UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

Dated: August 26, 2021

Commission File No. 001-34104

 

 

NAVIOS MARITIME ACQUISITION CORPORATION

 

 

Strathvale House, 90 N Church Street,

P.O. Box 309, Grand Cayman,

KY1-1104 Cayman Islands

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F  ☒                Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):    Yes  ☐     No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):    Yes  ☐     No  ☒

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.    Yes  ☐     No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 


Merger

On August 25, 2021, Navios Maritime Acquisition Corporation (the “Company”) entered into an Agreement and Plan of Merger with Navios Maritime Partners L.P. (“NMM”) and its direct wholly owned subsidiary Navios Acquisition Merger Sub. Inc. (“Merger Sub”) (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company being the surviving entity (the “Merger”). Upon consummation of the Merger, the Company will become wholly owned by NMM. The Merger Agreement was negotiated and unanimously approved by a special committee of the board of directors of the Company consisting of independent directors. The Merger Agreement was also unanimously approved by the Company’s full board of directors.

Under the terms of the Merger Agreement, upon consummation of the Merger, each outstanding share of common stock of the Company that is held by a holder other than NMM, the Company and their respective subsidiaries (such shares, the “Company Common Stock”) will be converted into the right to receive 0.1275 of a common unit of NMM.

Pursuant to the Merger Agreement, NMM will file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form F-4, which will include a proxy statement/prospectus describing the Merger and NMM’s common units to be issued in the Merger. After the registration statement is declared effective by the SEC, the proxy statement/prospectus will be mailed to holders of Company Common Stock and the Company will hold of a special meeting of the holders of Company Common Stock (the “Company Stockholders’ Meeting”) to vote on the Merger Agreement and the Merger.

The closing of the Merger is conditioned upon, among other things:

 

 

the approval of the Merger Agreement and the Merger by at least a majority of the outstanding shares of Company Common Stock at the Company Special Meeting (such approval, the “Company Stockholder Approval”);

 

 

the registration statement on Form F-4 referred to above having been declared effective by the SEC;

 

 

the absence of legal orders, decrees, injunctions or impediments prohibiting the transactions contemplated by the Merger Agreement; and

 

 

the approval of the listing on the New York Stock Exchange, subject to official notice of issuance, of the common units of NMM to be issued in the Merger.

Under the terms of the Merger Agreement, NMM, which, subsequent to the Equity Issuance described below, beneficially owns 44,117,647 shares of Company Common Stock, or approximately 62.4% of the outstanding shares of Company Common Stock, has agreed to vote those shares of Company Common Stock in favor of the Merger and the Merger Agreement at the Company Stockholders’ Meeting.

The Merger Agreement contains (i) customary representations and warranties of NMM and the Company and (ii) covenants of NMM and the Company with respect to, among other things, certain actions taken (or not to be taken) prior to the closing of the Merger. In addition, the Company has agreed to customary restrictions on its ability to solicit alternative acquisition proposals from third parties and engage in discussions or negotiations with third parties regarding acquisition proposals, subject to certain exceptions. The Company board of directors (acting upon the recommendation of the Company special committee) may change its recommendation with respect to the Merger in certain circumstances described in the Merger Agreement.


The Merger Agreement contains provisions granting both NMM and the Company the right to terminate the Merger Agreement for certain reasons, including, among others, if (i) the closing has not occurred by August 31, 2022 (the “Outside Date”), (ii) any governmental authority has issued an order, decree or ruling, or taken any other action (including the enactment of any statute, rule regulation, decree or executive order) enjoining or prohibiting the Merger, or (iii) under certain conditions, there has been a material breach of any of the representations, warranties, covenants or agreements set forth in the Merger Agreement by a party to the Merger Agreement that is not cured by the Outside Date.

The Merger Agreement provides that upon termination of the Merger Agreement in connection with a material breach by NMM or the Company (as applicable), the other party will be entitled to expense reimbursement of $1,000,000.

Redemption and Discharge of Ship Mortgage Notes

Pursuant to the Merger Agreement, on August 26, 2021, the Company called for redemption by delivery all of its outstanding 8.125% First Priority Ship Mortgage Notes due November 15, 2021 (the “Ship Mortgage Notes”) by delivery of a Redemption Notice to the registered holders of the Ship Mortgage Notes (the ‘Ship Mortgage Redemption Notice”) and remitted to the indenture trustee the aggregate redemption price payable to the holders of the Ship Mortgage Notes to satisfy and discharge the Company’s obligations under the indenture relating to the Ship Mortgage Notes. The redemption date for the Ship Mortgage Notes will be September 25, 2021.

The Company funded the approximately $397,478,000 aggregate redemption price with net proceeds from (i) the sale by the Company pursuant to the Merger Agreement (in a private placement in reliance on the exemption from registration provided for under Section 4(a)(2) of the Securities Act) of 44,117,647 shares of Company Common Stock to NMM for an aggregate purchase price of $150,000,000, or $3.40 per share (the “Equity Issuance”), and (ii) borrowings under the HCB Loan Agreement and BNP Loan Agreement described below. The shares of Company Common Stock issued to NMM pursuant to the Equity Issuance will be cancelled in the Merger for no consideration.

NSM Loan Amendment

In connection with the execution of the Merger Agreement, on August 25, 2021, the Company and Navios Shipmanagement Holdings Corporation (“NSM”) entered into a supplemental agreement (the “Supplemental Loan Agreement”) to amend an existing loan agreement dated March 19, 2021 by and among the Company and NSM, among others (the “NSM Loan Agreement”). Under the NSM Loan Agreement, NSM had made available to the Company a secured term loan (the “NSM Loan”) of up to $100,000,000, of which a balance of approximately $98,112,000 was outstanding at the time of the execution of the Supplemental Loan Agreement. The Supplemental Loan Agreement has amended the NSM Loan Agreement to, among other things, release all of the collateral securing the NSM Loan (which has been granted as collateral to secure NNA and/or its subsidiaries’ obligations under the HCB Loan Agreement and BNP Loan Agreement described below); eliminate NSM’s option under the NSM Loan Agreement to exchange all or a portion of the NSM Loan for equity of the Company’s material subsidiary, Navios Maritime Midstream Partners L.P.; cancel $30,000,000 of the outstanding balance of the NSM Loan in exchange for 8,823,529 newly-issued shares of Company Common Stock ($3.40 per share), which shares of Company Common Stock will be converted into common units of NMM in the Merger on the same terms as is applicable to other outstanding shares of Company Common Stock; and provide for the repayment of $35,000,000 of the outstanding balance of the NSM Loan in cash as of the date of the Supplemental Loan Agreement and the repayment of the remainder of the outstanding balance of the NSM Loan, of approximately $33,112,000, in cash on January 7, 2022.

Hamburg Commercial Bank Loan Agreement

In connection with the execution of the Merger Agreement, on August 23, 2021, the Company and Hamburg Commercial Bank AG (“HCB”), among other lenders, entered into a loan agreement (the “HCB Loan Agreement”) under which HCB and other lenders, agreed to make available to the Company a secured term loan facility of up to $195,385,000 to provide financing on seven tankers, all of which secure the loan (the “HCB Loan”) of which $190,215,625 was borrowed by the Company. The first advance is repayable in fifteen quarterly installments of $4,665,000 each beginning on October 29, 2021 with the final repayment to be made on April 29, 2025. The second advance is repayable in eleven quarterly installments of $2,825,000 beginning on October 29, 2021 with the final repayment to be made on April 29, 2024. The first advance bears interest at LIBOR plus 3.9% per annum and the second advance bears interest at LIBOR plus 7.0% per annum.


BNP Loan Agreement

In connection with the execution of the Merger Agreement, on August 25 2021, certain subsidiaries of the Company and BNP Paribas (“BNP”), among other lenders, entered into a loan agreement (the “BNP Loan Agreement”) under which BNP, and other lenders, agreed to make available to such Company subsidiaries a secured term loan facility of up to $96,000,000 (the “BNP Loan”), secured by five vessels owned by the Company of which the full amount was borrowed by the subsidiaries of the Company. The BNP Loan is repayable in eight quarterly installments of $4,625,000 beginning three months from the date of the initial drawdown, with the final repayment to be made on the earlier of two years after the date of the initial drawdown or December 30, 2023. The BNP Loan bears interest at LIBOR plus 3.55% per annum.

NMM Loan Agreement

In connection with the execution of the Merger Agreement, on August 24, 2021, the Company and NMM entered into a loan 4agreement (the “NMM Loan Agreement”) under which NMM agreed to make available to the Company a working capital facility of up to $45,000,000. As of the date hereof, the full amount of the facility has been drawn. The full amounts borrowed, including accrued and unpaid interest are due and payable on the date that is one year following the date hereof. The facility bears interest at the rate of 11.50% per annum.

