement). | ||
14.4 | Transfer | |
The Bank may transfer all or any part of its rights, benefits and/or obligations under this Agreement and/or any of the other Security Documents to any one or more banks or other financial institutions (a Transferee) with the prior written consent of the Borrower (such consent not to be unreasonably withheld and the request for which to be promptly responded to) unless the Transferee shall be a Related Company of the Bank (in which case no such consent shall be required, the Borrower consenting to such transfer by its execution of this Agreement) and if the Transferee, by delivery of |
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such undertaking as the Bank may approve, becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, part of the Banks obligations under this Agreement. |
14.5 | Documenting assignments and transfers | |
If the Bank assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 14.3 or 14.4 the Borrower undertakes, immediately on being requested to do so by the Bank and at the cost of the Bank, to enter into, and procure that the other Security Parties shall enter into, such documents as may be necessary or desirable to transfer to the Assignee or Transferee all or the relevant part of the Banks interest in the Security Documents and all relevant references in this Agreement to the Bank shall thereafter be construed as a reference to the Bank and/or its Assignee or Transferee (as the case may be) to the extent of their respective interests. | ||
14.6 | Lending office | |
The Bank shall lend through its office at the address specified in the definition of Bank in clause 1.2 or through any other office of the Bank selected from time to time by it through which the Bank wishes to lend for the purposes of this Agreement. If the office through which the Bank is lending is changed pursuant to this clause 14.6, the Bank shall notify the Borrower promptly of such change. | ||
14.7 | Disclosure of information | |
The Bank may disclose to a prospective assignee, transferee or to any other person who may propose entering into contractual relations with the Bank in relation to this Agreement such information about the Borrower and the other Security Parties or any of them as the Bank shall consider appropriate. | ||
15 | Notices and other matters | |
15.1 | Notices |
Every notice, request, demand or other communication under this Agreement or (unless otherwise provided therein) under any of the other Security Documents shall: | ||
15.1.1 | be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form; | |
15.1.2 | be deemed to have been received, subject as otherwise provided in the relevant Security Document, in the case of a letter, when delivered personally or five (5) days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and | |
15.1.3 | be sent: |
(a) | if to the Borrower at: | ||
c/o Free Bulkers S.A.
89 Akti Miaouli 185 38 Piraeus Greece |
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Fax No: +30 210 4291010
Attn: Mr Ion Varouxakis |
|||
(b) | if to the Bank at: | ||
Credit Suisse
St. Alban-Graben 1-3 P.O. Box CH-4002 Basel Switzerland |
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Fax No: +41 61 266 7939
Attention: Mr Jean-Baptiste Bless |
or to such other address and/or numbers as is notified by one party to the other party under this Agreement. | ||
15.2 | No implied waivers, remedies cumulative | |
No failure or delay on the part of the Bank to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Bank of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. | ||
15.3 | English language | |
All certificates, instruments and other documents to be delivered under or supplied in connection with any of the Security Documents shall be in the English language or shall be accompanied by a certified English translation upon which the Bank shall be entitled to rely. | ||
15.4 | Waiver of Borrowers rights | |
The Borrower agrees with the Bank that, from the date of this Agreement and so long as any moneys are owing under any of the Security Documents and while all or any part of the Commitment remains outstanding, it will not, without the prior written consent of the Bank: | ||
15.4.1 | exercise any right of subrogation, reimbursement and indemnity against any Owner or any other person liable under the Security Documents, whether in respect of any Indebtedness or intra-Group loans or otherwise; | |
15.4.2 | demand or accept repayment in whole or in part of any Indebtedness {including intra-Group loans) now or hereafter due to such Borrower from any Owner or from any other person liable under the Security Documents or demand or accept any guarantee, indemnity or other assurance against financial loss or any document or instrument created or evidencing an Encumbrance in respect of the same or dispose of the same; | |
15.4.3 | take any steps to enforce any right against any Owner or any other person liable under the Security Documents in respect of any such moneys; or | |
15.4.4 | claim any set-off or counterclaim against any Owner or any other person liable under the Security Documents or claiming or proving in competition with the Bank in the liquidation of any Owner or any other person liable under the Security Documents or have the benefit of, or share in, any payment from or composition with, any Owner or any other person liable under the Security Documents or any other Security Document now or hereafter held by the Bank for any moneys owing under this Agreement or for the obligations or liabilities of any other person liable but so that, if so directed by the Bank, it will prove for the whole or any part of its claim in the liquidation of any Owner or other person liable under the Security Documents on terms that the benefit of such proof and all money received by it in respect thereof shall be held on trust for the Bank and applied in or towards discharge of any moneys owing under this Agreement in such manner as the Bank shall deem appropriate. | |
16 | Governing law and jurisdiction | |
16.1 | Law | |
This Agreement is governed by, and shall be construed in accordance with, English law. | ||
16.2 | Submission to jurisdiction | |
The Borrower agrees, for the benefit of the Bank, that any legal action or proceedings arising out of or in connection with this Agreement against the Borrower or any of its assets may be brought in the |
39
40
(a) | no event or circumstance has occurred and is continuing which constitutes a Default; | |
(b) | the representations and warranties contained (i) in clauses 7.1, 7.2 and 7.3(b) of the Facility Agreement and (ii) in clauses 4.1 and 4.2 of each executed Owners Guarantee, 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 such Advance will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded; and | |
(d) | there has been no material adverse change in the financial position of ourselves or any Security Party or the Group, from that described by us or any other Security Party to the Bank in the negotiation of the Facility Agreement. |
41
1 | Constitutional documents | |
Copies, certified by an officer of each Security Party as true, complete and up to date copies of all documents which contain or establish or relate to the constitution of that Security Party; | ||
2 | Corporate authorisations | |
copies of resolutions of the directors of each Security Party and officers certificates attaching extracts of the resolutions of the shareholders of each Security Party, approving such of the Underlying Documents and the Security Documents to which such Security Party is, or is to be, party and authorising the signature, delivery and performance of such Security Partys obligations thereunder, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) by an officer of such Security Party as: |
(a) | being true and correct; | ||
(b) | being duly passed at meetings of the directors of such Security Party and of the shareholders of such Security Party, each duly convened and held; | ||
(c) | not having been amended, modified or revoked; and | ||
(d) | being in full force and effect, |
together with originals or certified copies of any powers of attorney issued by any such Security Party pursuant to such resolutions; | ||
3 | Specimen signatures | |
copies of the signatures of the persons who have been authorised on behalf of each Security Party to sign such of the Underlying Documents and the Security Documents to which such Security Party is, or is to be, party and to give notices and communications, including notices of drawing, under or in connection with the Security Documents, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) by an officer of such Security Party as being the true signatures of such persons; | ||
4 | Certificates of incumbency | |
a list of directors and officers of each Security Party specifying the names and positions of such persons, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) by an officer of such Security Party to be true, complete and up to date; | ||
5 | Borrowers consents and approvals |
42
a certificate (dated no earlier than five (5) Banking Days prior to the date of this Agreement) from an officer of the Borrower that no consents, authorisations, licences or approvals are necessary for the Borrower to authorise or are required by the Borrower in connection with the borrowing by the Borrower of the Advances pursuant to this Agreement or the execution, delivery and performance of the Borrowers Security Documents; | ||
6 | Other consents and approvals | |
a certificate (dated no earlier than five (5) Banking Days prior to the date of this Agreement) from an officer of each Security Party (other than the Borrower) that no consents, authorisations, licences or approvals are necessary for such Security Party to guarantee and/or grant security for the borrowing by the Borrower of the Commitment pursuant to this Agreement and execute, deliver and perform the Security Documents insofar as such Security Party is a party thereto; | ||
7 | Marshall Islands opinion | |
an opinion of Simpson & Reeder, special legal advisers on matters of Marshall Islands law to the Bank; | ||
8 | Operating Accounts | |
evidence that the Operating Accounts of the Initial Owners have been opened together with duly completed mandate forms in respect thereof and that there is a credit balance in each such Operating Account; | ||
9 | Security Documents | |
the Master Swap Agreement and the Master Agreement Security Deed, each duly executed by the relevant Security Parties; | ||
10 | Fees | |
evidence that any fees are under clause 5.1.1 have been paid in full; | ||
11 | Borrowers process agent | |
a letter from the Borrowers process agent for receipt of service of proceedings referred to in clause 16.2 accepting its appointment under the said clause and under each of the other Security Documents referred to in this Part 1 and in which it is or is to be appointed as the Borrowers agent; and | ||
12 | Security Parties process agent | |
a letter from each Security Partys agent for receipt of service of proceedings referred to in each of the Security Documents referred to in this Part 1 and in which it is or is to be appointed as such Security Partys agent. |
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1 | Drawdown Notice | |
The Drawdown Notice in respect of the first Advance to be drawn down under the Initial Tranche duly executed; | ||
2 | Conditions precedent |
evidence that the conditions precedent set out in Part 1 of schedule 2 remain fully satisfied; | ||
3 | Ship conditions | |
evidence that each Initial Ship (other than Free Jupiter): | ||
3.1 | Registration and Encumbrances | |
is permanently registered in the name of the relevant Owner under the laws and flag of the relevant Flag State through the relevant Registry and that each such Initial Ship and its Earnings, Insurances and Requisition Compensation are free of Encumbrances; | ||
3.2 | Classification | |
maintains the relevant Classification free of all requirements and recommendations of the relevant Classification Society; | ||
3.3 | Insurance | |
is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, confirmation from the protection and indemnity association or other insurer with which each such Initial Ship is, or is to be, entered for insurance or insured against protection and indemnity risks (including oil pollution risks) that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to each such Initial Ship); and | ||
3.4 | Initial Charter | |
has been delivered for service to the relevant charterer under the relevant Initial Charter; | ||
4 | Security Documents | |
the Owners Guarantee of each Initial Owner (other than the Free Jupiter Owner), the Operating Account Pledge in respect of the Operating Account of each such Initial Owner and the Ship Security Documents in respect of each Initial Ship (other than Free Jupiter), each duly executed; | ||
5 | Mortgage registration | |
evidence that the Mortgage over each Initial Ship (other than Free Jupiter) has been permanently registered against each such Initial Ship under the laws and flag of the relevant Flag State through the relevant Registry; | ||
6 | Registration forms | |
such statutory forms duly signed by the Borrower and the other Security Parties as may be required by the Bank to perfect the security contemplated by the Security Documents referred to in this Part 2; | ||
7 | Notices of assignment | |
copies of duly executed notices of assignment required by the terms of the relevant Ship Security Documents referred to in this Part 2 and in the forms prescribed by such Ship Security Documents; | ||
8 | Valuation | |
a valuation of each Initial Ship (other than Free Jupiter) made by one or (as the case may be) two shipbrokers in accordance with, and on the basis described in, clause 8.2.2, at the expense of the |
44
Borrower, such valuation to be made not earlier than thirty (30) days prior to the drawdown of the first Advance to be drawn down under the Initial Tranche; | ||
9 | Insurance opinion | |
an opinion (at the cost of the Borrower) from insurance consultants to the Bank on the Insurances effected or to be effected in respect of each Initial Ship (other than Free Jupiter) upon and following the first Drawdown Date; | ||
10 | SMC/DOC | |
a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) as a true and complete copy by an officer of the Borrower of the DOC issued to the Operator of each Initial Ship (other than Free Jupiter) and the SMC for each such Initial Ship; | ||
11 | ISPS |
(a) | evidence satisfactory to the Bank that each Initial Ship (other than Free Jupiter) is subject to a ship security plan which complies with the ISPS Code; and | ||
(b) | a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the first Drawdown Date) as a true and complete copy by an officer of the Borrower of the ISSC and the continuous synopsis record (as described in the ISPS Code) for each Initial Ship (other than Free Jupiter); |
12 | Fees | |
evidence that any fees and any commitment commission due under clause 5.1 have been paid in full; | ||
13 |
Marshall Islands opinion
an opinion of Cozen 0 Connor, special legal advisers on matters of Marshall Islands law to the Bank; |
|
14 | Underlying Documents | |
a certified true copy of the Management Agreement and the Initial Charter in respect of each Initial Ship (other than Free Jupiter); | ||
15 | Security Parties process agent | |
a letter from the relevant Security Parties agent for receipt of service of proceedings accepting its appointment under each of the Security Documents referred to in this Part 2 and in which it is or is to be appointed as the relevant Security Partys agent; | ||
16 | Existing Indebtedness | |
evidence that the Indebtedness of the Initial Owners existing on the date of this Agreement and secured on the Initial Ships has been, or will be with the proceeds of the first Advance to be drawn down under the Initial Tranche, reduced to $28,000,000, the Initial Owners (other than the Free Jupiter Owner) have been released from their obligations in respect thereof and any security granted in respect thereof has been discharged (except in connection with Free Jupiter); and | ||
17 | Further matters/opinions | |
any such other matter or further opinion as may be required by the Bank. |
45
1 | Drawdown Notice | |
The Drawdown Notice in respect of the second Advance to be drawn down under the Initial Tranche duly executed; | ||
2 | Conditions precedent | |
evidence that the conditions precedent set out in Part 1 and Part 2 of schedule 2 remain fully satisfied; | ||
3 | Ship conditions | |
evidence that Free Jupiter. | ||
3.1 | Registration and Encumbrances | |
is permanently registered in the name of the relevant Owner under the laws and flag of the relevant Flag State through the relevant Registry and that Free Jupiter and its Earnings, Insurances and Requisition Compensation are free of Encumbrances; | ||
3.2 | Classification | |
maintains the relevant Classification free of all requirements and recommendations of the relevant Classification Society; | ||
3.3 | Insurance | |
is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, confirmation from the protection and indemnity association or other insurer with which Free Jupiter is, or is to be, entered for insurance or insured against protection and indemnity risks (including oil pollution risks) that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to Free Jupiter, and | ||
3.4 | Initial Charter | |
has been delivered for service to the relevant charterer under the relevant Initial Charter; | ||
4 | Security Documents | |
the Owners Guarantee of the Free Jupiter Owner, the Operating Account Pledge in respect of the Operating Account of the Free Jupiter Owner and the Ship Security Documents in respect of Free Jupiter, each duly executed; | ||
5 | Mortgage registration | |