The foregoing descriptions of the Merger Agreement, the Supplemental Loan Agreement, the NSM Loan Agreement, the HCB Loan Agreement, the BNP Loan Agreement, NMM Loan Agreement and the transactions contemplated thereby do not purport to be complete and are qualified in their entirety by reference to the respective agreements. Copies of the Merger Agreement, the Ship Mortgage Redemption Notice, the Supplemental Loan Agreement, the HCB Loan Agreement, the BNP Loan Agreement and NMM Loan Agreement are attached hereto as Exhibits 4.1, 4.2, 4.3, 4.4, 4.5 and 4.6 and the terms of which are incorporated herein by reference.

The Merger Agreement, the Ship Mortgage Redemption Notice, the Supplemental Loan Agreement, the HCB Loan Agreement, the BNP Loan Agreement and NMM Loan Agreement are incorporated herein by reference to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual or financial information about NMM, the Company, the other parties thereto or any of their respective subsidiaries and affiliates. The representations, warranties and covenants contained in the applicable agreement were made only for purposes of those agreements and as of specific dates, were solely for the benefit of the parties thereto, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties thereto instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of NMM, the Company, the other parties to the applicable Agreements or any of their respective subsidiaries and affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the dates of the applicable agreements, which subsequent information may or may not be fully reflected in public disclosures by NMM and the Company. The applicable agreements should not be read alone, but should instead be read in conjunction with the other information regarding the companies and the Merger and the other transactions that will be contained in, or incorporated by reference into, the registration statement that NMM will file in connection with the Merger, as well as in the other filings that each of NMM and the Company make with the Securities and Exchange Commission (the “SEC”).

Press Release

On August 26, 2021, NMM and the Company issued a joint press release, announcing the entry into the Merger Agreement, and the other related transactions as described herein. A copy of this press release is furnished and attached hereto as Exhibit 99.1 and is incorporated herein by reference.


Important Information

In connection with the proposed Merger, NMM will file a registration statement and a related proxy/prospectus with the SEC. Investors are urged to read the registration statement and the related proxy statement/prospectus (including all amendments and supplements) because they will contain important information regarding the NMM common units and the Merger. Investors may obtain free copies of the registration statement and the related proxy/prospectus when they become available, as well as other filings containing information about NMM and the Company, without charge, at the SEC’s website (www.sec.gov).

This communication may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “intend,” “will,” “should,” and similar expressions, as they relate to NMM and the Company and their respective subsidiaries are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. Neither NMM nor the Company assume any obligation to update any forward-looking statement as a result of new information or future events or developments, except as required by law.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NAVIOS MARITIME ACQUISITION CORPORATION
By:  

/s/ Angeliki Frangou

  Angeliki Frangou
  Chief Executive Officer
  Date: August 26, 2021


EXHIBIT INDEX

 

Exhibit
No.
  

Exhibit

  4.1    Agreement and Plan of Merger, dated August 25, 2021, by and among Navios Maritime Acquisition Corporation, Navios Maritime Partners L.P. and Navios Acquisition Merger Sub, Inc.
  4.2    Ship Mortgage Redemption Notice dated August 26, 2021.
  4.3    Supplemental Agreement in relation to a Loan Agreement dated March 19, 2021, dated August  25, 2021, by and between Navios Maritime Acquisition Corporation and Navios Shipmanagement Holdings Corporation.
  4.4    Loan Agreement, dated August 23, 2021, by and among Navios Maritime Acquisition Corporation, Hamburg Commercial Bank AG and certain banks and financial institutions named therein.
  4.5    Loan Agreement, dated August  25, 2021, by and among Zakynthos Shipping Corporation, Delos Shipping Corporation, Kerkyra Shipping Corporation, Alkmene Shipping Corporation, Persephone Shipping Corporation, BNP Paribas, Credit Agricole Corporate and Investment Bank and certain banks and financial institutions named therein.
  4.6    Loan Agreement, dated August 24, 2021, by and between Navios Maritime Acquisition Corporation and Navios Maritime Partners, L.P.
99.1    Press Release dated August 26, 2021.

Exhibit 4.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

dated as of

August 25, 2021

by and among

NAVIOS MARITIME PARTNERS L.P.,

NAVIOS ACQUISITION MERGER SUB. INC.

and

NAVIOS MARITIME ACQUISITION CORP.


TABLE OF CONTENTS

 

         Page  
ARTICLE I.

 

DEFINITIONS

 

SECTION 1.1

  Definitions      2  

SECTION 1.2

  Rules of Construction      12  
ARTICLE II.

 

TRANSACTIONS

 

SECTION 2.1

  Initial Transactions      13  

SECTION 2.2

  Closing of the Merger      13  

SECTION 2.3

  Exchange of NNA Common Stock      16  

SECTION 2.4

  Plan of Reorganization      18  
ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES OF NNA

 

SECTION 3.1

  Organization and Existence      18  

SECTION 3.2

  Authority and Approval      19  

SECTION 3.3

  No Conflict; Consents; Voting Requirements      19  

SECTION 3.4

  Capitalization      20  

SECTION 3.5

  SEC Documents; Internal Controls      21  

SECTION 3.6

  Financial Statements; Undisclosed Liabilities      22  

SECTION 3.7

  Litigation; Laws and Regulations      22  

SECTION 3.8

  No Adverse Changes      23  

SECTION 3.9

  Taxes      23  

SECTION 3.10

  Licenses; Permits      24  

SECTION 3.11

  Contracts      25  

SECTION 3.12

  Insurance      25  

SECTION 3.13

  Condition of Assets      25  

SECTION 3.14

  Investment Company Act      26  

SECTION 3.15

  Brokerage Arrangements      26  

SECTION 3.16

  Opinion of Financial Advisor      26  

SECTION 3.17

  Information Supplied      26  

SECTION 3.18

  Waivers and Disclaimers      26  
ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES OF PARENT

 

SECTION 4.1

  Organization and Existence      27  

SECTION 4.2

  Authority and Approval      27  

SECTION 4.3

  No Conflict; Consents      28  

 

i


SECTION 4.4

  Capitalization      29  

SECTION 4.5

  SEC Documents; Internal Controls; Investment Representations      29  

SECTION 4.6

  Financial Statements; Undisclosed Liabilities      30  

SECTION 4.7

  Litigation; Laws and Regulations      31  

SECTION 4.8

  No Adverse Changes      32  

SECTION 4.9

  Taxes      32  

SECTION 4.10

  Licenses; Permits      33  

SECTION 4.11

  Contracts      33  

SECTION 4.12

  Insurance      34  

SECTION 4.13

  Condition of Assets      34  

SECTION 4.14

  Investment Company Act      34  

SECTION 4.15

  Brokerage Arrangements      34  

SECTION 4.16

  Opinion of Financial Advisor      35  

SECTION 4.17

  Information Supplied      35  

SECTION 4.18

  Waivers and Disclaimers      35  
ARTICLE V.

 

ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

 

SECTION 5.1

  Preparation of Certain Filings; Meeting of Holders of NNA Common Stock; Commitment to Vote      35  

SECTION 5.2

  Conduct of Parties      37  

SECTION 5.3

  No Solicitation; Recommendation of Merger      39  

SECTION 5.4

  Commercially Reasonable Efforts; Further Assurances      42  

SECTION 5.5

  Public Announcement      43  

SECTION 5.6

  Expenses      43  

SECTION 5.7

  Regulatory Issues      43  

SECTION 5.8

  Tax Opinion      44  

SECTION 5.9

  D&O Insurance      44  

SECTION 5.10

  Litigation      46  

SECTION 5.11

  Special Committee      46  

SECTION 5.12

  Stock Exchange Listing; Delisting and Deregistration      46  
ARTICLE VI.

 

CONDITIONS TO CLOSING

 

SECTION 6.1

  Conditions to Each Party’s Obligations      47  

SECTION 6.2

  Conditions to the Parent Parties’ Obligations      47  

SECTION 6.3

  Conditions to NNA’s Obligations      48  

SECTION 6.4

  Frustration of Conditions      48  
ARTICLE VII.

 

TERMINATION

 

SECTION 7.1

  Termination by Mutual Consent      48  

SECTION 7.2

  Termination by NNA or Parent      48  

 

ii


SECTION 7.3

  Termination by NNA      49  

SECTION 7.4

  Termination by Parent      49  

SECTION 7.5

  Expenses      49  

SECTION 7.6

  Effect of Certain Terminations      50  

SECTION 7.7

  Survival      50  

SECTION 7.8

  Enforcement of this Agreement      50  

SECTION 7.9

  No Waiver Relating to Claims for Fraud/Willful Misconduct      50  
ARTICLE VIII.