evidence that the Mortgage over Free Jupiter has been permanently registered against such Ship under the laws and flag of the relevant Flag State through the relevant Registry; | ||
6 | Registration forms | |
such statutory forms duly signed by the Borrower and the other Security Parties as may be required by the Bank to perfect the security contemplated by the Security Documents referred to in this Part 3; | ||
7 | Notices of assignment |
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copies of duly executed notices of assignment required by the terms of the relevant Ship Security Documents referred to in this Part 3 and in the forms prescribed by such Ship Security Documents; | ||
8 | Valuation | |
a valuation of Free Jupiter made by one or (as the case may be) two shipbrokers in accordance with, and on the basis described in, clause 8.2.2, at the expense of the Borrower, such valuation to be made not earlier than thirty (30) days prior to the drawdown of the second Advance to be drawn down under the Initial Tranche; | ||
9 | Insurance opinion | |
an opinion (at the cost of the Borrower) from insurance consultants to the Bank on the Insurances effected or to be effected in respect of Free Jupiter upon and following the Drawdown Date of the second Advance to be drawn down under the Initial Tranche; | ||
10 | SMC/DOC | |
a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of this Agreement) as a true and complete copy by an officer of the Borrower of the DOC issued to the Operator of Free Jupiter and the SMC for such Ship; | ||
11 | ISPS |
(a) | evidence satisfactory to the Bank that Free Jupiter is subject to a ship security plan which complies with the ISPS Code; and | ||
(b) | a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the Drawdown Date of the second Advance to be drawn down under the Initial Tranche) as a true and complete copy by an officer of the Borrower of the ISSC and the continuous synopsis record (as described in the ISPS Code) for Free Jupiter, |
12 | Fees | |
evidence that any fees and any commitment commission due under clause 5.1 have been paid in full; | ||
13 | Marshall Islands opinion | |
an opinion of Cozen O Connor, special legal advisers on matters of Marshall Islands law to the Bank; | ||
14 | Underlying Documents | |
a certified true copy of the Management Agreement and the Initial Charter in respect of Free Jupiter, | ||
15 | Security Parties process agent | |
a letter from the relevant Security Parties agent for receipt of service of proceedings accepting its appointment under each of the Security Documents referred to in this Part 3 and in which it is or is to be appointed as the relevant Security Partys agent; | ||
16 | Existing Indebtedness | |
evidence that the Indebtedness of the Initial Owners existing on the date of this Agreement and secured on the Initial Ships has been, or will be with the proceeds of the second Advance to be drawn down under the Initial Tranche repaid in full and any security granted in respect thereof has been discharged; |
47
17 | Dry-dock | |
evidence that Free Jupiter has completed its repairs in connection with its recent grounding and has left the dry-dock and resumed trading and any amounts due for such repairs have been settled in full by the relevant Owner and there is no dispute with the insurers, charterers or cargo interests of Free Jupiter in connection with any claims made as a result of such grounding and the insurers have paid any such claims (including to the Free Jupiter Owner); and | ||
18 | Further matters/opinions | |
any such other matter or further opinion as may be required by the Bank. |
48
1 | Drawdown Notice | |
The duly executed Drawdown Notice in respect of the first Advance (the Relevant Advance) to be drawn down under the Additional Tranche; | ||
2 | Constitutional Documents | |
copies, certified by an officer of the Additional Owner to purchase the Additional Ship as true, complete and up to date copies of all documents which contain or establish or relate to the constitution of the Additional Owner; | ||
3 | Corporate authorisations | |
copies of resolutions of the directors of the Additional Owner and the Manager and officers certificates attaching extracts of the resolutions of the shareholders of each such Security Party, approving such of the Underlying Documents and the Security Documents to which such Security Party is, or is to be, party and authorising the signature, delivery and performance of such Security Partys obligations thereunder, certified (in a certificate dated no earlier than five (5) Banking Days) by an officer of such Security Party as: |
(a) | being true and correct; | ||
(b) | being duly passed at meetings of the directors of such Security Party and of the shareholders of such Security Party, each duly convened and held; | ||
(c) | not having been amended, modified or revoked; and | ||
(d) | being in full force and effect, |
together with originals or certified copies of any powers of attorney issued by any such Security Party pursuant to such resolutions; | ||
4 | Specimen signatures | |
copies of the signatures of the persons who have been authorised on behalf of the Additional Owner and the Manager to sign such of the Underlying Documents and the Security Documents referred to in this Part 4 and to which such Security Party is, or is to be, party and to give notices and communications, including notices of drawing, under or in connection with the Security Documents, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of the relevant Drawdown Notice) by an officer of such Security Party as being the true signatures of such persons; | ||
5 | Certificates of incumbency |
49
a list of directors and officers of the Additional Owner and the Manager specifying the names and positions of such persons, certified (in a certificate dated no earlier than five (5) Banking Days prior to the date of the relevant Drawdown Notice) by an officer of such Security Party to be true, complete and up to date; | ||
6 | Consents and approvals | |
a certificate (dated no earlier than five (5) Banking Days prior to the date of the relevant Drawdown Notice) from an officer of the Additional Owner and the Manager that no consents, authorisations, licences or approvals are necessary for such Security Party to guarantee and/or grant security for the borrowing by the Borrower of the Advances pursuant to this Agreement and execute, deliver and perform the Security Documents insofar as such Security Party is a party thereto; | ||
7 | Ship conditions | |
evidence that the Additional Ship: | ||
7.1 | Registration and Encumbrances | |
is provisionally or permanently registered in the name of the Additional Owner under the laws and flag of the relevant Flag State through the relevant Registry and that the Additional Ship and its Earnings, Insurances and Requisition Compensation are free of Encumbrances; | ||
7.2 | Classification | |
maintains the relevant Classification free of all requirements and recommendations of the relevant Classification Society; | ||
7.3 | Insurance | |
is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, confirmation from the protection and indemnity association or other insurer with which the Additional Ship is, or is to be, entered for insurance or insured against protection and indemnity risks (including oil pollution risks) that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to the Additional Ship); and | ||
7.4 | Additional Charter | |
has been delivered for service to the relevant charterer under the Additional Charter; | ||
8 | Security Documents | |
the Owners Guarantee of the Additional Owner, the Operating Account Pledge in respect of the Operating Account of the Additional Ship and the Ship Security Documents in respect of the Additional Ship (including a Charter Assignment in respect of the Additional Charter), each duly executed; | ||
9 | Mortgage registration | |
evidence that the Mortgage over the Additional Ship has been permanently registered against the Additional Ship under the laws and flag of the relevant Flag State through the relevant Registry; | ||
10 | Registration forms | |
such statutory forms duly signed by the Additional Owner and the other Security Parties as may be required by the Bank to perfect the security contemplated by the relevant Security Documents referred to in this Part 4; |
50
11 | Notices of assignment | |
copies of duly executed notices of assignment requested by the terms of the relevant Ship Security Documents referred to in this Part 4 and in the forms prescribed by such Ship Security Documents referred to in this Part 4; | ||
12 | Delivery documents | |
copies, certified by the Additional Owner to be true and complete, of the bill of sale, the protocol of delivery and acceptance, the relevant commercial invoice and any other relevant delivery documents exchanged in respect of the Additional Ship under the Contract; | ||
13 | Transfer of title | |
evidence that the transfer of title to the Additional Ship from the Seller to the Additional Owner has been duly recorded in the relevant Registry free from Encumbrances; | ||
14 | Valuations | |
a valuation of the Additional Ship made by one or (as the case may be) two shipbrokers in accordance with, and on the basis described in, clause 8.2.2, at the expense of the Borrower, such valuation to be made not earlier than thirty (30) days prior to the drawdown of the Relevant Advance; | ||
15 | Insurance opinion | |
an opinion (at the cost of the Borrower) from insurance consultants to the Bank on the insurances effected or to be effected in respect of the Additional Ship upon and following the drawdown of the Relevant Advance; | ||
16 | SMC/DOC | |
a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the Drawdown Date of the Relevant Advance) as a true and complete copy by an officer of the Additional Owner of the DOC issued to the Operator of the Additional Ship and either (a) the SMC for the Additional Ship or (b) an application for the issuance of the SMC for the Additional Ship; | ||
17 | ISPS |
(a) | evidence satisfactory to the Bank that the Additional Ship is subject to a ship security plan which complies with the ISPS Code; and | ||
(b) | a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to the Drawdown Date of the Relevant Advance) as a true and complete copy by an officer of the Additional Owner of either (a) the ISSC or (b) an application for the issuance of the ISSC and the continuous synopsis record (as described in the ISPS Code) for the Additional Ship; |
18 | Fees | |
evidence that any fees and any commitment commission due under clause 5.1 have been paid in full; | ||
19 | Legal opinions | |
an opinion of special legal advisers to the Bank on the laws of the Flag State of the Additional Ship and on the laws of the country of incorporation of the Additional Owner of the Additional Ship; | ||
20 | Underlying Documents | |
a certified true copy of the Contract, the Management Agreement and the Additional Charter in respect of the Additional Ship, duly executed; |
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21 | Operating Account | |
evidence that the Operating Account of the Additional Owner has been duly opened together with duly completed mandate forms in respect thereof, and that there is a credit balance in such account; | ||
22 | Minimum fleet cover | |
evidence satisfactory to the Bank that at least 50% of all Mortgaged Ships {including the Additional Ship) by reference to their aggregate deadweight tons, are subject to timecharters with such charterers, and on such daily charter rates, as are acceptable to the Bank in its sole discretion; | ||
23 | Equity | |
any funds required to pay the remaining part of the Contract Price under the Contract which is not being financed by the Relevant Advance, have been deposited with the Bank at least three (3) days before the Drawdown Date of the Relevant Advance; | ||
24 | Security Parties process agent | |
a letter from the relevant Security Parties agent for receipt of service of proceedings accepting its appointment under each the said Security Documents referred to in this Part 4 in which it is or is to be appointed as the said Security Parties process agent; and | ||
25 | Further matter/opinions | |
any such other matters or further opinions as the Bank may require. |
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55
56
57
58
A. | The Owner granted the Mortgage to the Mortgagees as security for its Corporate Guarantee (as defined in the Mortgage), of (i) the Loan (as defined in the Mortgage) interest thereon and all other sums of money owing to the Mortgagee by FREESEAS INC. (the Borrower) under that certain Facility Agreement (the Loan Agreement) dated 24 December 2007 made among the Borrower, as borrower, and the Mortgagee, as lender and (ii) the debts and obligations arising or that may arise in favour of the Mortgagee under the Master Swap Agreement (as defined in the Mortgage, a copy of which is annexed hereto as Exhibit 1 and shall be read together with the Mortgage as amended by this Amendment) up to the maximum amount of Eighteen Million Two Hundred Thousand Dollars ($18,200,000). | |
B. | The Loan Agreement has been amended by a supplemental agreement dated I · ] June 2008 (the Supplemental Agreement and together with the Loan Agreement hereinafter called the Amended Loan Agreement) made among [ the Borrower, as borrower, the Owner , Adventure Five S.A. and Adventure Six S.A., each a wholly owned subsidiary of the Borrower (together, the Initial Owners), as guarantors, FREE BULKERS S Á., as manager, and the Mortgagee, as lender, pursuant to which, among other things, the Mortgagee, has agreed to increase the Loan made available to the Borrower under the Loan Agreement from United States Dollars Eighty Seven Million (US$87,000,000) to up to United States Dollars Ninety One Million (US$91,000,000), on condition, among other things that the Owner enter into this Amendment to the Mortgage. A copy of the form of the Supplemental Agreement together with the form of the amended and restated facility agreement reflecting the Loan Agreement as amended by the Supplemental Agreement, is attached hereto as Exhibit 2 and shall be read together herewith. | |
NOW THEREFORE, in consideration of the premises, the parties hereby agree as follows: | ||
1. | The Mortgage be and hereby is amended as follows: |
1
D. | Clause 2 of the Mortgage is hereby restated and reaffirmed as follows: | |
Grant, conveyance and mortgage | ||
For good and valuable consideration (receipt of which is hereby acknowledged by the Owner) and, pursuant to the Corporate Guarantee and in order to secure the repayment of the Outstanding Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the Loan Agreement and the Master Swap Agreement, express or implied, the Owner has granted, conveyed and mortgaged and does by these presents grant, convey and mortgage unto the Mortgagee, the whole of the Ship TO HAVE AND TO HOLD the same unto the Mortgagee forever, upon the terms herein set forth, for the enforcement of the payment of the Outstanding Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the Loan Agreement and the Master Swap Agreement, express or implied. | ||
PROVIDED ONLY, and the condition of these presents is such that, if the Owner shall pay or cause to be repaid to the Mortgagee, the Outstanding Indebtedness as and when the same shall become due and payable in accordance with the terms of the Corporate Guarantee and this Mortgage and shall observe and comply with the covenants, terms and conditions contained in the Corporate Guarantee and this Mortgage, expressed or implied to be performed, observed or complied with, by and on the part of the Owner, then these presents and the rights hereunder shall cease, determine and be void, otherwise to be and remain in full force and effect. | ||
IT IS NOT INTENDED that this Mortgage shall cover, and this Mortgage shall not cover, property other than the Ship as the term Vessel is used in Section 308(2) of Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands as amended. |
Total amount and maturity | ||
For the purpose of recording this First Preferred Mortgage as required by Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands as amended the total amount is one hundred nine million two hundred thousand Dollars (5109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million |
2
Two Hundred Thousand Dollars ($18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. The date of maturity is 31 October 2015 and the discharge amount is the same as the total amount. |
ADVENTURE EIGHT S.A. | CREDIT SUISSE | ||||||
|
|||||||
By:
|
By: | ||||||
|
Name: | Name: | |||||
|
Title: | Title: | |||||
|
3
4
5
Official | Gross | Net | ||||||||||
Name of Vessel | Number | Tonnage | Tonnage | |||||||||
FREE JUPITER
|
2506 | 27,176 | 15,533 |
Type of Instrument:
|
Amendment No. 1 to First Preferred Mortgage | |
|
||
Date of Instrument:
|
June [ ], 2008 | |
|
||
Mortgagor:
|
ADVENTURE EIGHT S.A. | |
|
||
Mortgagee:
|
CREDIT SUISSE | |
|
||
Date(s) of Maturity
(optional, except in the case of obligations secured under section 309(2)(a) of the MI Maritime Law): |
No change | |
|
||
Total Amount of Mortgage:
|
one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($ 18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. | |
|
||
Evidence of Mortgage Debt
(include date and amount): |
Loan Agreement (as defined in the Mortgage), as amended by the Supplemental Agreement (as defined in No. 1 to First Preferred Mortgage |
|
|
||
If Mortgage is given in continuation
of a Prior Mortgage, the date and time
(if available) of recordation of the
Prior Mortgage:
|
N/A | |
|
||
Intended Effect of Instrument:
|
to amend mortgage covenants and to increase the total amount to one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($ 18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. | |
|
||
ADVENTURE EIGHT S.A.