 

MISCELLANEOUS

 

SECTION 8.1

  Notices      51  

SECTION 8.2

  Governing Law; Jurisdiction; Waiver of Jury Trial      52  

SECTION 8.3

  Entire Agreement; Amendments, Consents and Waivers      52  

SECTION 8.4

  Binding Effect; No Third-Party Beneficiaries; and Assignment      53  

SECTION 8.5

  Severability      53  

SECTION 8.6

  Counterparts      54  

EXHIBIT A -

       Form of Amended NNA Articles of Incorporation

 

 

 

iii


AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of August 25, 2021 (the “Execution Date”), is entered into by and among Navios Maritime Partners L.P., a Republic of the Marshall Islands limited partnership (“Parent”), Navios Acquisition Merger Sub. Inc., a Republic of the Marshall Islands corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Navios Maritime Acquisition Corp., a Republic of the Marshall Islands corporation (“NNA”).

WITNESSETH:

WHEREAS, Parent desires to purchase from NNA, and NNA desires to issue and sell to Parent, simultaneously, or substantially simultaneously, herewith, 44,117,647 newly issued shares of NNA Common Stock at a price of $3.40 per share in cash and $150,000,000 in the aggregate in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act (the “NNA Equity Issuance”);

WHEREAS, simultaneously, or substantially simultaneously, herewith, NNA and/or certain of its Subsidiaries are entering into Loan Agreements with certain lenders (together, the “Loan Agreement”) pursuant to which NNA and its Subsidiaries are borrowing from such lenders up to $291,385,000, in the aggregate (the “NNA Debt Financing”);

WHEREAS, simultaneously, or substantially simultaneously, herewith, NNA is canceling all of the NNA Notes owned by NNA and is using net proceeds of the NNA Equity Issuance and the NNA Debt Financing to satisfy and discharge in full the NNA Notes Indenture;

WHEREAS, at a meeting duly called and held, the NNA Special Committee, by unanimous vote, in good faith (a) determined that this Agreement and the transactions contemplated hereby are in the best interests of NNA and the Holders of NNA Public Stock, (b) approved this Agreement and the Transactions, (c) resolved to recommend to the NNA Board the approval of this Agreement and the consummation of the Transactions (such recommendation, the “NNA Special Committee Recommendation”), and (d) resolved to recommend, and to direct the NNA Board to recommend, the approval of this Agreement and the Merger, by the Holders of shares of NNA Common Stock;

WHEREAS, at a meeting duly called and held, upon the receipt of the recommendation of the NNA Special Committee, the NNA Board, by unanimous vote, (a) determined that this Agreement and the Transactions are in the best interests of NNA and the Holders of NNA Public Stock, (b) approved this Agreement and the Transactions and (c) directed that this Agreement be submitted to a vote of the Holders of shares of NNA Common Stock at the NNA Stockholders Meeting and recommended the approval of this Agreement and the Merger by the Holders of shares of NNA Common Stock (such recommendation, the “NNA Board Recommendation”);

WHEREAS, at a meeting duly called and held, the Parent Conflicts Committee, by unanimous vote, (a) determined that this Agreement and the Transactions are in the best interests of Parent and the Holders of common units of Parent (“Parent Common Units”) (excluding the general partner of Parent and its Affiliates), and (b) granted a Special Approval (as defined in the Parent Partnership Agreement) of this Agreement and the Transactions;

 

1


WHEREAS, at a meeting duly called and held, the Board of Directors of Parent, by unanimous vote, (a) determined that this Agreement and the Transactions are in the best interests of Parent and the Holders of the Parent Common Units, and (b) approved and declared advisable this Agreement and the Transactions to which the Parent Parties are party, including issuance of Parent Common Units in connection with the Merger (the “Parent Equity Issuance”);

WHEREAS, Parent, as the sole stockholder of Merger Sub, has approved this Agreement and approved the execution, delivery and performance of this Agreement and the Merger on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, for U.S. federal income Tax purposes, the parties intend that the Merger (either alone or together with Second Merger, if applicable) qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Section 367(a) of the Code not cause Parent to be treated as other than a corporation with respect to any transfer of property thereto in connection with the Merger (other than, in certain circumstances, a transfer by a holder of NNA Common Stock that is a United States person and that holds 5% or more by vote or by value (within the meaning of Treasury Regulations Section 1.367(a)-3(b)(1)(i)) of Parent immediately following the Merger) (the “Intended Tax Treatment”).

NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants, agreements and conditions contained herein, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

SECTION 1.1 Definitions. In this Agreement, unless the context otherwise requires, the following terms shall have the following meanings respectively:

Affiliate” has the meaning set forth in Rule 405 of the rules and regulations under the Securities Act, unless otherwise expressly stated herein; provided, however, that prior to the Closing (i) with respect to the Parent Group Entities, the term “Affiliate” shall exclude each of the NNA Group Entities, and (ii) with respect to the NNA Group Entities, the term “Affiliate” shall exclude each of the Parent Group Entities.

Agreement” has the meaning set forth in the Preamble.

Amended NNA Articles of Incorporation” means the Amended and Restated Articles of Incorporation of NNA, as amended, supplemented or restated from time to time.

Book-Entry NNA Common Stock” has the meaning set forth in Section 2.2(c)(ii).

Business Day” means any day on which commercial banks are generally open for business in New York, New York other than a Saturday, a Sunday or a day observed as a holiday in New York, New York under the Laws of the State of New York or the federal Laws of the United States of America.

Certificate of Merger” has the meaning set forth in Section 2.2(b).

 

2


Closing” has the meaning set forth in Section 2.2(a).

Closing Date” has the meaning set forth in Section 2.2(a).

Code” means the Internal Revenue Code of 1986, as amended.

COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions, variants or mutations thereof or related or associated epidemics, pandemic or disease outbreaks.

D&O Insurance” has the meaning set forth in Section 5.9(b).

Effective Time” has the meaning set forth in Section 2.2(b).

Equity Issuance Shares” has the meaning set forth in Section 2.1(a).

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Exchange Agent” has the meaning set forth in Section 2.3(a).

Exchange Fund” has the meaning set forth in Section 2.3(a).

Exchange Ratio” has the meaning set forth in Section 2.2(c)(i).

Execution Date” has the meaning set forth in the Preamble.

GAAP” has the meaning set forth in Section 1.2.

Governing Documents” means, with respect to any Person, the certificate or articles of incorporation or formation, bylaws, articles of organization, limited liability company agreement, partnership agreement, formation agreement, joint venture agreement, operating agreement, unanimous equityholder agreement or declaration or other similar governing documents of such Person.

Governmental Entity” means any federal, state, tribal, provincial, municipal, foreign or other government, governmental court, department, commission, board, bureau, regulatory or administrative agency or instrumentality.

Holders” means, when used with reference to the Parent Common Units or the NNA Common Stock, the holders of such units of stock, as applicable, shown from time to time in the registers maintained by or on behalf of Parent or NNA, respectively.

Indenture Co-Issuers” has the meaning set forth in the definition of “NNA Notes Indenture.

Intended Tax Treatment” has the meaning set forth in the Preamble.

Latest NNA Quarter 6-K” has the meaning set forth in Section 3.6(a).

 

3


Latest Parent Quarter 6-K” has the meaning set forth in Section 4.6(a).

Laws” means all statutes, regulations, codes, tariffs, ordinances, decisions, administrative interpretations, writs, injunctions, stipulations, statutory rules, orders, judgments, decrees and terms and conditions of any grant of approval, permission, authority, permit or license of any court, Governmental Entity, statutory body or self-regulatory authority (including the NYSE).

Letter of Transmittal” has the meaning set forth in Section 2.3(b).

Liens” means any mortgage, restriction (including restrictions on transfer), deed of trust, lien, security interest, preemptive right, option, right of first offer or refusal, lease or sublease, claim, pledge, conditional sales contract, charge, encroachment or encumbrance.

Marshall Islands Business Corporations Act” means the Business Corporation Act of the Associations Law of The Republic of the Marshall Islands, as amended, supplemented or restated from time to time, and any successor to such statute.

Merger” means the merger of Merger Sub with and into NNA, with NNA as the sole surviving entity.

Merger Consideration” has the meaning set forth in Section 2.2(c)(i).

Merger Sub” has the meaning set forth in the Preamble.

Merger Tax Opinion” has the meaning set forth in Section 5.8.

Newco” has the meaning set forth in Section 5.8(b).

NNA” has the meaning set forth in the Preamble.

NNA 20-F” has the meaning set forth in Section 3.6(a).

NNA Adverse Recommendation Change” has the meaning set forth in Section 5.3(a).