|
CREDIT SUISSE | |
|
||
By
|
By
|
6
A. | The Owner granted the Mortgage to the Mortgagees as security for its Corporate Guarantee (as defined in the Mortgage), of (i) the Loan (as defined in the Mortgage) interest thereon and all other sums of money owing to the Mortgagee by FREESEAS INC. (the Borrower) under that certain Facility Agreement (the Loan Agreement) dated 24 December 2007 made among the Borrower, as borrower, and the Mortgagee, as lender and (ii) the debts and obligations arising or that may arise in favour of the Mortgagee under the Master Swap Agreement (as defined in the Mortgage, a copy of which is annexed hereto as Exhibit 1 and shall be read together with the Mortgage as amended by this Amendment) up to the maximum amount of Eighteen Million Two Hundred Thousand Dollars ($18,200,000). | |
B. | The Loan Agreement has been amended by a supplemental agreement dated [ · ] June 2008 (the Supplemental Agreement and together with the Loan Agreement hereinafter called the Amended Loan Agreement) made among [ the Borrower, as borrower, the Owner , Adventure Eight S.A. and Adventure Six S.A., each a wholly owned subsidiary of the Borrower (together, the Initial Owners), as guarantors, FREE BULKERS S.A., as manager, and the Mortgagee, as lender, pursuant to which, among other things, the Mortgagee, has agreed to increase the Loan made available to the Borrower under the Loan Agreement from United States Dollars Eighty Seven Million (US$87,000,000) to up to United States Dollars Ninety One Million (US$91,000,000), on condition, among other things that the Owner enter into this Amendment to the Mortgage. A copy of the form of the Supplemental Agreement together with the form of the amended and restated facility agreement reflecting the Loan Agreement as amended by the Supplemental Agreement, is attached hereto as Exhibit 2 and shall be read together herewith. |
1
D. | Clause 2 of the Mortgage is hereby restated and reaffirmed as follows: | |
Grant, conveyance and mortgage | ||
For good and valuable consideration (receipt of which is hereby acknowledged by the Owner) and, pursuant to the Corporate Guarantee and in order to secure the repayment of the Outstanding Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the Loan Agreement and the Master Swap Agreement, express or implied, the Owner has granted, conveyed and mortgaged and does by these presents grant, convey and mortgage unto the Mortgagee, the whole of the Ship TO HAVE AND TO HOLD the same unto the Mortgagee forever, upon the terms herein set forth, for the enforcement of the payment of the Outstanding Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the Loan Agreement and the Master Swap Agreement, express or implied. | ||
PROVIDED ONLY, and the condition of these presents is such that, if the Owner shall pay or cause to be repaid to the Mortgagee, the Outstanding Indebtedness as and when the same shall become due and payable in accordance with the terms of the Corporate Guarantee and this Mortgage and shall observe and comply with the covenants, terms and conditions contained in the Corporate Guarantee and this Mortgage, expressed or implied to be performed, observed or complied with, by and on the part of the Owner, then these presents and the rights hereunder shall cease, determine and be void, otherwise to be and remain in full force and effect. | ||
IT IS NOT INTENDED that this Mortgage shall cover, and this Mortgage shall not cover, property other than the Ship as the term Vessel is used in Section 308(2) of Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands as amended. |
2
Total amount and maturity | ||
For the purpose of recording this First Preferred Mortgage as required by Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands as amended the total amount is one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. The date of maturity is 31 October 2015 and the discharge amount is the same as the total amount. |
3
4
5
6
Official | Gross | Net | ||||||||||
Name of Vessel | Number | Tonnage | Tonnage | |||||||||
FREE GODDESS
|
3030 | 13,695 | 7,710 |
Type of Instrument:
|
Amendment No. 1 to First Preferred Mortgage | |
|
||
Date of Instrument:
|
June [ ], 2008 | |
|
||
Mortgagor:
|
ADVENTURE FIVE S.A. | |
|
||
Mortgagee:
|
CREDIT SUISSE | |
|
||
Date(s) of Maturity
|
||
(optional, except in the case of
|
||
obligations secured under section
|
||
309(2)(a) of the MI Maritime Law):
|
No change | |
|
||
Total Amount of Mortgage:
|
one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($ 18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. | |
|
||
Evidence of Mortgage Debt
|
||
(include date and amount):
|
Loan Agreement (as defined in the Mortgage), as amended by the Supplemental Agreement (as defined in No. 1 to First Preferred Mortgage | |
|
||
If Mortgage is given in continuation
of a Prior Mortgage, the date and time
(if available) of recordation of the
Prior Mortgage:
|
N/A | |
|
||
Intended Effect of Instrument:
|
to amend mortgage covenants and to increase the total amount to one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($ 18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. | |
|
||
ADVENTURE FIVE S.A.
|
CREDIT SUISSE | |
|
||
By
|
By
|
7
A. | The Owner granted the Mortgage to the Mortgagees as security for its Corporate Guarantee (as defined in the Mortgage), of (i) the Loan (as defined in the Mortgage) interest thereon and all other sums of money owing to the Mortgagee by FREESEAS INC. (the Borrower) under that certain Facility Agreement (the Loan Agreement) dated 24 December 2007 made among the Borrower, as borrower, and the Mortgagee, as lender and (ii) the debts and obligations arising or that may arise in favour of the Mortgagee under the Master Swap Agreement (as defined in the Mortgage, a copy of which is annexed hereto as Exhibit 1 and shall be read together with the Mortgage as amended by this Amendment) up to the maximum amount of Eighteen Million Two Hundred Thousand Dollars ($18,200,000). | |
B. | The Loan Agreement has been amended by a supplemental agreement dated [ · ] June 2008 (the Supplemental Agreement and together with the Loan Agreement hereinafter called the Amended Loan Agreement) made among [ the Borrower, as borrower, the Owner , Adventure Five S.A. and Adventure Eight S.A., each a wholly owned subsidiary of the Borrower (together, the Initial Owners), as guarantors, FREE BULKERS S.A., as manager, and the Mortgagee, as lender, pursuant to which, among other things, the Mortgagee, has agreed to increase the Loan made available to the Borrower under the Loan Agreement from United States Dollars Eighty Seven Million (US$87,000,000) to up to United States Dollars Ninety One Million (US$91,000,000), on condition, among other things that the Owner enter into this Amendment to the Mortgage. A copy of the form of the Supplemental Agreement together with the form of the amended and restated facility agreement reflecting the Loan Agreement as amended by the Supplemental Agreement, is attached hereto as Exhibit 2 and shall be read together herewith. |
1
1. | The Mortgage be and hereby is amended as follows: |
D. | Clause 2 of the Mortgage is hereby restated and reaffirmed as follows: | |
Grant, conveyance and mortgage | ||
For good and valuable consideration (receipt of which is hereby acknowledged by the Owner) and, pursuant to the Corporate Guarantee and in order to secure the repayment of the Outstanding Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the Loan Agreement and the Master Swap Agreement, express or implied, the Owner has granted, conveyed and mortgaged and does by these presents grant, convey and mortgage unto the Mortgagee, the whole of the Ship TO HAVE AND TO HOLD the same unto the Mortgagee forever, upon the terms herein set forth, for the enforcement of the payment of the Outstanding Indebtedness and to secure the performance and observance of and compliance with the covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the Loan Agreement and the Master Swap Agreement, express or implied. | ||
PROVIDED ONLY, and the condition of these presents is such that, if the Owner shall pay or cause to be repaid to the Mortgagee, the Outstanding Indebtedness as and when the same shall become due and payable in accordance with the terms of the Corporate Guarantee and this Mortgage and shall observe and comply with the covenants, terms and conditions contained in the Corporate Guarantee and this Mortgage, expressed or implied to be performed, observed or complied with, by and on the part of the Owner, then these presents and the rights hereunder shall cease, determine and be void, otherwise to be and remain in full force and effect. | ||
IT IS NOT INTENDED that this Mortgage shall cover, and this Mortgage shall not cover, property other than the Ship as the term Vessel is used in Section 308(2) of Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands as amended. |
Total amount and maturity |
2
For the purpose of recording this First Preferred Mortgage as required by Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall Islands as amended the total amount is one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. The date of maturity is 31 October 2015 and the discharge amount is the same as the total amount. |
3
4
5
6
Official | Gross | Net | ||||||||||
Name of Vessel | Number | Tonnage | Tonnage | |||||||||
FREE HERO
|
2540 | 15,737 | 8,039 |
Type of Instrument:
|
Amendment No. 1 to First Preferred Mortgage | |
|
||
Date of Instrument:
|
June [ ], 2008 | |
|
||
Mortgagor:
|
ADVENTURE SIX S.A. | |
|
||
Mortgagee:
|
CREDIT SUISSE | |
|
||
Date(s) of Maturity
|
||
(optional, except in the case
of obligations secured under
section
309(2)(a) of the MI Maritime Law):
|
No change |
7
Total Amount of Mortgage:
|
one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($ 18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. | |
|
||
Evidence of Mortgage Debt
|
||
(include date and amount):
|
Loan Agreement (as defined in the Mortgage), as amended by the Supplemental Agreement (as defined in No. 1 to First Preferred Mortgage | |
|
||
If Mortgage is given in continuation
of a Prior Mortgage, the date and time
(if available) of recordation of the
Prior Mortgage:
|
N/A | |
Intended Effect of Instrument:
|
to amend mortgage covenants and to increase the total amount to one hundred nine million two hundred thousand Dollars ($109,200,000) (of which ninety one million Dollars ($91,000,000) represents the maximum principal amount of the Loan that may be outstanding at any one time, and Eighteen Million Two Hundred Thousand Dollars ($18,200,000) represents the Swap Obligations) and interest on the Loan and performance of mortgage covenants. | |
ADVENTURE SIX S.A.
|
CREDIT SUISSE |
By
|
By | |||||||
|
|
|
8
EXECUTED
as a
DEED
|
||||||||||
by
|
||||||||||
for and on behalf of | ||||||||||
FREESEAS INC. |
/s/ [ILLEGIBLE]
|
|||||||||
in the presence of |
Attorney-in-Fact | |||||||||
/s/ Ioannis
Fassolis
|
||||||||||
Witness:
Name: |
||||||||||
Address: | ||||||||||
Occupation: |
EXECUTED
as a
DEED
|
||||||||||
by
|
||||||||||
for and on behalf of | ||||||||||
ADVENTURE FIVE S.A. |
/s/ [ILLEGIBLE]
|
|||||||||
in the presence of |
Attorney-in-Fact | |||||||||
/s/ Ioannis
Fassolis
|
||||||||||
Witness:
Name: |
||||||||||
Address: | ||||||||||
Occupation: |
EXECUTED
as a
DEED
|
||||||||||
by
|
||||||||||
for and on behalf of | ||||||||||
ADVENTURE SIX S.A. |
/s/ [ILLEGIBLE]
|
|||||||||
in the presence of |
Attorney-in-Fact | |||||||||
/s/ Ioannis
Fassolis
|
||||||||||
Witness:
Name: |
||||||||||
Address: | ||||||||||
Occupation: |
EXECUTED
as a
DEED
|
||||||||||
by
|
||||||||||
for and on behalf of | ||||||||||
ADVENTURE EIGHT S.A. |
/s/ [ILLEGIBLE]
|
|||||||||
in the presence of |
Attorney-in-Fact | |||||||||
/s/ Ioannis
Fassolis
|
||||||||||
Witness:
Name: |
||||||||||
Address: | ||||||||||
Occupation: |
EXECUTED
as a
DEED
|
||||||||||
by
|
||||||||||
for and on behalf of | ||||||||||
FREE BULKERS, S.A. |
/s/ [ILLEGIBLE]
|
|||||||||
in the presence of |
Attorney-in-Fact | |||||||||
/s/ Ioannis
Fassolis
|
||||||||||
Witness:
Name: |
||||||||||
Address: | ||||||||||
Occupation: |
EXECUTED
as a
DEED
|
||||||||||
by
Maria Gratzi
|
||||||||||
for and on behalf of | ||||||||||
CREDIT SUISSE |
/s/ [ILLEGIBLE]
|
|||||||||
in the presence of |
Attorney-in-Fact | |||||||||
/s/ [ILLEGIBLE]
|
||||||||||
Witness:
Name: Ioannis Fassolis |
||||||||||
Address: 15 Sachtouri Str. | ||||||||||
Occupation: Attorney-At-Law |
1 | Reference is made to the Facility Agreement dated 24 December 2007 as amended and restated by a Supplemental Agreement dated 26 June 2008, made between FreeSeas Inc as Borrow sr and Credit Suisse as Bank in respect of a reducing revolving credit facility of up to $91,000,000 (together, the Facility Agreement). The outstanding principal amount on the date hereof under the Facility Agreement is $79,250,000. | |
2 | Words and expressions defined in the Facility Agreement shall have the same meanings when used herein. | |
3 | At the request of the Borrower, the Bank on the date of this Agreement hereby agrees as follows: |
(a) | with effect from 1 October 2008 and until 31 March 2010, the Bank waives the application of clause 8.2.1 of the Facility Agreement; | ||
(b) | with offset from the date of this Agreement the Bank consents to: |
(c) | with [ILLEGIBLE] fleet from the date of this Agreement the Bank consents to the following chances of the charterhire payable under, and other arrangements made in relation to, the Initial Charter in respect of Free Goddess: |
(i) | the charterhire payable under such Initial Charter for the period from 15 February 2009 until 15 September 2009 shall be the aggregate of (A) $8,000 per day and (B) 50% profit share over any sub-charter earnings or freights of the relevant Charterer in excess of $10,000 per day; and | ||
(ii) | the charterhire payable under such Initial Charter for the period from 16 September 2009 until 1 January 2010 or 28 February 2010 (at the Charterers option) shall be the aggregate of (A) $10,500 per day and (B) 50% profit share over any sub-charter earnings or freights of the relevant Charterer in excess of $12,500 per day; and | ||
(iii) | an upfront payment from the relevant Charterer to Adventure Five S.A. in the amount of $500,000 paid on 15 February 2009 (receipt of which is hereby confirmed by the Borrower). |
(c) | the reduction of the Commitment in respect of the Initial Tranche referred to in clause 4(b) above, shall reduce the amounts of the Commitment in respect of the Initial Tranche still required to be reduced on each Reduction Date under clause 4.3.2, in inverse order of their due dates of reduction thereunder; | ||
(d) | it is hereby agreed and acknowledged that the reduction of $1,725,000 referred to in clause 4(b) above is a permanent reduction of the Commitment in respect of the Initial Tranche and, consequently: |
(i) | on or prior to the Additional Reduction Date, the Borrower shall (and the Borrower hereby undertakes with the Bank to) prepay such part of the Advances of the Initial Tranche, as shall ensure that the outstanding amount of the Advances under the Initial Tranche on the Additional Reduction Date, does not on such date exceed the amount of the Commitment in respect of the Initial Tranche (taking into account the reduction of such Commitment referred to in clause 4(b) above, and any other reduction thereof made on the Additional Reduction Date or on any prior Reduction Dates under the terms of the Facility Agreement); and | ||
(ii) | any amount prepaid on or prior to the Additional Reduction Date under paragraph (i) above as a result of, or in order to comply with, the requirements of paragraph (i) above, may not be re-borrowed under the terms of the Facility Agreement; |
(e) | on the Additional Reduction Date, the Commitment in respect of the Additional Tranche shall also be reduced by the amount of $3,275,000, and such reduction shall be an additional reduction made over and above any other reductions of the Additional Tranche (scheduled or otherwise) required by the terms, of the Facility Agreement; | ||
(f) | the reduction of the Commitment in respect of the Additional Tranche referred to in clause 4(e) above, shall reduce the amounts of the Commitment in respect of the Additional Tranche still required to be reduced on each Reduction Date under clause 4.3.3, in inverse order of their due dates of reduction thereunder; | ||
(g) | it is hereby agreed and acknowledged that the reduction of $3,275,000 referred to in clause 4(e) above is a permanent reduction of the Commitment in respect of the Additional Tranche and, consequently: |
(i) | on or prior to the Additional Reduction Date, the Borrower shall (and the Borrower hereby undertakes with the Bank to) prepay such part of the Advances of the Additional Tranche, as shall ensure that the outstanding amount of the Advances under the Additional Tranche on the Additional Reduction Date, does not on such date exceed the amount of the Commitment in respect of the Additional Tranche (taking into account the reduction of such Commitment referred to in clause 4(e) above, and any other reduction thereof made on any prior Reduction Dates under the terms of the Facility Agreement); and | ||
(ii) | any amount prepaid on or prior to the Additional Reduction Date under paragraph (i) above as a result of, or in order to comply with, the requirements of paragraph (i) above, may not be re-borrowed under the terms of the Facility Agreement. |
(h) | from the date of this Agreement until 31 March 2010: |
(i) | the Borrower shall ensure (and the Borrower hereby undertakes with the Bank to ensure) that, on each Retention Date in respect of a Tranche, the Borrower pays to the Bank for credit to the Retention Account, the Retention Amount for such Retention Date in respect of such Tranche Provided however that, to the extent that there are moneys standing to the credit of the Operating Account, such moneys shall, up to an amount equal to the Retention Amount for that Tranche, be transferred to the Retention Account on that Retention Date for such Tranche (and the |
Borrower hereby irrevocably and unconditionally instructs and authorises the Bank to effect each such transfer); and to that extent the Borrowers obligations to make the payments referred to in this clause 4(h) shall have been fulfilled upon such transfer being effected; | |||
(ii) | unless and until there shall occur an Event of Default, all Retention Amounts in respect of a Tranche credited to the Retention Account, together with interest from time to time accruing or at any time accrued thereon, shall be applied by the Bank (and the Borrower hereby irrevocably and unconditionally instructs and authorises the Bank so to apply the same) upon each Reduction Date for that Tranche, and on each day that interest is payable pursuant to clause 3.1 on or in respect of that Tranche, in or towards payment to the Bank of any prepayment then falling due under clause 4.3 in relation to such Tranche or (as the case may be) in or towards payment of the amount of interest then due in relation to such Tranche. Each such application by the Bank shall constitute a payment in or towards satisfaction of the Borrowers 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 Bank is insufficient to meet the same, and | ||
(iii) | unless the Bank otherwise agrees in writing, the Borrower shall not be entitled to withdraw any moneys from the Retention Account at any time from the date of this Agreement and so long as any moneys are owing under the Facility Agreement and the other Security Documents. |
(i) | for the purposes of this Agreement, the following words and expressions shall have the following meanings: |
Retention Account means a Dollar account of the Borrower with account number 007331766326 opened by the Borrower with the Bank and includes any [ILLEGIBLE] sub-accounts thereof and any other account designated in writing by the Bank to be a Retention Account for the purposes of this Agreement; | |||
Retention Amount means, in relation to each Tranche and in respect of any Retention Date for that Tranche, such sum as shall be the aggregate of: |
(a) | one-third (1/3 ,a ) of the prepayment amount in respect of the relevant Tranche, which would fall due for payment pursuant to clause 4.3 of the Facility Agreement on the next Reduction Date for that Tranche after the relevant Retention Date, assuming that the Commitment in relation to the relevant Tranche were fully drawn on such Retention Date (but as reduced by any prior reductions made prior to such Retention Date); and | ||
(b) | the applicable fraction (as hereinafter defined) of the aggregate amount of interest that would fall due for payment in respect of the Advances of |
the relevant Tranche, during and at the end of each Interest Period for that Tranche current at the relevant Retention Date for that Tranche, assuming that the Commitment in relation to the relevant Tranche were fully drawn on such Retention Date (but as reduced by any prior reductions made prior to such Retention Date) and, for this purpose, the expression applicable fraction in relation to each Interest Period for a Tranche shall mean a fraction having a numerator of one and a denominator equal to the number of Retention Dates for that Tranche falling within the relevant Interest Period; and |
Retention Dates means, subject to clause 6.3 of the Facility Agreement: |
(a) | in the case of the Initial Tranche, 28 February 2009 and each of the dates falling at monthly intervals thereafter and prior to the Final Maturity Date; or | ||
(b) | in the case of the Additional Tranche, 2 February 2009 and each of the dates falling at monthly intervals thereafter and prior to the Final Maturity Date. |
5 | The waiver of the Bank referred to in clause 3 (a) above is without prejudice to the Banks rights under clause 8.2.1 of the Facility Agreement and the Borrowers obligations to comply with such clause at all times after 31 March 2010. | |
6 | Each of the Owners and the Manager hereby confirm their agreement to, and acknowledge, :he contents of this Agreement and further agree that their obligations under the Security Documents to which they are a party will continue in full force and effect and unaffected by, and notwithstanding the terms of, this Agreement and that the obligations of he Borrower secured under such Security Documents shall include the obligations of the Borrower under this Agreement. Each such party further agrees that references in the Security Documents to the Facility Agreement, the Loan Agreement or the Agreement shall be deemed to be references to the Facility Agreement as amended by this Agreement. | |
7 | This Agreement is supplemental to the Facility Agreement and the Facility Agreement and this Agreement shall be read and construed together as one instrument. | |
8 | This Agreement is a Security Document for the purposes of the Facility Agreement. Failure by the Borrower to comply with its obligations under this Agreement shall constitute an Event of Default under the Facility Agreement. | |
9 | Save as amendment by this Agreement, all other terms of the Facility Agreement remain unchanged The Bank however reserves any rights it may have under the Facility Agreement and the other Security Documents. | |
10 | This Agreement and any non-contractual obligations in connection with this Agreement are governed by English law. |
by /s/
[ILLEGIBLE]
|
/s/ Ion G. Varouxakis
|
|||
duly authorised for and on behalf of
|
Attorney-in-Fact | |||
FREESEAS INC.
|
||||
in the presence of
|
||||
/s/ [ILLEGIBLE]
|
||||
Witness
Name |
Evangella Platsidaki | |||
|
Norton Rose LLP-Athens | |||
|
Solicitor |
EXECUTED
as a
DEED
|
||||||||||
by
|
) | |||||||||
) | ||||||||||
duly authorised for and on behalf of | ) | |||||||||
CREDIT SUISSE | ) |
/s/ Ion G. Varouxakis
|
||||||||
in the presence of |
) |
Attorney-in-Fact
Gianrichy Giamboi |
||||||||
/s/ [ILLEGIBLE]
|
||||||||||
Witness | ||||||||||
Name |
Evangella Platsidaki Norton Rose LLP -
Athens Solicitor |
EXECUTED
as a
DEED
|
|||||
by /s/ [ILLEGIBLE]
|
|||||
duly authorised for and on behalf of | |||||
FREE BULKERS S.A. | |||||
in the presence of | |||||
/s/ [ILLEGIBLE] Witness |
|||||
Name
Evangella Platsidaki Norton Rose LLP -
Athens Solicitor |
|||||
Theo V. Sioufas & Co.
Law Offices Piraeus |
(1) | FBB FIRST BUSINESS BANK S.A., a bank incorporated in the Republic of Greece with its head office at 91 Michalopoulou Street, 11528 Athens, Greece, acting except otherwise herein provided, through its office at 62, Notara and Sotiros Dios streets, 185 35 Piraeus, Greece (the Bank); and | |
(2) | ADVENTURE NINE S.A., a company duly incorporated and validly existing under the laws of the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the Borrower) and |
(b) | FREE BULKERS S.A., a company duly incorporated under the laws of the Republic of the Marshall Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (hereinafter called the Approved Manager); and |
(A) | The Borrower, the Corporate Guarantor and the Approved Manager hereby jointly and severally acknowledge and confirm that (a) the Bank has advanced to the Borrower the full amount of the Loan and (b) as the date hereof the principal amount of $ 24,000,000 (US Dollars Twenty Four Million) remains outstanding. | |
(B) | Pursuant to a Guarantee dated 31 st March, 2008 (the Corporate Guarantee) the Corporate Guarantor irrevocably and unconditionally guaranteed the due and timely repayment of the Loan and interest and default interest to accrue thereon and the performance of all the obligations of the Borrower under the Loan Agreement and the Security Documents executed in accordance thereto. | |
(C) | Pursuant to a Managers Undertaking dated 31 st March, 2008 (the Managers Undertaking) the Approved Manager agreed, among others, that all claims it has or it may have against or in connection with the Vessel, her earnings, Insurances or Requisition Compensation or the Owner (as such terms are defined therein) shall rank after and be in all respects subordinate to all of the Banks rights and claims. | |
(D) | The Borrower and the other Security Parties have requested the Bank to consent to: |
2
(a) | non compliance by the Borrower of its covenants under Clause 8.3 (a) for the whole Deferral Period (as hereinafter defined); | ||
(b) | the non compliance by the Borrower of its covenants under Clause 8.6(c) for the whole Deferral Period (as hereinafter defined); | ||
(c) | the amendment of the Margin; and | ||
(d) | the amendment of the Loan Agreement as set out in Clause 5 hereof, |
1. | Definitions |
1.1 | Words and expressions defined in the Principal Agreement and not otherwise defined herein (including the Preamble and Recitals hereto) shall have the same meanings when used in this Agreement. | |
Additional Document means the Deed of Covenants Addendum; | ||
Deferral Period means a period starting on the 1st January, 2009 and terminating on the 1 st January 2010; | ||
Effective Date means the 1st January, 2009; | ||
Loan Agreement means the Principal Agreement as hereby amended as the same may from time to time be further amended and/or supplemented; | ||
Deed of Covenants Addendum means the addendum to the deed of covenants collateral to the first priority statutory Bahamian ship mortgage registered over the Vessel in favour of the Bank, whereby the said deed of covenants shall be amended, executed or (as the context may require) to be executed by the Borrower in favour of the Bank in form satisfactory to the Bank; | ||
1.2 | In this Agreement the term Security Documents shall be construed as to include the Security Documents as defined in the Principal Agreement as amended and/or supplemented by this Agreement and the Additional Documents. | |
1.3 | (a) where the context so admits words importing the singular number only shall include the plural and vice versa and words importing persons shall include firms and corporations, (b) clause headings are inserted for convenience of reference only and shall be ignored in construing this Agreement, (c) references to Clauses are to clauses of this Agreement save as may be otherwise expressly provided in this Agreement and (d) all capitalised terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. |
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2. | Representations and Warranties |
2.1 | Each corporate Security Party hereby jointly and severally represent and warrant to the Bank as at the date hereof that the representations and warranties set forth in the Principal Agreement and the Security Documents (updated mutatis mutandis to the date of this Agreement) are (and were on the Effective Date) true and correct as if all references therein to this Agreement were references to the Principal Agreement as amended and supplemented by this Agreement. | |
2.2 | In addition to the above, the Borrower and the Corporate Guarantor hereby jointly and severally represent and warrant to the Bank as at the date of this Agreement that: |
(a) | each of the corporate Security Parties is duly formed, is validly existing and in good standing under the laws of the place of its incorporation has full power to carry on its business as it is now being conducted and to enter into and perform its obligations under the Principal Agreement, this Agreement and the Additional Document and has complied with all statutory and other requirements relative to its business; | ||
(b) | all necessary licences, consents and authorities, governmental or otherwise under this Agreement, the Principal Agreement and the Additional Document have been obtained and, as of the date of this Agreement, no further consents or authorities are necessary for any of the Security Parties to enter into this Agreement or otherwise perform its obligations hereunder; | ||
(c) | this Agreement constitutes and the Additional Document on the execution thereof will constitute, the legal, valid and binding obligations of the Security Parties thereto enforceable in accordance with their respective terms; | ||
(d) | the execution and delivery of, and the performance of the provisions of this Agreement and the Additional Document do not, and will not contravene any applicable law or regulation existing at the date hereof or any contractual restriction binding on any of the Security Parties or its respective constitutional documents; | ||
(e) | no action, suit or proceeding is pending or threatened against any of the Borrower and the other Security Parties or their assets before any court, board of arbitration or administrative agency which could or might result in any material adverse change in the business or condition (financial or otherwise) of the Borrower or such Security Party; and | ||
(f) | none of the Borrower and the other Security Parties is and at the Effective Date was in default under any agreement by which it is or was at the Effective Date bound or in respect of any financial commitment, or obligation. |
3. | Conditions |
3.1 | The agreement of the Bank contained in Clause 4 shall be expressly subject to the fulfilment of the conditions set out in Clause 7 of the Principal Agreement and further subject to the condition that the Bank shall have received on or before the date hereof in form and substance satisfactory to the Bank and its legal advisers: |
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(a) | a recent certificate of incumbency of the Borrower, the Corporate Guarantor and the Approved Manager signed by the secretary or a director thereof, stating the officers and the directors and the shareholders of each of them and confirming that the corporate authorities submitted to the Bank on the execution of the Principal Agreement continue in full force and effect; | ||
(b) | a certificate of good standing or equivalent document issued by the competent authorities of the place of its incorporation in respect of the Borrower, the Corporate Guarantor and the Approved Manager (if required by the Bank); | ||
(c) | such favourable legal opinions from lawyers acceptable to the Bank and its legal advisors on such matters concerning the laws of Greece and such other relevant jurisdiction as the Bank shall require; | ||
(d) | the Additional Document duly executed by the respective parties thereto; | ||
(e) | payment of any and all fees payable by the Borrower in accordance with Clause 9 hereof. |
4. | Agreement of the Bank | |
The Bank, relying upon each of the representations and warranties set out in Clause 2 hereby agrees with the Borrower, subject to and upon the terms and conditions of this Agreement and in particular, but without limitation, subject to the fulfilment of the conditions precedent set out in Clause 3, to consent to the amendment of the Loan Agreement as set out in Clause 5 hereof. | ||
Further, the Bank confirms that no Event of Default had occurred as at the 31 st December 2008. | ||
5. | Variations to the Loan Agreement | |
The Borrower hereby agree with the Bank, subject to the Banks consent and further subject to and upon the terms and conditions contained in this Agreement, that the provisions of the Principal Agreement shall be and are hereby agreed to be varied and/or amended and/or supplemented as follows: |
5.1 | As from the Effective Date, the following new definitions shall be added to Clause 1.2 of the Principal Agreement reading as follows: | ||
Deferral Period means a period starting on the 1 st January 2009 and terminating on the 1 st January 2010; | |||
Deed of Covenants Addendum means an addendum executed or to be executed by the Borrower in connection with the Deed of Covenants collateral to the Mortgage in favour of the Bank in such form as the Bank may approve or require; | |||
Quotation Date means, in respect of any period in respect of which LIBOR falls to be determined under this Agreement, the second Banking Day before the first day of such period; |
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5.2 | With effect as from the Effective Date, the following definition set out in Clause 1.2 of the Principal Agreement shall be deleted and shall be replaced as follows: | |
Margin means two per cent (2%); | ||
5.3 | With effect from the Effective Date, Clause 3.6 (Market disruption-Non Availability) of the Principal Agreement shall be deleted in its entirety and shall be substituted by the following: |
(a) | Market disruption : | ||
If and whenever, at any time prior to the commencement of any Interest Period, the Bank (in its reasonable discretion) shall have determined (which determination shall be conclusive) that a Market Disruption Event has occurred in relation to the Loan for any such Interest Period, then the Bank shall forthwith give notice (a Determination Notice) thereof to the Borrower and the rate of interest on the Loan (or the relevant part thereof) for that Interest Period shall be the percentage rate per annum which is the sum of: |
(aa) | the Margin; and | ||
(bb) | the rate which expresses as a percentage rate per annum the cost to the Bank of funding the Loan (or the relevant part thereof) from whatever source it may reasonably select. |
(b) | In this Agreement Market Disruption Event means: |
(i) | at or about noon on the Quotation Date for the relevant Interest Period the LIBOR is not available; or | ||
(ii) | before close of business in London on the Quotation Date for the relevant Interest Period, the Bank determines (in its reasonable discretion) that the cost to it of obtaining matching deposits in the London Interbank Market to fund the Loan (or the relevant part thereof) for such Interest Period would be in excess of LIBOR; or | ||
(iii) | before close of business in London on the Quotation Date for the relevant Interest Period, deposits in Dollars are not available to the Bank in the London Interbank Market in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for such Interest Period. |
(c) | Alternative basis of interest or fundins |
(i) | If a Market Disruption Event occurs and the Bank or the Borrower so require(s), the Bank and the Borrower shall enter into negotiations (for a period of not more than ten (10) days (the Negotiation Period)) after the giving of the relevant Determination Notice with a view to agreeing a substitute basis for determining the rate of interest. |
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(ii) | Any alternative basis agreed pursuant to paragraph (i) above shall be binding on the Bank and all Security Parties. |
(d) | Alternative basis of interest in absence of agreement : If the Bank and the Borrower will not enter into negotiations as provided in clause 3. 6(c)(i) or if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Bank shall determine the next Interest Period and an interest rate representing the cost of funding of the Bank in Dollars of the Loan (or the relevant part thereof) plus the applicable Margin for such Interest Period; if the relevant circumstances are continuing at the end of the Interest Period so set by the Bank, the Bank shall continue to determine the next Interest Period and an interest rate representing its cost of funding in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period. | ||
(e) | Notice of prepayment : If the Borrower does not agree with an interest rate set by the Bank under Clause 3. 6(d) , the Borrower may give the Bank not less than 15 Banking Days notice of its intention to prepay the Loan at the end of the interest period set by the Bank | ||
(f) | Prepayment; termination of Commitments : A notice under Clause 3. 6(e) shall be irrevocable; and on the last Banking Day of the interest period set by the Bank, the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon up to the date of prepayment at the applicable rate plus the Margin and any balance of the Outstanding Indebtedness. | ||
(g) | Application of prepayment : The provisions of Clause 4 shall apply in relation to the prepayment. |
5.4 | With effect as from the Effective Date, the following shall be added after the final paragraph of Clause 8.3 (a): | |
Provided however that, subject to: (i) no Event of Default or potential Event of Default having occurred or to occur and (ii) no distribution of dividends, this covenant shall not be applicable to the Corporate Guarantor throughout the Deferral Period and any breach of said covenant during the Deferral Period is hereby waived. | ||