NNA Alternative Proposal” means any inquiry, proposal or offer from any Person or “group” (as defined in Section 13(d) of the Exchange Act), relating to any (i) direct or indirect acquisition (whether in a single transaction or a series of related transactions), outside of the ordinary course of business, of assets of NNA and its Subsidiaries (including securities of Subsidiaries) equal to 20% or more of NNA’s consolidated assets or to which 20% or more of NNA’s revenues or earnings on a consolidated basis are attributable, (ii) direct or indirect acquisition (whether in a single transaction or a series of related transactions) of beneficial ownership (within the meaning of Section 13 of the Exchange Act) of 20% or more of the outstanding equity securities of NNA, (iii) tender offer or exchange offer that if consummated would result in any Person or “group” (as defined in Section 13(d) of the Exchange Act) beneficially owning 20% or more of the outstanding equity securities of NNA or (iv) merger, consolidation, unit exchange, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction (whether in a single transaction or a series of related transactions) involving NNA which is structured to permit such Person or group to acquire beneficial ownership of 20% or more of the corporation’s consolidated assets or outstanding equity interests; in each case, other than the transactions contemplated by this Agreement.

 

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NNA Board” means the Board of Directors of NNA.

NNA Board Recommendation” has the meaning set forth in the Preamble.

NNA Certificate” has the meaning set forth in Section 2.2(c)(ii).

NNA Changed Circumstance” means a material event, circumstance, effect, condition, change or development, in each case that arises or occurs after the date of this Agreement and was not, prior to the date of this Agreement, known to or reasonably foreseeable by the NNA Special Committee and did not result from or arise out of the announcement or pendency of, or any actions required to be taken by (or to be refrained from being taken by) NNA pursuant to this Agreement; provided, however, that in no event shall the following events, circumstances, or changes in circumstances constitute an NNA Changed Circumstance: (i) any event, fact, development or occurrence that involves or relates to an NNA Alternative Proposal or any inquiry or communications or matters relating thereto, (ii) any change in the price, or change in trading volume, of the shares of NNA Common Stock, (iii) the fact that NNA meets or exceeds internal or published projections, budgets, forecasts or estimates of revenues, earnings or other financial results for any period (provided, however, that the exception in this clause (iii) shall not apply to the underlying causes giving rise to or contributing to such change or prevent any of such underlying causes from being taken into account in determining whether an NNA Changed Circumstance has occurred), (iv) the NNA Equity Issuance, the NNA Debt Financing, the Working Capital Revolving Loan Facility, the NNA Notes Cancellation and Discharge or the NSH Loan Amendment, or (v) any change in the price, or change in trading volume, of the Parent Common Units.

NNA Common Stock” means the Common Stock, par value $0.0001 per share, of NNA.

NNA D&O Indemnified Parties” means (a) any Person (together with such Person’s heirs, executors and administrators) who is or was, or at any time prior to the Effective Time becomes, an officer or director of any NNA Group Entity and (b) any Person (together with such Person’s heirs, executors and administrators) who is or was serving, or at any time prior to the Effective Time serves, at the request of any NNA Group Entity as an officer, director, member, partner, agent, fiduciary or trustee of another Person; provided that a Person shall not be an NNA D&O Indemnified Party by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services.

NNA Debt Financing” has the meaning set forth in the Preamble.

NNA Equity Issuance” has the meaning set forth in the Preamble.

NNA Expenses” means an amount in cash equal to the reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants) incurred by the NNA Group Entities in connection with this Agreement and the transactions contemplated hereby up to a maximum amount of $1,000,000.

 

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NNA Fairness Opinion” has the meaning set forth in Section 3.16.

NNA Financial Statements” has the meaning set forth in Section 3.6(a).

NNA Group Entities” means NNA and the NNA Subsidiaries.

NNA Material Adverse Effect” means any change, effect, event or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on or a material adverse change in (i) the business, assets, liabilities, properties, condition (financial or otherwise) or results of operations of the NNA Group Entities, taken as a whole; provided, however, that any adverse changes, effects, events or occurrences resulting from or due to any of the following shall be disregarded in determining whether there has been an NNA Material Adverse Effect: (a) changes, effects, events or occurrences affecting the markets or geographic locations in which the NNA Group Entities operate, (b) changes, effects, events or occurrences affecting the United States or global economic conditions or financial, credit, debit, securities or other capital markets in general, (c) any outbreak of, acts of or escalation of hostilities, terrorism, war or other similar national emergency, including any event, fact, condition or circumstance resulting from COVID-19 or the worsening thereof, (d) the announcement or pendency of this Agreement or the transactions contemplated hereby, (e) changes in any Laws applicable to NNA or any of the NNA Subsidiaries or in accounting regulations or principles or the interpretation thereof that materially affects this Agreement or the transactions contemplated hereby, (f) NNA taking any action required or contemplated by this Agreement, (g) any change in the market price or trading volume of the shares of NNA Common Stock (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of NNA Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, an NNA Material Adverse Effect) (h) changes, effects, events or occurrences generally affecting the prices of oil, natural gas, natural gas liquids and other similar commodities, or (i) any failure of NNA to meet any internal or external projections, forecasts or estimates of revenues, earnings or other financial or operating metrics for any period (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of NNA Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, an NNA Material Adverse Effect); provided that, in the case of clauses (a), (b), (c), (e) and (h) the adverse impact on the NNA Group Entities, taken as a whole, is not materially disproportionate to the adverse impact on similarly situated parties, or (ii) the ability of NNA to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

NNA Material Contract” has the meaning set forth in Section 3.11(a).

NNA Notes” means the 8.125% First Priority Ship Mortgage Notes due 2021 issued by Indenture Co-Issuers pursuant to the NNA Notes Indenture.

 

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NNA Notes Cancellation and Discharge” means (i) the delivery by NNA and its Subsidiaries of all of the NNA Notes held by the foregoing for cancellation as provided for in Section 2.11 of the NNA Notes Indenture and (ii) the satisfaction and discharge by the Indenture Co-Issuers of their obligations under the NNA Notes and the NNA Notes Indenture and the obligations of the Guarantors under the Note Guarantees (each as defined in the NNA Notes Indenture) and the NNA Notes Indenture pursuant to Article Eight of the NNA Notes Indenture and the termination and release of the Security Interests (as defined in the NNA Notes Indenture) pursuant to Section 11.11 of the NNA Notes Indenture by NNA irrevocably depositing with the trustee under the NNA Notes Indenture as trust funds in trust for the benefit of the holders of such NNA Notes an amount of cash sufficient to pay and discharge the entire indebtedness on the NNA Notes not delivered to the trustee for cancellation for principal, premium and accrued interest, if any, thereunder to the Redemption Date (as defined in the NNA Notes Indenture) in respect of a redemption of the outstanding NNA Notes and the Indenture Co-Issuers delivering, or causing to be delivered, to the trustee under the NNA Notes Indenture all necessary Officer’s Certificates and Opinion of Counsel (both as defined in the NNA Notes Indenture) to effect the foregoing.

NNA Notes Indenture” means the Indenture, dated as of November 13, 2013, among NNA and Navios Acquisition Finance (US) Inc., a wholly owned Subsidiary of NNA (together, the “Indenture Co-Issuers”), each of the guarantors thereunder and the trustee and collateral trustee thereunder, as such indenture shall have been supplemented from time to time.

NNA Proxy Statement” has the meaning set forth in Section 5.1(a).

NNA Public Stock” means the outstanding shares of NNA Common Stock, other than the shares of NNA Common Stock held directly or indirectly by the Parent Group Entities (including the shares of NNA Common Stock issued to Parent in connection with the NNA Equity Issuance), by the NNA Group Entities or by NSH or any of its Affiliates (including the shares of NNA Common Stock issued to NSH in connection with the NSH Equity Issuance).

NNA Recommendation Change Notice” has the meaning set forth in Section 5.3(d)(ii)(A).

NNA Recommendation Change Notice Period” has the meaning set forth in Section 5.3(d)(ii)(B).

NNA SEC Reports” has the meaning set forth in Section 3.5(a).

NNA Special Committee” means the special committee consisting of independent directors of the NNA Board.

NNA Special Committee Recommendation” has the meaning set forth in the Preamble.

NNA Subsidiaries” means the entities that are partially or wholly owned, directly or indirectly, by NNA.

NNA Superior Proposal” means a bona fide unsolicited written NNA Alternative Proposal (except that references to “20%” within the definition of “NNA Alternative Proposal” shall be replaced by “50%”), obtained after the date of this Agreement and not in breach of Section 5.3 (other than an immaterial breach), which is on terms and conditions which the NNA Special Committee determines in good faith to be (i) reasonably capable of being consummated in accordance with its terms, taking into account legal, regulatory, financial, financing and timing

 

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aspects of the proposal, and (ii) if consummated, more favorable to the Holders of shares of NNA Common Stock (in their capacity as Holders of shares of NNA Common Stock) from a financial point of view than the transactions contemplated hereby, taking into account at the time of determination any changes to the terms of this Agreement that as of that time had been committed to by Parent in writing.

NNA Superior Proposal Notice” has the meaning set forth in Section 5.3(d)(i)(C).

NNA Superior Proposal Notice Period” has the meaning set forth in Section 5.3(d)(i)(D).