5.5 | With effect from the Effective Date, the following shall be added after the final paragraph of Clause 8.6 (c): | |
Provided however that, subject to: (i) no Event of Default or potential Event of Default having occurred or to occur and (ii) no distribution of dividends, this covenant shall not be applicable to the Borrower throughout the Deferral Period and any breach of said covenant during the Deferral Period is hereby waived. |
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5.6 | With effect from the Effective Date, the definition Security Documents shall be deemed to include the Security Documents as amended and/or supplemented in pursuance to the terms hereof as well as the Additional Documents and any document or documents (including if the context requires the Loan Agreement) that may now or hereafter be executed as security for the repayment of the Loan, interest thereon and any other moneys payable by the Bank under the Principal Agreement and the Security Documents (as herein defined) as well as for the performance by the Borrower and the other Security Parties (as herein defined) of all obligations, covenants and agreements pursuant to the Principal Agreement this Agreement and/or the Security Documents; | |
5.7 | With effect from the Effective Date, the definition and all references in the Principal Agreement and in the Security Documents to the Mortgage as references to the Mortgage as amended and supplemented by the Mortgage Addendum. | |
5.8 | With effect from the Effective Date, the definition and all references in the Principal Agreement and in the Security Documents to this Agreement, hereunder and the like and in the Security Documents to the Loan Agreement shall be construed as references to the Principal Agreement as amended and/or supplemented by this Agreement. |
6. | Continuance of Principal Agreement and the Security Documents | |
Save for the alterations to the Principal Agreement made or deemed to be made pursuant to this Agreement and such further modifications (if any) thereto as may be necessary to make the same consistent with the terms of this Agreement, the Principal Agreement shall remain in full force and effect and the security constituted by the Security Documents executed by the Borrower and the other Security Parties shall continue and remain valid and enforceable and the Borrower hereby reconfirms its obligations under the Principal Agreement as hereby amended and under the Security Documents to which it is party. | ||
7. | Reconfirmation of the Corporate Guarantee and the Managers undertaking | |
Notwithstanding the variation to the Loan Agreement contained herein (a) the Corporate Guarantee granted by the Corporate Guarantor (which the Corporate Guarantor hereby reconfirms) and (b) the Managers Undertaking granted by the Approved Manager (which the Approved Manager hereby reconfirms) shall remain in full force and effect as guarantee and/or security of the obligations of the Borrower under the Principal Agreement, this Agreement and the Security Documents (as hereby amended), and in respect of all outstanding balance of the Loan and other sums due to the Bank under the Loan Agreement and the Security Documents. | ||
8. | Entire Agreement and Amendment; Effect On Principal Agreement-Waivers | |
8.1 | The Principal Agreement, the Security Documents and this Agreement represent the entire agreement among the parties hereto with respect to the subject matter hereof and supersede any prior expressions of intent or understanding with respect to this |
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8.2 | Except to the extent that the Principal Agreement is expressly amended or supplemented by this Agreement, all terms and conditions of the Principal Agreement remain in full force and effect. This Agreement is supplementary to and incorporated in the Principal Agreement, all terms and conditions whereof, including, but not limited to, provisions on payments, calculation of interest and Events of Default, shall apply to the performance and interpretation of this Agreement. |
8.3 | No waiver of any such right, remedy or power, or any consent to any departure from the strict application of the provisions of this Agreement, the Loan Agreement or of any other Security Document shall in any way prejudice or affect the powers conferred upon the Bank under this Agreement, the Loan Agreement and the other Security Documents or the right of the Bank thereafter to act strictly in accordance with the terms of this Agreement, the Loan Agreement and the other Security Documents nor shall, any delay or omission by the Bank to exercise any right, remedy or power vested in the Bank under this Agreement, the Loan Agreement and/or the other Security Documents or by law, impair such right or power, or be construed as a waiver of, or as an acquiescence in any default by the Borrower and/or any other Security Party, nor shall any single or partial exercise by the Bank of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. |
9. | Fees and Expenses |
(a) | The Borrower shall pay on the date hereof a non-refundable restructuring fee in the amount of five thousand Dollars ($5,000). | ||
(b) | The Borrower shall pay to the Bank any additional amount of interest resulting out of the increase of the Margin, as stipulated in Clause 5.3 hereof, on the next Interest Payment Date, i.e. the 2 nd April 2009. | ||
(c) | The Borrower, the Corporate Guarantor and the Approved Manager, jointly and severally, agree to pay to the Bank all costs, charges and expenses (including legal fees) incurred by the Bank in connection with the negotiation, preparation, execution and enforcement or attempted enforcement of this Agreement and any document executed pursuant thereto and/or in preserving or protecting or attempting to preserve or protect the security created hereunder and/or under the Security Documents. | ||
(d) | The Borrower, the Corporate Guarantor and the Approved Manager, jointly and severally, covenant and agree to pay and discharge any and all stamp duties, registration and recording fees and charges and any other charges whatsoever and wheresoever payable or due in respect of this Agreement and/or any document executed pursuant hereto. |
10. | Notices | |
The provisions of clause 15.1 of the Principal Agreement shall extend and apply to the giving or making of notices or demands hereunder as if the same were expressly stated |
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herein save that notices or demands hereunder as regards the Borrower should be sent to such address or facsimile number as the Borrower have advised in writing to the Bank on the date of the Principal Agreement. |
11. | Applicable Law and Jurisdiction; Miscellaneous |
(a) | This Supplemental Agreement shall be governed by and construed in accordance with English law. The provisions of Clauses 16.1 (Law) and 16.2 (Submission to Jurisdiction) of the Principal Agreement shall extend and apply to this Supplemental Agreement as if the same were (mutatis mutandis) herein expressly set forth. | ||
(b) |
Mr. Ioannis Fassolis, an Attorney-at-Law, whose present address is at 15
S^chtouri Street, 185 36, Piraeus, Greece, is hereby appointed by the Borrower as
agent to accept service (hereinafter the
Process Agent)
upon whom any judicial or
extrajudicial process may be served (including but without limitation any documents
initiating legal proceedings) and any notice, request, demand payment order,
announcement of claim, any enforcement process or other communication under the
Principal Agreement, this Agreement or any of the Security Documents. In the event
that the Process Agent (or any substitute process agent notified to the Bank in
accordance with the foregoing) cannot be found at the address specified above (or, as
the case may be, notified to the Bank), which will be conclusively proved by the
affidavit of a process server to that effect, the authority of the Process Agent as
agent to accept service shall be deemed to have ceased and service of documents may be
effected in accordance with the procedure provided by the relevant provisions on
service of process provided by the Hellenic Procedural Code. In case, however, that
such Process Agent is found at any other address, the Bank shall have the right to
serve the documents either on the Process Agent at such address or in accordance with
the procedure provided by the relevant law.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed the day and year first above written. |
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SIGNED by | ) | ||||||||
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Mr. Ion Varouxakis | ) | /s/ Ion Varouxakis | |||||||
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for and on behalf of the
Borrower
ADVENTURE NINE S.A. |
)
) |
||||||||
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of the Marshall Islands, in the presence of | ) |
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Witness: |
/s/ Ioannis Fassolis
|
||||
Name: Ioannis Fassolis | ||||||
Address: 15 Sachtouri Street, Piraeus, Greece | ||||||
Occupation: Attorney-at-law |
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SIGNED by | ) | ||||||||
) | ||||||||||
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/s/ Mr. Ion Varouxakis | ) | /s/ Ion Varouxakis | |||||||
) | ||||||||||
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for and on behalf of | ) | ||||||||
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the Corporate Guarantor | |||||||||
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FREESEAS INC. | |||||||||
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in the presence of: |
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Witness: | /s/ Ioannis Fassolis | ||||
Name: Ioannis Fassolis | ||||||
Address: 15 Sachtouri Street, Piraeus, Greece | ||||||
Occupation: Attorney-at-law |
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SIGNED by | ) | |||||||||
) | |||||||||||
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/s/ Mr. Ion Varouxakis | ) | /s/ Ion Varouxakis | ||||||||
) | |||||||||||
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for and on behalf of | ) | |||||||||
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the Approved Manager | ||||||||||
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FREE BULKERS S.A. | ||||||||||
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in the presence of: |
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Witness: |
/s/ Ioannis Fassolis
|
||||
Name: Ioannis Fassolis | ||||||
Address: 15 Sachtouri Street, Piraeus, Greece | ||||||
Occupation: Attorney-at-law |
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SIGNED by | ) | ||||||
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||||||||
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/s/ Mr. Nikolaos Vougioukas
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) | /s/ Nikolaos Vougioukas | |||||
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for and on behalf of | ) | ||||||
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||||||||
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FBB-FIRST BUSINESS BANK S.A. | ) | ||||||
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in the presence of: | ) |
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Witness: |
/s/ Maria C. Galanopoulou
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||||
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Name: | Maria C. Galanopoulou | ||||
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Address: | Defteras Merarchias 13, | ||||
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Piraeus, Greece | |||||
Occupation: Attorney-at-law |
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(1) | ADVENTURE NINE S.A., a corporation incorporated and validly existing under the laws of the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (hereinafter called the Owner) (which expression shall include its successors and permitted assigns) and | |
(2) | FBB-FIRST BUSINESS BANK S.A., a bank incorporated in the Republic of Greece with its head office at 91 Michalakopoulou Street, 11528 Athens, Greece, acting except otherwise herein provided, through its office at 62, Notara and Sotiros Dios streets, 185 35 Piraeus, Greece (hereinafter called the Mortgagee which expression shall include its successors and assigns). |
(A) | The Owner is the absolute and unencumbered legal and beneficial owner of the sixty-four sixty-fourth shares of and in the motor vessel FREE IMPALA built by Shanghai Shipyard, in 1997, lawfully and permanently registered under Bahamas flag in the Ships Register of the Port of Nassau and having Official No. 8000947, Call Sign C6UF9, IMO No.: 9138680, of 15888 gross tonnage and 8036 net tonnage, propelled by a diesel internal combustion engine of 6074 KW, together with all her boats, engines, machinery tackle outfit spare gear fuel consumable and other stores belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired and all the additions, improvements and replacements in or on the above described ship (the said Ship together with all aforesaid is hereinafter called the Ship). | |
(B) | by a Loan Agreement (the Principal Agreement) dated 31 st March, 2008 and made between (a) the Mortgagee (therein described as the Bank), as lender and (b) the Owner, as borrower (therein called the Borrower), the Mortgagee agreed, subject to and upon the terms and conditions therein contained, to make available to the Owner, a term loan facility of up to United States Dollars twenty six million two hundred and fifty thousand (US$26,250,000) (the Loan) for the purposes therein specified and as at the date hereof the outstanding principal amount which remains due to the Mortgagee in respect of the Loan is United States Dollars twenty four million (US$24,000,000), which the Owner hereby acknowledges and confirms. | |
(C) |
The Owner in order to secure the repayment of the said principal amount of the said loan
facility executed and delivered in favour of the Mortgagee the First Priority Statutory Ship
Mortgage on the Ship dated the 2
nd
April, 2008, in favour of the Mortgagee which
was registered in the appropriate mortgage books by the Registrar of Bahamian Ships on the
2
nd
April, 2008 at 10:16 hours as
Mortgage B (the |
Mortgage) and a Deed of Covenant supplemental to the Mortgage (the Deed of Covenant) bearing even date to the Mortgage. | ||
(D) | By (a) a First Supplemental Agreement (the First Supplemental Agreement) dated 17 th March, 2009 made between (inter alios) the Owner and the Mortgagee (the Principle Agreement as supplemented and amended by the First Supplemental Agreement and as the same may from time to time be amended and/or supplemented hereinafter referred to as the Loan Agreement), supplemental and amendatory to the Principal Agreement, the Mortgagee, at the request of (inter alia) the Owner, agreed to amend the terms and conditions of the Principal Agreement so as to, among others, increase the Margin applicable to the Loan from 1.375% to 2%; and | |
(E) | the Owner and the Mortgagee wish by this Deed of Amendment to amend the Deed of Covenant. |
1. | Recital (B) of the Deed of Covenant is hereby amended to read as follows: |
(B) | By a Loan Agreement (which as the same may from time to time be supplemented and/or amended hereinafter called the Principal Agreement) dated 31 st March, 2008 and made between (A) the Owner, as borrower (therein called the Borrower) and (B) the Mortgagee, as lender (therein called the Bank) the Mortgagee agreed to make available to the Borrower and under the terms and conditions set forth therein, a secured floating interest rate loan facility in the sum of up to United States Dollars twenty six million two hundred and fifty thousand (US$26,250,000) (the Commitment) for the purposes therein specified.. |
2. | A new Recital (C) is hereby inserted in the Deed of Covenant (and the rest of the Recitals in the Deed of Covenant are renumbered as required) reading as follows: |
(C) | By a First Supplemental Agreement to Loan Agreement (the Principal Agreement) dated 17 th March, 2009 (the First Supplemental Agreement), made between (inter alios) the Owner and the Mortgagee (the Principle Agreement as supplemented and amended by the First Supplemental Agreement and/or as the same may from time to time be amended and/or supplemented hereinafter called the Loan Agreement), supplemental to and amendatory of the Principal Agreement, the Mortgagee agreed (inter alia), upon the terms and conditions therein set forth, to further amend the terms and conditions of the Principal Agreement as therein provided. |
3. | Definition Loan Agreement is hereby amended to read as follows: |
4. | Clause 2.2 of the Deed of Covenants is hereby amended to read as follows: |
The Owner will pay in accordance with Clause 3.1 of the Loan Agreement to the Mortgagee interest on the Loan calculated on the actual number of days elapsed and on the basis of a 360 day year for each Interest Period relative thereto at the annual rate of interest which is conclusively certified by the |
Mortgagee to be the aggregate of (i) two points (2%) (the Margin) and (ii) the rate per annum determined by the Mortgagee to be equal to the London Interbank Offered Rate shown on Page 3750 of the Telerate Service for deposits in United States Dollars in amounts comparable to the amount of the Loan for such Interest Period at or about 11:00 a.m. (London time) two (2) business days prior to the commencement of such Interest Period (the LIBOR). Such interest shall be paid in arrears on the last day of each Interest Period, provided that, in the case of an Interest Period during which one or more Repayment Date(s) fall(s), interest accruing during such Interest Period shall be payable on each such Repayment Date and on the last day of such Interest Period; | |||
Provided however, that the rate of interest for the Loan or the method of computation thereof may be varied in accordance with Clause 3.6 of the Loan Agreement; and | |||
Provided always, that the actual method of calculating the Interest Rate payable in respect of the Loan or any part thereof and the dates for the payment thereof shall be governed by the relevant provisions of the Loan Agreement. |
5. | All terms and expressions not defined herein shall have the same meanings given to them in the Agreement and/or the Deed of Covenant. |
THE OWNER | ||||||
Signed and Delivered as a Deed
By /s/ Ion Varouxakis |
) | /s/ Ion Varouxakis | ||||
for and on behalf of ADVENTURE NINE S.A. | ) | |||||
) | ||||||
Witness
|
/s/ Ioannis Fassolis | ) | ||||
|
|
) | ||||
Name:
|
Ioannis Fassolis | ) | ||||
Address: | 15 Sachtouri Street, Piraeus, Greece | |||||
Occupation: Attorney-at-Law | ||||||
of Marshall Islands, in the presence of:
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EXECUTED as a DEED for and on behalf
|
) | |||||
of
FBB-FIRST BUSINESS BANK S.A.
|
) | |||||
|
||||||
by
/s/ Mr. Nikolaos
Vougioukas
|
) | |||||
|
) |
|
||||
its duly authorised Attorney-in-fact,
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) | /s/ Nikolaos Vougioukas | ||||
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|
|||||
in the presence of:
|
) | Attorney-in-fact |
Witness:
|
||||
Name:
|
|
|||
Address:
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13, Defteras Merarchias street, Piraeus, Greece | |||
Occupation:
|
Attorney-at-law |
| the refinancing of overdraft facility IV as mentioned in the credit agreement between Hollandsche Bank-Unie N.V. (HBU) and Adventure Two S.A., Adventure Three S.A., Adventure Seven S.A. and Adventure Eleven S.A. dated 12 th August, 2008: and | |
| your request to grant a waiver with respect to a breach of the loan to value ratio. |
| Adventure Two S.A., Adventure Three S.A., Adventure Seven S.A., Adventure Eleven S.A. |
| FreeSeas, Inc. |
| I Existing overdraft facility to pro resto USD 1,125,000; | ||
| II Existing term loan amounting to pro resto USD 21,750,000; | ||
| III Existing overdraft facility amounting to pro resto USD 29,600,000 (this facility will be refinanced by facility IV); | ||
| IV New term loan amounting to USD 27,100,000 to refinance the existing overdraft facility amount to pro resto USD 29,600,000 of which facility an amount of USD 27,100,000 will be outstanding; and | ||
| Existing conditional overdraft facility amounting to USD 3,000,000 will be cancelled. |
| Maturity of the existing term loan and overdraft facilities that are being continued will remain unchanged. | ||
| The lifetime of the new term loan amounting to USD 27,100,000 will be 3.5 years starting May 1 st , 2009 and ending November 1 st , 2012. |
| The repayment schedule of the existing overdraft facility of pro resto USD 1,125,000 and the existing term loan of pro resto USD 21,750,000 will remain unchanged. | ||
| The last repayment date of the existing overdraft facility amounting to pro resto USD 29,600,000 will change from August 1 st , 2009 in May 1 st , 2009. | ||
| The repayment schedule of the new term loan will be as follows: |
o | USD 600,000 per quarter starting August 1 st , 2009 with a balloon payment of USD 19,300,000 as per November 1 st , 2012. | ||
o | Prepayment of the new term loan is allowed without penalty. | ||
o | In case of a sale or scrapping of the Free Destiny, Free Envoy, Free Maverick and the Free Knight, the proceeds of such a sale or scrapping will be used as a mandatory prepayment of the Loan Facilities. HBU will at its sole discretion consider at the time of such mandatory prepayment if part of the proceeds can be excluded of the prepayment whereby amongst others the financial condition of the group at such time and its prospects would be taken into account. | ||
o | In case the group receives debt and/or equity proceeds through an issue of a convertible bond, a rights issue or otherwise, 10% of the proceeds, up to USD 3,000,000, will be used for prepayment of the outstanding facilities with HBU. |
| HBU is only willing to defer one instalment of USD 750,000 of the existing term loan amounting to pro resto USD 21,750,000 and one instalment of USD 600,000 under the new term loan amounting to USD 27,100,000 as a result of a restructuring of existing or future charters. |
| The margin of the existing term loan and overdraft facilities that are being continued will increase from 130 bp to 225 bp as per March 1 st , 2009. The margin will decrease to 130 bp the moment the Borrower meets the originally agreed loan to value ratio of 70%. | ||
| The margin of the new term loan will be Libor + 300 bp. | ||
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| The margin of new term loan will be increased by a liquidity premium, which will be determined on August 1 st , 2009. |
| A waiver fee and upfront fee of in total USD 250,000 payable on April 1 st , 2009 whether or not the new term loan amounting to USD 27,100,000 is consummated. | ||
| A success fee of 225 bp with a minimum of USD 100,000 over the outstanding balloon of the new term loan of USD 27,100,000 as per November 1 st , 2011. |
| The existing security as laid down in the existing credit agreement dated 12 th August, 2008 will remain in full force, which will need to be confirmed by local counsel in a legal opinion. In case local counsel advises us that amendments to the security package are required, effecting such amendments will be a condition to completing the amended facilities. |
| The representations and warranties may be extended to reflect what HBU considers appropriate for this type of transaction in the current circumstances. |
| The existing covenants as laid down in the existing credit agreement dated 12 th August, 2008 will remain in full force. | ||
| We will waive existing loan to value ratio not to exceed 70% at any moment until July 1 st , 2010, which waiver will be set out in a separate waiver letter. | ||
| A new value to loan covenant related to the Facilities will be included in the credit agreement and will be as follows: |
o | 100% as per July 1 st , 2010 | ||
o | 110% as per July 1 st , 2011 | ||
o | 120% as per July 1 st , 2012 | ||
o | 125% as per December 31, 2012 |
| Cross default clause with all existing and future debt providers of FreeSeas Inc. and her subsidiaries. |
| The events of default may be extended to reflect what HBU considers appropriate for this type of transaction in the current circumstances. * see Note herebelow |
| The terms and conditions of any debt and/or equity issue either by way of an issue of convertible bonds, a rights issue or otherwise must be on terms satisfactory to HBU. Next to the mandatory prepayment of 10% of the proceeds so received, an additional 25% of the remainder must be placed on a deposit with HBU until these proceeds will be used for the purchase of vessels, which purchase requires the prior approval of HBU. | ||
| HBU will have the right of first refusal to provide senior debt for one or more vessels. | ||
| No further bank debt and financial obligations in excess of USD 1,000,000 for the Guarantor and its existing subsidiaries. Consent from HBU to be required for increasing indebtedness and financial obligations in order to acquire additional vessels, such consent not to be unreasonably withheld with criterion being HBUs position not be deteriorated. | ||
| No cash dividend payments by the Guarantor without the prior written consent of HBU. | ||
| The terms and conditions of the waiver of FBB and CSFB must be at the convenience of HBU. | ||
| All excess cash after reasonable operating expenses and after deduction of required working capital, must be used for prepayment of the existing financings of HBU, FBB and CSFB. A formula for the determination of excess cash and the way the excess cash will be used for prepayment of the financings of HBU, FBB and CSFB has to be agreed upon between the banks, the borrower and the guarantor. Definition of excess cash to be agreed in documentation phase. | ||
| Other relevant covenants with HBU considers appropriate for this type of transaction in the current circumstances. |
* | Note : Signed and accepted, and deemed to incorporate clarifications included in e-mail dated 23 March 2009 sent by Mr. Vodegel to FreeSeas Inc. which is attached herewith. Piraeus 24 March 2009 |
/s/ Ion G. Varouxakis | ||||
Ion G. Varouxakis, President | ||||
FreeSeas Inc. |
| Dutch law |
| We will ask an external lawyer to write the amendments of the existing credit agreement, the credit agreement of the new term loan amounting to USD 27,100,000 and to write the term sheet in which the above terms and conditions are incorporated. Such new agreement will basically amend and restate the current contractual arrangements and will effectively incorporate the various loans and the guarantee by FreeSeas Inc. into one document. Such amended and restated agreement shall include standard provisions in respect of, amongst others, illegality, (tax) indemnities, voluntary and mandatory prepayments, increased costs, grossing-up, market disruption, costs and expenses and default interest. These outside legal expenses will be for the account of the borrower. |
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(1) | FREESEAS INC. (the Company), a company incorporated in the Republic of the Marshall Islands; and |
(2) | FREE BULKERS, S.A. (the Manager), a company incorporated in the Republic of the Marshall Islands. |
(A) | The Company appointed the Manager to manage the business of the Company and its various ship-owning subsidiaries (the Subsidiaries) from time to time and their respective operations and external affairs and the Manager accepted such appointment. | |
(B) | The Parties wish to amend and restate the terms and conditions of the appointment of the Manager as herein set forth. |
1.1 | In this Agreement, the following terms shall have the following meanings: | ||
Board means the Board of Directors of the Company or of a Subsidiary (as the context may require) and references in this Agreement to the Board or any board of directors of the Company or any or all of the Subsidiaries shall be deemed to include in the alternative a reference to any duly constituted committee thereof or to any person or persons duly authorized to exercise the power in question by either the Board or such board of directors or such a committee (as appropriate); | |||
Bonus has the meaning given to it in Clause 7; | |||
Effective Date means 1 October, 2008; | |||
Euro means the single currency of participating member states of the European Union; | |||
GAAP means generally accepted accounting principles and U.S. GAAP means those principles as determined in the United States of America; | |||
Management Agreement and Management Agreements have the meanings given to them in Clause 2.4; | |||
Management Fees has the meaning given to it in Clause 6.1; Management Services has the meaning given to it in Clause 2.1, and shall include the |
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Accounting Services as described in Clause 3.1.11; | |||
Ships means ships owned and operated by the Company or its Subsidiaries during the Term; | |||
Subsidiary means any entity of which a majority of the outstanding equity interests are owned, directly or indirectly, by the Company; and | |||
Term has the meaning given to it in Clause 2.2. | |||
1.2 | References to Clauses and Sub-Clauses shall be references to Clauses and Sub-Clauses of this Agreement. |
2.1 | The Company hereby appoints the Manager to perform the services set forth in Clause 3 (the Management Services) and the Manager agrees to perform the Management Services, subject to the terms and conditions set out in this Agreement. | ||
2.2 | The appointment of the Manager to perform the Management Services shall continue for an initial term of ten (10) years (the Term) commencing from the Effective Date, which Term shall be deemed to be automatically extended on or before each anniversary of the Effective Date for an additional one (1) year, unless such appointment is earlier terminated in accordance with Clause 10. | ||
2.3 | The Manager may appoint any person or entity (the Sub-Manager), at any time during the Term of this Agreement, to discharge any of the Managers duties and, in particular, to act as agent and/or sub-contractor in connection with the performance of such of the Management Services, and with respect to such Ships, as the Manager may determine to be necessary or advisable in its reasonable discretion. Any such agreement with a Sub-Manager must be in writing and upon commercially reasonable terms, and a copy of any such agreement must be provided to the Company not less than ten (10) business days before its execution by the Manager. Notwithstanding the foregoing, no such appointment of a Sub-Manager shall relieve the Manager of any of its responsibilities, obligations or liabilities to the Company and each Subsidiary hereunder. | ||
2.4 | In order to assure consistent management of all Ships owned by the Company and its Subsidiaries, the Company agrees that it shall cause each Subsidiary acquired after the Effective Date of this Agreement to enter into a Ship Management Agreement with the Manager (each such Ship Management Agreement, as may be amended from time to time, is referred to herein individually as a Management Agreement and collectively with each other Management Agreement as may be in effect from time to time as the Management Agreements), on substantially the same terms and conditions as the Management Agreements then in effect. |
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3.1 | In consideration of the payment of the Management Fees, the Manager shall, for and on behalf of the Company and each Subsidiary: |
3.1.1 | provide planning, managerial and advisory services in respect of the whole operations of the Company and the Subsidiaries; | ||
3.1.2 | provide or contract for all general administrative, office and support services necessary for the operation of the Company and of each Subsidiary and each Ship including the employment of technical and clerical personnel, accountants and managerial staff, the provision of telecommunications, accounting and data processing services and the provision of office space at the Managers offices; | ||
3.1.3 | seek suitable Ships for purchase and/or determine Ships suitable for sale by the Subsidiaries and negotiate the terms of any such purchase or sale and arrange and complete the acquisition, sale or other disposition of the Ships; provided that the Manager shall only enter into a binding commitment on the part of the Company or the relevant Subsidiary with any third party in respect of the sale or purchase of the Ships after receiving express authority from the Board of the Company and of the relevant Subsidiary to do so; | ||
3.1.4 | supervise and perform the delivery of the Ships to and by the Company and the Subsidiaries; | ||
3.1.5 | in the case of the Company and the relevant Subsidiary, seek employment for the Ships and negotiate, arrange, complete and supervise the chartering or other employment of the Ships (and keep the Board of the Company and the relevant Subsidiary informed on a regular basis of the employment and location of the Ship); provided that the Manager shall not enter into any binding charterparty or other contract of employment for a Ship for a period of longer than twelve (12) months (or such shorter period as may be determined by the Company and notified to the Manager) without receiving the express authority of the Company and the relevant Subsidiary; | ||
3.1.6 | provide bunkers and lubricants necessary for the operation of the fleet; | ||
3.1.7 | upon prior instructions from the Board of the Company, negotiate all borrowing and deposit or lending arrangements of the Company and the Subsidiaries and supervise the implementation of such arrangements and advise the Board and the relevant Subsidiary from time to time of the arrangements for financing the acquisition and the operation of Ships; provided that the Manager shall only enter into any binding commitment in |
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respect of any borrowing or financing after receiving express authority from the Company and the relevant Subsidiary to do so; | |||
3.1.8 | open and operate such bank accounts with such bankers and in such names as the Company and/or the relevant Subsidiary may require and liaise with the Company and the relevant Subsidiary and instruct the Bankers and such Subsidiary in connection with their respective obligations and duties; | ||
3.1.9 | provide customary technical management services including in relation to but not limited to voyage operation, superintendence, surveys, maintenance, drydocking, repairs, alterations, maintenance and renewals to hull, machinery, boilers, auxiliaries, equipment and accommodation; | ||
3.1.10 | provide at cost price officers and crew and perform all customary owners obligations in relation to manning and crew welfare and amenities and usual services to the Ships; | ||
3.1.11 | keep separate books, records and accounts relating to all the activities of the Company, each Subsidiary and of each Ship in accordance with the advice of the internal auditor of the Company from time to time, with good business and shipping accounting practices, and in order to comply with the requirements of U.S. GAAP, any stock exchange on which all or any part of the Companys share capital is listed (the Exchange Rules), the rules and regulations of the US Securities and Exchange Commission (the SEC Rules), and all applicable laws and regulations of the Marshall Islands, Liberia, the Bahamas and each other jurisdiction in which a Subsidiary is organized or in which a Ship is flagged (collectively, the Accounting Services). The Accounting Services shall include all financial and accounting services to the Company necessary in connection with the Companys compliance with the SEC Rules and the Exchange Rules relating to the preparation and maintenance of the Companys accounting records in accordance with U.S. GAAP, preparing and filing financial statements with the US Securities and Exchange Commission (the SEC) and Nasdaq in accordance with applicable financial reporting requirements, and developing, implementing, monitoring and assessing the Companys internal controls, including, without limitation, the following: |
(a) | assist with the internal audit of the Companys records and with the maintenance of the Companys general ledger and other internal accounting records and reports; | ||
(b) | assist with the preparation of projections, cash flow analyses and budgets; | ||
(c) | assist with the preparation of annual and interim financial statements, including all financial statement notes and accompanying schedules thereto and all necessary period-end |
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reconciliations and associated period-end journal entries, in compliance with U.S. GAAP and the applicable SEC Rules; | |||
(d) | assist the Company in monitoring changes and developments in U.S. GAAP and the SEC Rules relating to financial reporting and in determining the applicability thereof to the Company; | ||
(e) | assist in planning for all necessary reviews and/or audits of the Companys financial statements; | ||
(f) | maintain all accounting records supporting the Companys financial statements separate and discrete from the accounting records of the Contractor; | ||
(g) | assist in coordinating the review and/or audit of such financial statements by the Companys independent auditing firm and the delivery to such auditing firm of all internal records and other supporting information requested by such firm; | ||
(h) | assist with the preparation and filing of all necessary tax returns; | ||