NNA Stockholders Approval” has the meaning set forth in Section 3.3(c).

NNA Stockholders Meeting” has the meaning set forth in Section 5.1(c).

Notice” has the meaning set forth in Section 8.1.

NSH” means Navios Shipmanagement Holdings Corporation.

NSH Equity Issuance” means the issuance of 8,823,529 shares of NNA Common Stock to NSH pursuant to the NSH Loan Amendment.

NSH Loan Amendment” means the Amendment No. 1 to the Loan Agreement, dated March 19, 2021, between NNA and NSH being entered into simultaneously herewith.

NYSE” means the New York Stock Exchange.

Orders” has the meaning set forth in Section 3.7(a).

Outside Date” has the meaning set forth in Section 7.2(a).

Parent” has the meaning set forth in the Preamble.

Parent 20-F” has the meaning set forth in Section 4.6(a).

Parent Board” means the Board of Directors of Parent.

Parent Common Units” has the meaning set forth in the Recitals.

Parent Conflicts Committee” means the Conflicts Committee (as defined in the Parent Limited Partnership Agreement) of the Parent Board.

Parent Equity Issuance” has the meaning set forth in the Recitals.

Parent Expenses” means an amount in cash equal to the reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants) incurred by any Parent Group Entities or the general partner of Parent in connection with this Agreement and the transactions contemplated hereby up to a maximum amount of $1,000,000.

 

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Parent Financial Statements” has the meaning set forth in Section 4.6(a).

Parent Group Entities” means the Parent and the Parent Subsidiaries (excluding the NNA Group Entities).

Parent Common Units” has the meaning set forth in the Recitals.

Parent Incentive Distribution Rights” means the “Incentive Distribution Rights,” as defined in the Parent Partnership Agreement.

Parent Material Adverse Effect” means any change, effect, event or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on or a material adverse change in (i) the business, assets, liabilities, properties, condition (financial or otherwise) or results of operations of the Parent Group Entities (including their ownership of shares of NNA Common Stock), taken as a whole; provided, however, that any adverse changes, effects, events or occurrences resulting from or due to any of the following shall be disregarded in determining whether there has been a Parent Material Adverse Effect: (a) changes, effects, events or occurrences affecting the markets or geographic locations in which the Parent Group Entities operate, (b) changes, effects, events or occurrences affecting the United States or global economic conditions or financial, credit, debt, securities or other capital markets in general, (c) any outbreak of, acts of or escalation of hostilities, terrorism, war or other similar national emergency, including any event, fact, condition or circumstance resulting from COVID-19 or the worsening thereof, (d) the announcement or pendency of this Agreement or the transactions contemplated hereby, (e) changes in any Laws applicable to Parent or any of the Parent Subsidiaries or in accounting regulations or principles or the interpretation thereof that materially affects this Agreement or the transactions contemplated hereby, (f) the Parent Parties taking any action required or contemplated by this Agreement, (g) changes, effects, events or occurrences at any NNA Group Entity, (h) any change in the market price or trading volume of the Parent Common Units (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of Parent Material Adverse Effect should be deemed to constitute, or be taken into account in determining, whether there has been, or would reasonably be expected to be, a Parent Material Adverse Effect), (i) changes, effects, events or occurrences generally affecting the prices of oil, natural gas, natural gas liquids and other similar commodities, or (j) any failure of Parent to meet any internal or external projections, forecasts or estimates of revenues, earnings or other financial or operating metrics for any period (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of Parent Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Parent Material Adverse Effect); provided that, in the case of clauses (a), (b), (c), (e) and (i) the adverse impact on the Parent Group Entities, taken as a whole, is not materially disproportionate to the adverse impact on similarly situated parties, or (ii) the ability of any of the Parent Parties to perform their obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

Parent Material Contract” has the meaning set forth in Section 4.11(a).

 

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Parent Partnership Agreement” means the Fourth Amended and Restated Agreement of Limited Partnership of Parent, dated as of March 19, 2018, as amended, supplemented or restated from time to time.

Parent Parties” means Parent and Merger Sub.

Parent SEC Reports” has the meaning set forth in Section 4.5(a).

Parent Subsidiaries” means the entities that are partially or wholly owned, directly or indirectly, by Parent, excluding any NNA Group Entity.

Parent Tax Counsel” has the meaning set forth in Section 5.8.

Permits” has the meaning set forth in Section 3.10(a).

Permitted Indebtedness” means (i) in the case of Parent, (a) Refinancing Indebtedness, (b) additional indebtedness with a principal amount of up to 20% of the aggregate principal amount of the existing indebtedness of the Parent Group Entities in effect as of the date hereof and (c) any intercompany indebtedness between the Parent Group Entities, and (ii) in the case of NNA, (a) the NNA Debt Financing and the Working Capital Revolving Loan Facility and (b) any intercompany indebtedness between the NNA Group Entities.

Permitted Lien” means all: (i) mechanics’, materialmen’s, carriers’, workmen’s, repairmen’s, vendors’, operators’ or other like Liens, if any, that do not materially detract from the value of or materially interfere with the use of any of the assets of the Parent Group Entities or NNA Group Entities, as applicable, subject thereto; (ii) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business; (iii) title defects or Liens (other than those constituting Liens for the payment of indebtedness), if any, that do not or would not, individually or in the aggregate, impair in any material respect the use or occupancy of the assets of the Parent Group Entities or NNA Group Entities, as applicable, taken as a whole; (iv) Liens for Taxes that are not due and payable or that may thereafter be paid without penalty, or the validity or amount of which is being contested in good faith by appropriate Proceedings and for which adequate reserves have been established in accordance with GAAP; and (v) Liens supporting surety bonds, performance bonds and similar obligations issued in connection with the businesses of the Parent Group Entities or NNA Group Entities, as applicable.

Person” means an individual, partnership, corporation, association, trust, limited liability company, joint venture, unincorporated organization or other entity or Governmental Entity.

Proceedings” has the meaning set forth in Section 3.7(a).

Refinancing Indebtedness” means any indebtedness of any Parent Group Entity issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease, or refund, other indebtedness of any Parent Group Entity outstanding as of the date hereof; provided that the principal amount (or accreted value, if applicable) of such indebtedness does not exceed the principal amount (or accreted value, if applicable) of the indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of any reasonably determined premium necessary to accomplish such refinancing and such reasonable fees and expenses incurred in connection therewith).

 

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Registration Statement” has the meaning set forth in Section 3.17.

Representatives” shall mean, with respect to any Person, such Person’s directors, officers, employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives.

Rights” shall mean, with respect to any Person, subscriptions, options, restricted units, equity appreciation rights, profits interests or other equity-based interests, warrants, calls, convertible or exchangeable securities, rights, preemptive rights, preferential purchase rights, rights of first refusal or any similar rights, commitments or agreements of any character providing for the issuance of any partnership interests, voting securities or equity interests of such Person, including any representing the right to purchase or otherwise receive any of the foregoing or any securities convertible into or exchangeable or exercisable for such partnership interests, voting securities or equity interests.

Sarbanes-Oxley Act” has the meaning set forth in Section 3.5(a).

SEC” means the United States Securities and Exchange Commission.

Second Merger” has the meaning set forth in Section 5.8(b).

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Subsidiaries” means, when used with reference to Parent or NNA, the Parent Subsidiaries or the NNA Subsidiaries, respectively.

Surrender” means, when used with reference to an NNA Common Stock, the proper delivery of an NNA Certificate (or lost certificate affidavit as contemplated by Section 2.3(b)) or the proper completion, with respect to a Book-Entry NNA Common Stock, of all procedures necessary, in either case, to effect the transfer of such NNA Common Stock in accordance with the terms of the Letter of Transmittal and such other procedures as may be reasonably established by the Exchange Agent.

Surviving Entity” has the meaning set forth in Section 2.2(b).

Tax Return” means all reports, estimates, declarations of estimated Tax, claims for refund, information statements, forms and returns relating to, or required to be filed in connection with, any Taxes, including any schedule or attachment thereto, and including any amendment thereof, supplied to, or required to be supplied to, a Governmental Entity.

 

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Tax” or “Taxes” means (i) all taxes, however denominated, including any interest, penalties or other additions to tax that may become payable in respect thereof, imposed by any Governmental Entity, which taxes shall include, without limiting the generality of the foregoing, all income or profits taxes (including, but not limited to, federal income taxes and state income taxes), gross receipts taxes, net proceeds taxes, alternative or add-on minimum taxes, sales taxes, use taxes, real property gains or transfer taxes, ad valorem taxes, property taxes, value-added taxes, franchise taxes, production taxes, severance taxes, windfall profit taxes, withholding taxes, payroll taxes, employment taxes, excise taxes and other obligations of the same or similar nature to any of the foregoing and (ii) any liability in respect of any items described in clause (i) payable by reason of contract, assumption, transferee or successor liability, operation of law, Treasury Regulations Section 1.1502-6 (or any similar provision of law) or otherwise.