(i) | assist the Company in developing, implementing and assessing the necessary and appropriate procedures to enable the Company to assess and report on its internal controls, including assisting with (i) identification of key risks and controls, (ii) developing tests for such controls, (iii) performing tests of such controls, (iv) correction of inadequate controls, and (v) reporting the results of the foregoing; | ||
(j) | attend seminars and courses relating to updates in U.S. GAAP, SEC Rules and Exchange Rules; and | ||
(k) | provide such other assistance as the Company may reasonably request from time to time. |
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3.1.12 | prepare and submit annual budgets and quarterly projections for the approval of the Board and, if requested, provide monthly statements of accounts and quarterly statements of account and analysis of operating income and expenses as well as such other statements, special reports, memoranda and original or copies of documents as the Board of the Company or the relevant Subsidiary may reasonably require all such books, records and accounts to be available to the Board of the Company and of the relevant Subsidiary or authorised officers of the Company for inspection at all reasonable times; | ||
3.1.13 | in addition to the requirements of Clause 3.1.12, at the end of each three-month period, provide to the Board or the relevant Subsidiary an analysis of the previous three months trading and results of operations together with the intended budget for the operations of each Subsidiary and each Ship in the next quarter; | ||
3.1.14 | prepare and submit all documents and reports required by the U.S. Securities and Exchange Commission in respect of the Company and its Subsidiaries and by loan agreements to which the Company or its Subsidiaries are party; | ||
3.1.15 | ensure that the Ships are at all times insured for hull and machinery, war, loss of hire (as appropriate or necessary) and P&I risks in accordance with good shipping practice and handle all claims arising in connection with the insurance of the Ships and otherwise including: |
(a) | the preparation, documentation and submission of claims to insurers and/or P&I Clubs; | ||
(b) | the making of settlements of claims against insurers and/or P&I Clubs subject to the instructions from time to time of the Company and the relevant Subsidiary; and | ||
(c) | the following-up of claims and settlements; |
3.1.16 | keep the Board informed of planned drydocking and other significant off-hire periods; and arrange for and supervise drydocking, surveys and repairs, renewals, alterations, improvements and maintenance of the Ships; |
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3.1.17 | in the event of an emergency affecting a Ship, take any necessary steps as quickly as possible on its own initiative (though consulting with the Board of the Company and any relevant Subsidiary to the extent practicable) including the engaging of salvage or towage services, the posting of security, notification to brokers and insurers, engagement of surveyors or other experts and, without limitation, the taking of any other steps necessary or desirable in the circumstances; | ||
3.1.18 | undertake all the functions, duties and obligations of the secretary of each Subsidiary in accordance with the laws and regulations of their respective jurisdictions of organization and any other laws applicable to them, including but not limited to the keeping and updating of company records and statutory books and the filing of all necessary documents with the relevant authorities; | ||
3.1.19 | subject to the limitations provided elsewhere in this Agreement, enter into, make and perform all contracts, agreements and other undertakings as may be, in the opinion of the Manager, necessary or advisable or incidental to the carrying out of the objectives of this Agreement; | ||
3.1.20 | ensure that the Companys Code of Business Conduct and its Insider Trading Policy are observed by it and its officers and employees. |
3.2 | In connection with (a) that certain Lease Agreement for Commercial Purposes dated 30 October 2006 entered into between Klenco II S.A. as lessor (the Lessor) and the Manager as lessee (the Lease Agreement A), pursuant to which the Manager has leased for a period commencing from 1 December 2006 and terminating on 30 November 2011 premises comprising the fourth floor of an office building situated at 4 Mavrokordatou Str. & 89 Akti Miaouli, Piraeus, Greece, having a total area of 381.70 square meters, consisting of office spaces, one kitchenette and two WCs and having in its exclusive use parking in the subbasement of the building (the Premises A), and (b) that certain Lease Agreement for Commercial Purposes dated 12 March 2008 entered into between the Lessor and the Manager as lessee (the Lease Agreement B, and together with the Lease Agreement A, the Lease Agreement), pursuant to which the Manager has leased for a period commencing from 15 March 2008 and terminating on 30 November 2011 premises comprising the third floor of the above office building, having a total area of 529 square meters, consisting of office spaces, one kitchenette and two WCs and having in its exclusive use parking in the subbasement of the building (the Premises B, and together with Premises A, the Premises), the following provisions shall apply: |
3.2.1 | The Manager has equipped the Premises with office furniture and up-to-date electronic, filing and communications equipment (the Equipment) as may be necessary or appropriate for the operation of a shipping and management company, and agrees to continue to provide such Equipment throughout the Term of this Agreement. |
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3.2.2 | The Company acknowledges that the Manager supervised, and has expended certain sums in connection with, the renovation of the Premises to suit the management of the Companys and the Subsidiaries business operations and, in consideration therefor, agrees to reimburse the Manager the aggregate sum of US$300,000 for such renovation. | ||
3.2.3 | The Manager agrees to permit the Company, in order to further promote the Companys local business interests through such representatives in Greece, such representatives to be either resident or visiting (the Company Representatives) to use the Premises under the terms and on the conditions as set forth below: |
(a) | Non-exclusive use by the Company Representatives of half of the Premises. | ||
(b) | Non-exclusive use by the Company Representatives of parking spaces for three (3) vehicles out of the total parking space for ten (10) vehicles belonging to the exclusive use of the Premises. | ||
(c) | Non-exclusive use by the Company Representatives of the kitchenette and the WCs of the Premises. | ||
(d) | Non-exclusive use by the Company Representatives of the office furniture and Equipment located in the Premises. | ||
(e) | Secretarial support to the Company Representatives by the staff of the Manager, including filing, handling of incoming and outgoing correspondence of any form, reply services in the absence of the Company Representatives, etc. |
3.2.4 | In exchange for the above, the Company hereby undertakes to pay to the Manager thoughout the Term of the Agreement and on a monthly basis (a) one-half of the monthly rent and corresponding stamp duty that the Manager is under an obligation to pay to the lessor for the Premises, according to the terms of the Lease Agreement, being noted that such amount will be automatically re-adjusted at each time as the same are re-adjusted under the terms of the Lease Agreement, and (b) at each time due and payable monthly by the Manager under the terms of the Lease Agreement, one-half of the common charges and expenses (the Common Charges) in respect of the building in which the Premises are situated, which Common Charges are shared together with all the other lessees and/or owners (as the case may be) of the office building in which the Premises is located (the amounts payable under Sub-Clauses (a) and (b) above are collectively referred to as the Premises Fee). The monthly rent currently payable by the Manager to the lessor under the terms of the Lease Agreement is Euro 19,409 plus stamp duty payable in advance for each month and accordingly the amount currently payable by the |
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Company to the Manager is Euro 9,704.50 plus the stamp duty corresponding to said amount and such amount shall be payable by the Company at the same time that the rent is payable by the Manager to the lessor under the terms of the Lease Agreement. The amount payable by the Company to the Manager in respect of the Common Charges shall be payable simultaneously with payment of same by the Manager to the manager of the building. | |||
The Manager is entitled at its absolute discretion to make reasonable extra charges for telephone and fax expenses and occupation of its staff depending on the volume of work of the Company, provided that the Manager agrees to provide the Company with reasonable advance notice of and detail regarding any such extra charges. |
3.2.5 | No representation, warranty or guarantee, express or implied, is given by the Manager in respect of the Premises or the Equipment (as indicatively in respect of quality, continuous functioning, merchantability, etc.) and the Company hereby irrevocably and unconditionally waives any right to claim damages due to defect of the Premises or the Equipment or any act or omission of the staff of the Manager or for any other reason whatsoever. | ||
3.2.6 | The Company confirms and acknowledges that it has perused a copy of the Lease Agreement and fully approves its contents and hereby undertakes the obligation to fully abide by all the terms and conditions of the Lease Agreement and to inform and instruct the Company Representatives to act accordingly. The Company confirms and acknowledges that it has surveyed the Premises and the Equipment, fully approves the condition of same and acknowledges suitability of same for the intended purpose. The Company undertakes to indemnify on demand the Manager in respect of any damage caused by the Company Representatives to the Premises or the Equipment. | ||
3.2.7 | The Manager and the Company agree that the foregoing Clause 3.2 will automatically expire at the same time that the Lease Agreement expires or is terminated for any reason whatsoever. Upon such expiration of this Agreement, no indemnity or damages whatsoever shall be due to or payable by either party. Upon expiration or termination of the Lease Agreement, the Manager will make every reasonable effort to find new suitable office space, taking under consideration the market conditions prevailing at that time, in which case the Company will be under an obligation to pay the rent plus corresponding stamp duty payable and the Common Charges. | ||
3.2.8 | Upon the expiration or termination of the Lease Agreement, the Company will redeliver the Premises and the Equipment in the same good condition as on the date of this Agreement, fair wear and tear excepted. |
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4.1 | The Manager shall observe and comply with the Articles of Incorporation, By-Laws or other governing documents (as applicable) of each of the Company and the Subsidiaries, the resolutions of the Boards of each of the Company and the Subsidiaries notified to them, and the provisions of any prospectus, explanatory memorandum or other such document relating to the Company distributed to the Manager from time to time by or on behalf of the Company, provided that the same do not contravene applicable law governing the establishment and operation of the Managers office in Greece. All activities engaged in by the Manager hereunder including the chartering of a Ship shall at all times be subject to the control of and review by the Company and the relevant Subsidiary and, without limiting the generality of the foregoing, the Company and the relevant Subsidiary may from time to time instruct the Manager as to the exercise of the rights attached to ownership of the relevant Ship and the Manager shall use their best efforts to give effect to all such directions and shall use their best efforts (but without guarantee) to procure that any person, firm or company to whom any functions may be directly delegated by the Company or any of the Subsidiaries shall give effect to all such directions. In connection with its performance of the Management Services, the Manager shall not, without the express written consent of the Company and the relevant Subsidiary, commit the Company or such Subsidiary to any expenditure in respect of any one item or in any month in respect of the Ship which exceeds the limits (if any) from time to time prescribed by the Company and such Subsidiary; provided that such consent shall be deemed to have been given if such expenditure was included in a budget provided pursuant to the provisions of Clause 3.1.11, 3.1.12 or 3.1.13 and thereafter approved by the Company and such Subsidiary. | ||
4.2 | Notwithstanding the provisions of Clause 4.1, the Manager shall have the discretion to commit the Company or a Subsidiary to extra expenditure not included in the budget up to a limit prescribed by the Company or a Subsidiary where it deems such expenditure to be required for the safe and sound maintenance and operation of the Ship. | ||
4.3 | The foregoing provisions of Clauses 3 and 4 shall be in addition to the obligations of the Manager to each Subsidiary as set forth in the applicable Management Agreement entered into between the Manager and each Subsidiary. In the event of a conflict between this Agreement and the provisions of any such Management Agreement, the provisions of the applicable Management Agreement shall control. |
5.1 | The Manager will at all times exercise the rights and powers and perform the duties or any of them conferred upon it by this Agreement, the Management Agreements, any supplemental agreement, or otherwise by the Company or any Subsidiary so as not knowingly to render the Company or any Subsidiary liable |
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for any tax imposed by any jurisdiction on any part of its income without the consent of the Company or any Subsidiary. |
6.1 | In consideration of the Management Services provided by the Manager under this Agreement, and in addition to the Ship management fees payable by each Subsidiary to the Manager under the Management Agreements, the payment of which is hereby guaranteed by the Company, and the Premises Fee payable pursuant to Clause 3.2.4 above, the Company agrees to pay to the Manager fees calculated from the Effective Date as follows (the Management Fees): |
6.1.1 | US$100,000 per month, plus; | ||
6.1.2 | Such additional amounts as are necessary to reimburse the Manager for all out of pocket costs and expenses, to include traveling, auditing, legal assistance and all extraordinary expenses in connection with technical and/or operational assistance and other unexpected expenses, incurred in connection with the provision of the Management Services by the Manager. |
6.2 | The applicable rate of remuneration payable to the Manager under Clause 6.1.1 shall be further adjusted upwards if : |
6.2.1 | the Euro should have strengthened against the U.S. dollar at the last business day of each month during the Term of this Agreement such that the Euro-US exchange rate is more than 1.35, in which case the rate of remuneration shall be adjusted, effective as of the first day of the following month, upwards by the percentage amount by which the Euro has so strengthened against the U.S. dollar; or | ||
6.2.2 | the Manager should incur a material unforeseen increase in the costs of providing the Management Services, in which case the amount and effective date of such increase will be as agreed between the Company and the Manager. |
7.1 | In addition to the Management Fees, the Company shall pay to the Manager an annual bonus (the Bonus), as may be determined by the Companys compensation committee from time to time. Such Bonus may be based on a formula determined in advance by the compensation committee or may be determined based on, and by reference to, the historical results achieved by the Company for a fiscal year. Such determination shall take into account the size and growth of the Companys fleet, the Companys operating results for the fiscal year, and such other factors, whether ordinary or extraordinary, as the |
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compensation committee may, in its discretion, determine to be appropriate for such purpose. |
7.2 | A Bonus, if payable, shall be paid on or before 31 March in each year for which a Bonus is granted. Such Bonus shall be paid in cash, shares of the Companys capital stock, or Company securities convertible into or exchangeable for shares of the Companys capital stock, or any combination thereof, as the compensation committee shall determine. | ||
7.3 | In consideration of the longstanding and existing relationship between the Company and the Manager, and of the Managers services to the Company since its organization, the Company agrees to pay the Manager an initial Bonus consisting of [______] shares of the Companys common stock. |
8.1 | The Manager undertakes to carry out the Management Services efficiently and in the best interests of the Company. | ||
8.2 | The Manager shall not contract on behalf of the Company or any of the Subsidiaries or arrange any contract or transaction for or on behalf of the Company or any Subsidiary with itself or any of its affiliates (all such contracts and transactions being interested party transactions) except on terms no less favorable than would exist if such contract or transaction were to be entered into with unrelated third parties on an arms length basis. The Manager shall also not so contract if any interested party transaction is reasonably likely to involve payments or a value in excess of US$100,000 individually for such contract or transaction or in the aggregate with any related transactions within any period of five (5) years, without the approval of the Board of Company and any affected Subsidiary except: |
8.2.1 | agreements in effect prior to the date of this Agreement; | ||
8.2.2 | where the payment or payments concerned represent reimbursement to the Manager in respect of arrangements with third parties where the Manager has contracted as agent on behalf of the Company; | ||
8.2.3 | where the relevant contract or transaction occurs following or connected with emergency situations relating to the operation of the Companys Ships; and | ||
8.2.4 | where the Board of Directors consider that certain contracts or transactions or a class of contracts or transactions may occur repeatedly and have given a general exemption for such transactions or class of transactions. |
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8.3 | All discounts, commissions, rebates and benefits of whatever nature received by the Manager in the course of its performance of the Management Services shall be held to the account of the relevant Subsidiary or, if a particular Subsidiary cannot be identified, the Subsidiaries equally. |
9.1 | Without prejudice to Clause 9.2, the Manager shall be under no liability whatsoever for any damages or loss of whatsoever nature (including loss of profit due to detention or delay) whensoever and howsoever arising in course of performance of the Management Services by the Manager or any agents, superintendents, officers, crew, management personnel or other persons or independent contractors employed by the Manager in connection with the Management Services, unless the same shall be proved to have resulted from the willful misconduct or gross negligence of the Manager or any person to whom performance of any of the Management Services has been delegated by the Manager in which case (save where loss, damage, delay or expense has resulted from the Managers personal act or omission committed with the intent to cause the same, or recklessly and with knowledge that such loss, damage, delay or expense would probably result), the Managers liability for each incident or series of incidents giving rise to a claim or claims shall never exceed (a) with respect to the Company, a total of ten (10) times the then-current annual Management Fees payable to the Manager hereunder, and (b) with respect to a Ship and the related Subsidiary, a total of ten (10) times the then-current annual management fee payable with respect to such Ship under the related Management Agreement. | ||
9.2 | Subject to the obligations of the Manager to effect insurances pursuant to Clause 3.1.15, the Manager shall not be responsible for the loss of or damage to any property of the Company and the Subsidiaries in the possession of the Manager or for any failure to fulfill its duties to the Company under this Agreement if such loss, damage or failure shall be caused by or directly or indirectly due to war damage, enemy action, the act of any government or other competent authority, riot, civil commotion, rebellion, storm, tempest, accident, fire, lockout, strike or other cause whatsoever beyond the control of the Manager or other persons to whom performance of the Management Services has been delegated by the Manager provided that the Manager or other persons shall use all reasonable efforts to avoid or minimise the effects of the same. | ||
9.3 | Notwithstanding anything that may appear to the contrary in this Agreement, the Manager shall not be liable for any of the actions of the crew employed in connection with the Ships, even if such actions are negligent or in willful disregard of obligations, except only to the extent that they are shown to have resulted from a failure by the Manager to discharge its obligations to provide the Management Services, in which case its liability shall be limited in accordance with the terms of Clause 9.1. |
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10.1 | This Agreement will terminate automatically: |
10.1.1 | following an order made or resolution passed for the purpose of winding up of the Manager or if a receiver shall be appointed of the undertaking or property of the Manager or if the Manager shall cease to carry on its business or make any special arrangement or composition with its creditors; | ||
10.1.2 | upon the completion of the winding-up of the business of the Company following liquidation or otherwise. |
10.2 | The Company or the Manager may terminate this Agreement by giving ninety (90) days notice in writing to the other in any of the following events: |
10.2.1 | at any time if the other shall commit any breach of its obligations under this Agreement by virtue of its willful misconduct or negligence and (if such breach is capable of remedy) shall fail within thirty (30) days of receipt of notice so requiring it to make good such breach and such breach is material to the party giving notice; or | ||
10.2.2 | if the Manager shall be unable or otherwise fail to perform any or all of the Management Services to a material extent for a continuous period of sixty (60) days in circumstances covered by Clause 9.2; | ||
provided that the Company may not terminate this Agreement by reason of such an event which relates to only one of the Subsidiaries individually. |
10.3 | The Company may terminate this Agreement by giving one hundred eighty (180) days notice in writing to the Manager if there has been a change of control in the shareholding of the Manager, unless such change has previously been agreed in writing by the Board of the Company. | ||
10.4 | The Manager may terminate this Agreement by giving the Company and the Subsidiaries not less than one (1) years notice of intention to terminate the same, any such notice of termination to be given on or before an anniversary of the Effective Date to take effect on the succeeding anniversary of the Effective Date. | ||
10.5 | The appointment of the Manager may be terminated by the Company, or by any of the Subsidiaries with respect to such Subsidiary, by sixty (60) days prior written notice if the Manager shall be, become or be deemed to be or become resident for tax purposes or carry on business within the United Kingdom or the United States or elsewhere in circumstances that cause the Company or any of the Subsidiaries to become liable for tax on any part of its income in the country of such residence or carrying on of business. |
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10.6 | The Manager may terminate this Agreement upon sixty (60) days prior written notice to the Company in the event that the Company undergoes a Change of Control. For the purposes of this Clause 10.6, Change of Control shall mean: |
10.6.1 | the election of any director whose election was not recommended by the then-current Board of Directors; | ||
10.6.2 | any person or entity or group of affiliated persons or entities (other than the Company) becomes a beneficial owner, directly or indirectly, of 15% or more of the Companys voting securities or all or substantially all of the assets of the Company; | ||
10.6.3 | the Company enters into a definitive agreement that contemplates the merger, consolidation or combination of the Company with an unaffiliated entity in which either or both of the following is to occur: (i) the Board of Directors of the Company immediately prior to such merger, consolidation or combination will constitute less than a majority of the board of directors of the surviving, new or combined entity; or (ii) less than a majority of the outstanding voting securities of the surviving, new or combined entity will be beneficially owned by the shareholders of the Company immediately prior to such merger, consolidation or combination; provided, however, that if any definitive agreement to merge, consolidate or combine is terminated without consummation of the transaction, then no Change in Control shall be deemed to have occurred pursuant to this paragraph; | ||
10.6.4 | the Company enters into a definitive agreement that contemplates the transfer of all or substantially all of the Companys assets, other than to a wholly owned subsidiary of the Company; provided, however, that if any definitive agreement to transfer assets is terminated without consummation of the transfer, then no Change in Control shall be deemed to have occurred pursuant to this paragraph; or | ||
10.6.5 | a majority of the members of the Board of Directors of the Company shall be persons who: (i) were not members of the Board on the date of the annual shareholders meeting immediately preceding the Change of Control (current members); and (ii) were not nominated by the unanimous affirmative vote of the current members of the Board at the time of their nomination (future designees); and (iii) were not nominated by the unanimous affirmative vote of the current members and future designees, taken as a group, of the Board at the time of their nomination; |
10.7 | Upon the effective date of termination pursuant to Clause 10.6, the Manager shall promptly terminate its services under this Agreement, as may be required in order to minimise any interruption to the business of the Company and the Subsidiaries. |
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10.8 | Upon termination, the Manager shall as promptly as possible submit a final accounting of funds received and disbursed under this Agreement and of any remaining Management Fees due from the Company, calculated pro rata to the date of termination (but subject to Clause 10.9), and any disbursed funds of the Company or the Subsidiaries in the Managers possession or control will be promptly paid by the Manager as directed by the Company or may be set off against any sums due from the Company hereunder. | ||
10.9 | If this Agreement is terminated under Clause 10.6, the Company shall pay to the Manager an amount equal to: |
10.9.1 | the total aggregate of the Premises Fees to which the Manager would be entitled pursuant to Clause 3.2.4 from the date of such termination to the end of the Term of this Agreement; plus | ||
10.9.2 | twenty-five (25) multiplied by the sum of (a) the annualized aggregate Ship management fees to which the Manager would be entitled under the Management Agreements, based on the monthly Ship management fees in effect on the date of termination, and (b) the annualized Management Fee to which the Manager would be entitled under this Agreement, based on the monthly Management Fee in effect on the date of termination; plus | ||
10.9.3 | twenty-five (25) multiplied by the average of the Bonuses previously paid to the Manager under Clause 7 (with the dollar value of any Bonus paid in shares or other securities of the Company based on the aggregate fair market value of such shares or securities on the date such Bonus was awarded). |
10.10 | The authorities contained in this Agreement are continuing ones and shall remain in full force and effect until revoked by termination of this Agreement in accordance with the provisions of this Clause 10. Such revocation shall not affect any liability in any way resulting from transactions initiated prior to such revocation. | ||
10.11 | Any termination of this Agreement pursuant to this Clause 10 shall be without prejudice to any claims each party may have upon the other. |
11.1 | Subject to Clause 4, the Company and the Subsidiaries hereby ratify and confirm and undertake at all times to allow, ratify and confirm all and whatsoever the Manager shall lawfully do or cause to be done in the performance of its duties as Manager hereunder. Except to the extent that the Manager would be liable under Clause 9.1, the Company and the Subsidiaries further undertake at all times hereafter to keep the Manager indemnified on demand against all actions, proceedings, claims and demands or liabilities whatsoever which may be brought commenced or prosecuted against or incurred by the Manager and also against all |
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costs, damages and expenses which the Manager may in any way pay or incur in defending or settling the same or otherwise in consequence of the Manager acting as Manager of the affairs of the Company and the Subsidiaries or of any Ship or in respect of any matters or things in relation thereto. In addition, the Company and the Subsidiaries agree to reimburse to the Manager any moneys which it may properly expend on behalf of the Company or any of the Subsidiaries in connection with its duties under this Agreement. |
12.1 | Each party may, with the prior written consent of the other party, to be exercised in the other partys respective discretion, assign all its rights and obligations hereunder to any other company, person, firm or institution acceptable to the other party; provided, however, that any such assignee shall execute and deliver to the other party an instrument in writing in form and substance acceptable to such other party whereby it shall assume the obligations of the assignor hereunder and agree to be bound by the provisions hereof, whereupon such assignee shall become the successor to the assignor hereunder and thereafter such successor may exercise all of the powers and enjoy all of the rights and be subject to all of the duties and obligations of the assignor hereunder as fully as though originally named as a party to this Agreement. |
13.1 | None of the parties hereto shall (except under compulsion of law or in compliance with the requirements of any regulatory authority or stock exchange on which the shares of the Company are listed), either before or after the termination of this Agreement, disclose to any person not authorized by the relevant party to receive it any confidential information relating to such party or to the affairs of such party of which the party disclosing the same shall have become possessed during the period of this Agreement, and each party shall use all reasonable endeavours to prevent any such disclosure as aforesaid. |
14.1 | Any notice to be given by any party to this Agreement shall be in writing and will be deemed duly served if delivered personally or by registered post or sent by fax to the addressee at the address set out below: |
the Company:
|
FreeSeas Inc. | |
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c/o I. Fassolis & Partners Law Offices | |
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15 Sachtouri Street | |
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185 36 Piraeus, Greece | |
|
Fax No: 011 30 210 4183 015 |
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the Manager:
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Free Bulkers, S.A. | |
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89 Akti Miaouli & 4 Mavrokordatou Street | |
|
185 38 Piraeus, Greece | |
|
Fax No: 011 30 210 429 1010 |
14.2 | Any notice sent by fax shall be deemed served when dispatched and shall be effective when actually received, except that if sent outside normal office hours such notice shall be deemed to be effective at commencement of business on the succeeding business day and any notice served by registered post shall be deemed served when received. In proving the service of any notice it will be sufficient to prove, in the case of a fax, that such fax was duly dispatched to a current fax number of the addressee. |
15.1 | This Agreement shall be governed in all respects by the laws of England. | ||
15.2 | The parties agree that any legal actions or proceedings arising out of or in connection with this Agreement may be brought in the English courts and the parties irrevocably and unconditionally submit to the jurisdiction of such courts. The Company hereby appoints Messrs. Atlas Maritime Services Ltd., Enterprise House, 113-115 George Lane, London E18 1AB, England, as its agent for service of process in England under this Agreement. The Manager hereby appoints [________________________] as its agent for service of process in England under this Agreement. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the taking of proceedings in the courts of any other competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. |
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16.1 | This Agreement constitutes the entire agreement between the parties with respect to the subject matter herein and supersedes all prior agreements and understandings, written or oral, with respect thereto. |
17.1 | This agreement is not intended to, nor shall it create, any rights, claims or benefits enforceable by any person not a party to it. A person who is not a party to this agreement may not enforce or otherwise have the benefit of, any provision of this agreement under the Contracts (Rights of Third Parties) Act 1999. |
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SIGNED by
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) | |||||||
for and on behalf of
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) |
/s/
Ion G. Varouxakis
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FREESEAS INC.
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) | |||||||
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SIGNED by
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) | |||||||
for and on behalf of
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) |
/s/
ILLEGIBLE
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FREE BULKERS, S.A.
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) |
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Registrants Subsidiaries | Jurisdiction of Formation | |
Adventure Two S.A.
|
Marshall Islands | |
Adventure Three S.A.
|
Marshall Islands | |
Adventure Four S.A.
|
Marshall Islands | |
Adventure Five S.A.
|
Marshall Islands | |
Adventure Six S.A.
|
Marshall Islands | |
Adventure Seven S.A.
|
Marshall Islands | |
Adventure Eight S.A.
|
Marshall Islands | |
Adventure Nine S.A.
|
Marshall Islands | |
Adventure Ten S.A.
|
Marshall Islands | |
Adventure Eleven S.A.
|
Marshall Islands |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this annual report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the company and have: |
(a) | Designed such disclosures 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 companys 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 companys 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 companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(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 companys 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 companys internal control over financial reporting. |
|
/s/ Ion G. Varouxakis | |
|
Ion G. Varouxakis | |
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Chief Executive Officer |
1. | I have reviewed this annual report on Form 20-F of FreeSeas Inc.; |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this annual report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the company and have: |
(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 companys 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 companys 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 companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
(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 companys 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 companys internal control over financial reporting. |
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/s/
Dimitris Filippas
Dimitris Filippas
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Interim Chief Financial Officer |
/s/ Ion G. Varouxakis
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Chief Executive Officer
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April 15, 2009
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/s/ Dimitris
Filippas
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Interim Chief Financial Officer
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April 15, 2009
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