Transactions” means the Merger, the Parent Equity Issuance, the NNA Equity Issuance, NNA Debt Financing, the NNA Notes Cancellation and Discharge, the NSH Loan Amendment, the NSH Equity Issuance, the Working Capital Revolving Loan Facility and the other transactions contemplated hereby.

Working Capital Revolving Loan Facility” means the Loan Agreement being entered into between NNA and Parent simultaneously herewith pursuant to which Parent is agreeing to provide to NNA a revolving credit facility in an amount up to $45 million.

SECTION 1.2 Rules of Construction. The division of this Agreement into articles, sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an “Article” or “Section” followed by a number or a letter refer to the specified Article or Section of this Agreement. The terms “this Agreement,” “hereof,” “herein” and “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof. Unless otherwise specifically indicated or the context otherwise requires, (a) all references to “dollars” or “$” mean United States dollars, (b) words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders, (c) “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and (d) all words used as accounting terms shall have the meanings assigned to them under United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”). In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day that is a Business Day. Reference to any party hereto is also a reference to such party’s permitted successors and assigns. The Exhibits attached to this Agreement are hereby incorporated by reference into this Agreement and form part hereof. Unless otherwise indicated, all references to an “Exhibit” followed by a number or a letter refer to the specified Exhibit to this Agreement. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, it is the intention of the parties hereto that this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any Person by virtue of the authorship of any of the provisions of this Agreement. Further, prior drafts of this Agreement or the fact that any clauses have been added, deleted or otherwise modified from any prior drafts of this Agreement shall not be used as an aid of construction or otherwise constitute evidence of the intent of the parties; and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of such prior drafts.

 

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ARTICLE II.

TRANSACTIONS

SECTION 2.1 Initial Transactions.

(a) NNA Equity Issuance. Simultaneously herewith, NNA and Parent are consummating the NNA Equity Issuance, and in furtherance thereof, NNA hereby issues, sells and delivers to Parent, and Parent hereby subscribes for and purchases from NNA, effective as of the date hereof, 44,117,647 newly issued shares of NNA Common Stock (the “Equity Issuance Shares”), free and clear of any and all Liens (other than restrictions under applicable securities laws), for a price of $3.40 per share in cash and $150,000,000 in the aggregate (the “Aggregate Purchase Price”). Simultaneously herewith, Parent is remitting the Aggregate Purchase Price to NNA by wire transfer to an account of NNA. As promptly as practicable after the date hereof, NNA shall deliver to Parent a copy of the records of NNA’s transfer agent showing Parent as the registered owner of the Equity Issuance Shares.

(b) NNA Debt Financing. Simultaneously, or substantially simultaneously, herewith, NNA shall enter into the Loan Agreement and consummate the NNA Debt Financing pursuant to the Loan Agreement.

(c) NNA Notes Cancellation and Discharge. Simultaneously, or substantially simultaneously, herewith, NNA shall consummate the NNA Notes Cancellation and Discharge.

(d) NSH Loan Amendment. Simultaneously, or substantially simultaneously herewith, NNA shall enter into the NSH Loan Amendment and consummate the transactions contemplated thereby.

(e) Working Capital Revolving Loan Facility. Simultaneously herewith, NNA and Parent shall enter into the Loan Agreement providing for the Working Capital Revolving Loan Facility.

SECTION 2.2 Closing of the Merger.

(a) Closing Date. Subject to the satisfaction or waiver of the conditions (other than those conditions that are not legally permitted to be waived) to closing set forth in Article VI, the closing (the “Closing”) of the Merger and the transactions contemplated by this Section 2.2 shall be held at the principal executive offices of Parent, located at 7 Avenue de Grande Bretagne, Office 11B2 Monte Carlo, MC 98000 Monaco, on the third Business Day following the satisfaction or waiver (other than those conditions that are not legally permitted to be waived) of all of the conditions set forth in Article VI (other than conditions that would normally be satisfied on the Closing Date, but subject to satisfaction or waiver (other than those conditions that are not legally permitted to be waived) of those conditions) commencing at 9:00 a.m., local time, or such other place, date and time as may be mutually agreed upon in writing by Parent and NNA. The “Closing Date,” as referred to herein, shall mean the date on which the Closing actually occurs.

 

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(b) Effective Time. On the Closing Date, concurrently with or as soon as practicable following the Closing, Parent and NNA shall cause a certificate of merger effecting the Merger (the “Certificate of Merger”) to be filed with the Office of the Registrar of Corporations of the Republic of the Marshall Islands, duly executed in accordance with the relevant provisions of the Marshall Islands Business Corporation Act (the date and time of such filing (or, if agreed by the parties hereto, such later time and date as may be expressed therein as the effective date and time of the Merger) being the “Effective Time”). Upon the terms and subject to the conditions of this Agreement, at the Effective Time, Merger Sub shall merge with and into NNA, the separate existence of Merger Sub shall cease, and NNA shall continue as the surviving corporation in the Merger (the “Surviving Entity”).

(c) Effect of the Merger on Equity Securities. Subject in each case to Sections 2.2(d) and 2.2(e), at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, NNA, any Holder of shares of NNA Common Stock, any Holder of Parent Common Units, or any other Person:

(i) Conversion of NNA Common Stock. Each share of NNA Common Stock outstanding immediately prior to the Effective Time (other than the shares of NNA Common Stock referenced in Section 2.2(c)(iii) below and other than any share of NNA Common Stock outstanding immediately prior to the Effective Time that is subject to vesting or other forfeiture conditions (such shares, the “NNA Restricted Shares”)) shall be converted into the right to receive 0.1275 of a validly issued Parent Common Unit (the “Merger Consideration” and such ratio, the “Exchange Ratio”). Each NNA Restricted Share award outstanding immediately prior to the Effective Time shall be converted into an award with respect to a number of Parent Common Units (rounded up or down to the nearest whole unit) equal to the product of (x) the number of shares of NNA Common Stock subject to such NNA Restricted Share award and (y) the Exchange Ratio, and such award of Parent Common Units will be subject to the same terms and conditions (including, without limitation, the same vesting conditions) as were applicable to such NNA Restricted Share award immediately prior to the Effective Time.

(ii) Each share of NNA Common Stock, upon being converted into the right to receive the Merger Consideration pursuant to Section 2.2(c)(i), shall cease to be outstanding and shall be canceled and retired and shall cease to exist, and each Holder of a share of NNA Common Stock immediately prior to the Effective Time shall thereafter cease to be a shareholder of NNA or have any rights with respect to such share of NNA Common Stock, except the right to receive the Merger Consideration and any dividends or distributions to which former Holders of NNA Common Stock become entitled all in accordance with this Article II upon the Surrender of (A) a certificate that immediately prior to the Effective Time represented NNA Common Stock (a “NNA Certificate”) or (B) uncertificated NNA Common Stock represented by book-entry (“Book-Entry NNA Common Stock”), together with such properly completed and duly executed Letter of Transmittal and such other documents in accordance with Section 2.3.

(iii) Treatment of NNA-Owned NNA Common Stock and Parent-Owned NNA Common Stock. Any shares of NNA Common Stock that are owned immediately prior to the Effective Time by any NNA Group Entity or Parent Group Entity (including the Equity Issuance Shares) shall be automatically canceled and shall cease to exist and no consideration shall be delivered in exchange for such canceled NNA Common Stock.

 

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(iv) Common Stock of Merger Sub. Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Entity. At the Effective Time, the books and records of NNA shall be revised to reflect the cancellation and retirement of all shares of NNA Common Stock and the conversion of the shares of common stock of Merger Sub into common stock of the Surviving Entity, and the existence of NNA (as the Surviving Entity) shall continue without dissolution.

(d) Other Effects of the Merger. The Merger shall be conducted in accordance with and shall have the effects set forth in this Agreement and the applicable provisions of Marshall Islands Limited Business Corporation Act. At the Effective Time, by virtue of the Merger, the Amended NNA Articles of Incorporation as in effect immediately prior to the Effective Time to read in its entirety as set forth on Exhibit A and from and after the Effective Time, the Amended NNA Articles of Incorporation as so amended shall continue as the articles of incorporation of the Surviving Entity until duly amended in accordance with applicable Law. From and after the Effective Time, the bylaws of NNA as in effect immediately prior to the Effective Time shall continue as the bylaws of the Surviving Entity until duly amended in accordance with applicable Law.

(e) No Fractional Units. Notwithstanding any other provision of this Agreement, (i) no certificates or scrip representing fractional Parent Common Units shall be issued in the Merger, (ii) each Holder of shares of NNA Common Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fractional Parent Common Unit (after taking into account all shares of NNA Common Stock held by such Holder immediately prior to the Effective Time) of 0.5 or above shall receive from Parent, in lieu of such fractional unit, a full Parent Common Unit, and (iii) any Holder of shares of NNA Common Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fractional Parent Common Unit (after taking into account all shares of NNA Common Stock held by such Holder immediately prior to the Effective Time) of less than 0.5 shall receive no consideration for such fractional unit, which shall be forfeited.

(f) Certain Adjustments. If between the Execution Date and the Effective Time, whether or not permitted pursuant to the terms of this Agreement, the number of outstanding shares of NNA Common Stock or Parent Common Units shall be changed into a different number of units, shares or other securities (including any different class or series of securities) by reason of any dividend or distribution payable in shares or partnership interests, equity interests or Rights, subdivision, reclassification, split, split-up, combination, merger, consolidation, or other similar transaction, or any such transaction shall be authorized, declared or agreed upon with a record date at or prior to the Effective Time, then the Merger Consideration and any other similarly dependent items shall be appropriately adjusted to reflect fully the effect of such transaction and to provide to Parent, NNA, Merger Sub and the Holders of shares of NNA Common Stock the same economic effect as contemplated by this Agreement prior to such event, and thereafter, all references in this Agreement to the Merger Consideration, and any other similarly dependent items shall be references to the Merger Consideration and any other similarly dependent items, as so adjusted; provided, however, that nothing in this Section 2.2(f) shall be deemed to permit or authorize any party hereto to effect any such dividend or distribution payable in shares, partnership interests, equity interests or Rights, subdivision, reclassification, split, split up, combination, merger, consolidation or other similar transaction, or the authorization, declaration or agreement to do such transaction that is not otherwise authorized or permitted to be undertaken pursuant to this Agreement.

 

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SECTION 2.3 Exchange of NNA Common Stock.

(a) Exchange Agent. Prior to the mailing of the NNA Proxy Statement, Parent shall appoint a bank, trust company or similar Person to act as exchange agent (the “Exchange Agent”) and establish an exchange fund (the “Exchange Fund”) for the payment of the Merger Consideration and any dividends or distributions payable pursuant to Section 2.3(c). At or prior to the Closing, Parent shall (i) reserve with the Exchange Agent the Parent Common Units to be issued pursuant to Section 2.2(c)(i), and (ii) authorize the Exchange Agent to exchange Parent Common Units in accordance with this Section 2.3. Parent shall deposit with the Exchange Agent any additional cash as and when necessary to pay any dividends or distributions payable pursuant to Section 2.3(c) and 2.3(d) and other amounts required to be paid under this Agreement. Parent shall pay all costs and fees of the Exchange Agent and all expenses associated with the exchange process. Any Parent Common Units, and any other funds deposited with the Exchange Agent, shall be returned to Parent after the earlier to occur of (x) payment in full of all amounts due to the Holders of shares of NNA Common Stock and (y) the expiration of the period specified in Section 2.3(e).

(b) Exchange Procedures. Promptly after the Effective Time, Parent shall, or shall cause the Exchange Agent to, mail to each Holder of NNA Common Stock as of the Effective Time whose shares of NNA Common Stock were converted into the right to receive the Merger Consideration a form of letter of transmittal (the “Letter of Transmittal”) (which shall specify that delivery shall be effected, and risk of loss and title to the NNA Certificates shall pass, only upon proper delivery of the NNA Certificates (or lost certificate affidavit as contemplated by this Section 2.3(b)) to the Exchange Agent or, in the case of Book-Entry NNA Common Stock, upon adherence to the procedures set forth in the Letter of Transmittal, and which shall be in such customary form and have such other provisions as Parent and NNA may reasonably agree prior to the Effective Time) and instructions for effecting the Surrender of such NNA Certificates (or lost certificate affidavit as contemplated by this Section 2.3(b)) or Book-Entry NNA Common Stock in exchange for, as applicable, whole Parent Common Units and any dividends or distributions payable pursuant to Section 2.3(c) or Section 2.3(d). Subject to Section 2.3(c), upon Surrender to the Exchange Agent of such NNA Certificates (or lost certificate affidavit as contemplated by this Section 2.3(b)) or Book-Entry NNA Common Stock, together with such properly completed and duly executed Letter of Transmittal and such other documents as may reasonably be required by the Exchange Agent, the Holder of an NNA Certificate (or lost certificate affidavit as contemplated by this Section 2.3(b)) or Book-Entry NNA Common Stock shall be entitled to receive in exchange therefor, as applicable, (i) that number and type of whole Parent Common Units (which shall be in uncertificated book-entry form unless a physical certificate is requested) to which such Holder is entitled pursuant to Sections 2.2(c)(i) and 2.2(e), and (ii) any dividends or distributions payable pursuant to Section 2.3(c) or Section 2.3(d) to which such Holder is entitled. The instructions for effecting the Surrender of NNA Certificates shall set forth procedures that must be taken by the Holder of any NNA Certificate that has been lost, destroyed or stolen; it shall be a condition to the right of such Holder to receive the Merger Consideration and any dividends or distributions payable pursuant to Section 2.3(c) or Section 2.3(d) that the Exchange Agent shall have received,

 

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along with the Letter of Transmittal, a duly executed lost certificate affidavit, including an agreement to indemnify Parent, signed exactly as the name or names of the registered Holder or Holders of shares of NNA Common Stock appeared on the books of NNA immediately prior to the Effective Time, together with a customary bond and such other documents, in each case, as Parent may reasonably require in connection therewith. After the Effective Time, there shall be no further transfer on the records of NNA or its transfer agent of NNA Certificates or Book-Entry NNA Common Stock; and if such NNA Certificates or Book-Entry NNA Common Stock are presented to NNA or its transfer agent for transfer, they shall be canceled against delivery of the Merger Consideration and any dividends or distributions payable pursuant to Section 2.3(c) or Section 2.3(d) as hereinabove provided. Until Surrendered as contemplated by this Section 2.3(b), each NNA Certificate or Book-Entry NNA Common Stock shall be deemed at any time after the Effective Time to represent only the right to receive upon such Surrender the Merger Consideration. No interest will be paid or will accrue on any dividends or distributions payable pursuant to Section 2.3(c) or Section 2.3(d).

(c) Dividends and Distributions with Respect to Unexchanged NNA Common Stock. No dividends or other distributions with respect to Parent Common Units issued in the Merger with a record date after the Effective Time shall be paid to the Holder of any NNA Certificate or Book-Entry NNA Common Stock not Surrendered with respect to such Parent Common Units issuable in respect thereof until the Surrender of such NNA Certificate or Book-Entry NNA Common Stock in accordance with this Section 2.3. Subject to the effect of applicable Law, Parent shall pay, or cause the Exchange Agent to pay, to the Holder of each NNA Certificate or Book-Entry NNA Common Stock, without interest, (i) at the time of Surrender of such NNA Certificate or Book-Entry NNA Common Stock, the amount of dividends or other distributions previously paid with respect to the whole Parent Common Units issuable with respect to such NNA Certificate or Book-Entry NNA Common Stock that have a record date after the Effective Time and a payment date on or prior to the time of Surrender and (ii) at the appropriate payment date, the amount of dividends and distributions payable with respect to such whole Parent Common Units with a record date after the Effective Time and prior to such Surrender and a payment date subsequent to such Surrender.

(d) No Further Ownership Rights in NNA Common Stock. All Merger Consideration issued upon the Surrender for exchange of NNA Certificates or Book-Entry NNA Common Stock in accordance with the terms of this Article II shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the shares of NNA Common Stock theretofore represented by such NNA Certificates or Book-Entry NNA Common Stock, subject, however, to Parent’s obligation, notwithstanding the conversion of shares of NNA Common Stock pursuant to this Agreement, with respect to shares of NNA Common Stock outstanding immediately prior to the Effective Time, to pay (or cause NNA to pay) to the Holder of shares NNA Common Stock as of the applicable record date any distributions with a record date at or prior to the Effective Time that may have been declared or made by NNA with respect to such shares of NNA Common Stock on or prior to the Effective Time and that remain unpaid at the Effective Time.

 

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(e) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the Holders of the NNA Certificates or Book-Entry NNA Common Stock for six (6) months after the Closing Date shall be delivered to Parent, upon demand, and any Holders of the NNA Certificates or Book-Entry NNA Common Stock who have not theretofore complied with this Section 2.3 shall thereafter look only to Parent and only as general creditors thereof for payment of their claim for the Merger Consideration and any dividends and distributions with respect to NNA Common Stock or Parent Common Units to which such holders may be entitled.

(f) No Liability. To the extent permitted by applicable Law, none of Parent, Merger Sub, NNA or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration or distribution properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any NNA Certificates or Book-Entry NNA Common Stock shall not have been Surrendered immediately prior to such date on which any Merger Consideration, or any dividends or distributions with respect to the NNA Common Stock or Parent Common Units in respect of such NNA Certificate or Book-Entry NNA Common Stock would escheat to or become the property of any Governmental Entity, any such units, cash or distributions in respect of such NNA Certificates or Book-Entry NNA Common Stock shall, to the extent permitted by applicable Law, become the property of Parent, free and clear of all claims or interest of any Person previously entitled thereto.

(g) Withholding Rights. Parent, Merger Sub, NNA, the Surviving Entity and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement, without duplication, such amounts, which may include Parent Common Units, as Parent, Merger Sub, NNA, the Surviving Entity or the Exchange Agent reasonably deem to be required to deduct and withhold with respect to the making of payments under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or non-U.S. Tax Law. To the extent that amounts are so withheld or paid over to or deposited with the relevant Governmental Entity, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding or payment was made.

SECTION 2.4 Plan of Reorganization. For purposes of the Intended Tax Treatment, this Agreement constitutes, and is adopted as, a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF NNA

Except as disclosed in the NNA SEC Reports (excluding any disclosures set forth in such NNA SEC Report under the heading “Risk Factors” or in any section related to forward-looking statements (other than any factual information contained within such headings, disclosures or statements)) filed or publicly furnished on or after January 1, 2020 and prior to the Execution Date (without giving effect to any NNA SEC Report or any amendment to any NNA SEC Report in each case filed or publicly furnished on or after the Execution Date), NNA hereby represents and warrants to Parent that:

SECTION 3.1 Organization and Existence.

 

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(a) NNA is a corporation duly formed, validly existing and in good standing under the Laws of the Republic of the Marshall Islands and has all requisite power and authority to own, operate and lease its properties and assets and to carry on its business as now conducted.

(b) Each of the NNA Subsidiaries is an entity duly organized or formed, as applicable, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of its respective jurisdiction of organization or formation and has all requisite power and authority to own, operate and lease its properties and assets and to carry on its business as now conducted.

(c) Each of the NNA Group Entities is duly licensed or qualified to do business and is in good standing in the states in which the character of the properties and assets owned or held by it or the nature of the business conducted by it requires it to be so licensed or qualified, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have an NNA Material Adverse Effect.

SECTION 3.2 Authority and Approval. NNA has all requisite power and authority to execute and deliver this Agreement, to consummate the Transactions and to perform all of the terms and conditions hereof to be performed by it, except that the consummation of the Merger is subject to receipt of the NNA Stockholders Approval. The execution and delivery of this Agreement by NNA, the consummation of the Transactions and the performance of all of the terms and conditions hereof to be performed by NNA have been duly authorized and approved by all requisite action on the part of NNA, except that the consummation of the Merger is subject to receipt of the NNA Stockholders Approval. At a meeting duly called and held, the NNA Special Committee, by unanimous vote, in good faith (a) determined that this Agreement and the Transactions are in the best interests of NNA and the Holders of NNA Public Stock, (b) approved this Agreement and the Transactions, including the Merger, (c) resolved to make the NNA Special Committee Recommendation and (d) resolved to recommend, and to direct the NNA Board to recommend, the approval of this Agreement and the Merger, by the Holders of shares of NNA Common Stock. At a meeting duly called and held and upon the receipt of the recommendation of the NNA Special Committee, the NNA Board, by unanimous vote, (i) determined that this Agreement and the Transactions are in the best interests of NNA and the Holders of NNA Public Stock, (ii) approved this Agreement and the Transactions, including the Merger, and (iii) directed that this Agreement be submitted to a vote of Holders of shares of NNA Common Stock and made the NNA Board Recommendation. This Agreement has been duly executed and delivered by NNA and constitutes the valid and legally binding obligation of NNA, enforceable against NNA in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (whether applied in a Proceeding at law or in equity).

SECTION 3.3 No Conflict; Consents; Voting Requirements.

(a) Subject to the consent, approval, license, permit, order, authorization, filings and notices referred to in Section 3.3(b) and the NNA Stockholders Approval, the execution, delivery and performance of this Agreement by NNA does not, and the fulfillment and compliance with the terms and conditions hereof and the consummation of the Transactions will not, (i)

 

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contravene, violate, conflict with any of, result in any breach of, or require the consent of any Person under, the terms, conditions or provisions of the Governing Documents of NNA; (ii) contravene, conflict with or violate any provision of applicable Law; (iii) conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, or result in the suspension, termination or cancellation of, or in a right of suspension, termination or cancellation of, any indenture, deed of trust, mortgage, debenture, note, agreement, contract, commitment, license, concession, permit, lease, joint venture, obligation or other instrument to which any of the NNA Group Entities is a party or by which any of the NNA Group Entities or any of their assets are bound; or (iv) result in the creation of any Lien (other than Permitted Liens) on any of the assets or businesses of any of the NNA Group Entities under any such indenture, deed of trust, mortgage, debenture, note, agreement, contract, commitment, license, concession, permit lease, joint venture, obligation or other instrument, except in the case of clauses (ii), (iii) and (iv), for those items that would not, individually or in the aggregate, have an NNA Material Adverse Effect.

(b) No consent, approval, license, permit, order or authorization of, or any filing with or notice to, any Governmental Entity is required to be obtained or made by any of the NNA Group Entities in connection with the execution, delivery, and performance of this Agreement or the consummation of the Transactions , except (i) as have been waived or obtained or with respect to which the time for asserting such right has expired, (ii) for (A) such filings and reports as may be required pursuant to the applicable requirements of the Securities Act, the Exchange Act, and any other applicable U.S. state or federal or non-U.S. securities, takeover and “blue sky” Laws, (B) any filings and approvals required under the rules and regulations of the NYSE, or (C) the filing of the Certificate of Merger with the Office of the Registrar of Corporations of the Republic of the Marshall Islands, or (iii) for those which would not, individually or in the aggregate, have an NNA Material Adverse Effect (including such consents, approvals, licenses, permits, orders or authorizations that are not customarily obtained prior to the Closing and are reasonably expected to be obtained in the ordinary course of business following the Closing).

(c) The affirmative vote of the Holders of a majority of the outstanding shares of NNA Common Stock at the NNA Stockholders Meeting or any adjournment or postponement thereof in favor of the adoption of this Agreement and the transactions contemplated hereby (the “NNA Stockholders Approval”) is the only vote or approval of the limited partners of NNA that is necessary to adopt this Agreement and the transactions contemplated hereby in accordance with the Amended NNA Articles of Incorporation and applicable Law.

SECTION 3.4 Capitalization. As of the Execution Date, the authorized capital stock of NNA consists of 250,000,000 shares of NNA Common Stock and 10,000,000 shares of preferred stock, par value $0.0001 per share (the “NNA Preferred Stock” and, together with the NNA Common Stock, the “NNA Capital Stock”). As of the Execution Date, there are outstanding 17,735,966 shares of NNA Common Stock (including NNA Restricted Shares), excluding the shares of NNA Common Stock being issued pursuant to the NNA Equity Issuance and the NSH Equity Issuance and there are no shares of NNA Preferred Stock outstanding. All of the outstanding shares of NNA Common Stock have been duly authorized and validly issued in accordance with the Amended NNA Articles of Incorporation. Upon issuance pursuant to this Agreement and/or the NSH Loan Amendment, as applicable, all of the shares of NNA Common Stock being issued

 

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pursuant to the NNA Equity Issuance and the NSH Equity Issuance will be duly authorized and validly issued in accordance with the Amended NNA Articles of Incorporation and listed on the NYSE. Except as set forth above in this Section 3.4(a), as of the Execution Date, no shares of NNA Capital Stock were subject to outstanding options, share appreciation rights, restricted shares, or equity awards of any kind. Except as set forth above in this Section 3.4(a), as of the Execution Date there are not any shares of NNA Capital Stock, interests, voting securities or equity interests of NNA issued and outstanding or any Rights with respect to shares of NNA Capital Stock, interests, voting securities or equity interests of NNA issued or granted by, or binding upon, any of the NNA Group Entities. As of the Execution Date, there are no outstanding obligations of NNA or any NNA Group Entity to repurchase, redeem or otherwise acquire any shares of NNA Capital Stock or other interests, voting securities or equity interests or any Rights with respect to shares of NNA Capital Stock, interests, voting securities or equity interests of NNA. There are no outstanding bonds, debentures, notes or other indebtedness, the holders of which have the right to vote (or which are convertible or exchangeable into or exercisable for securities having the right to vote) with the shareholders of NNA on any matter.

SECTION 3.5 SEC Documents; Internal Controls.

(a) Since January 1, 2020, all reports, including but not limited to the Annual Reports on Form 20-F and the Reports on Form 6-K (whether filed on a voluntary basis or otherwise), forms, schedules, certifications, prospectuses, registration statements and other documents required to be filed or furnished by NNA or any NNA Subsidiary with or to the SEC have been or will be timely filed or furnished (the “NNA SEC Reports”). Each of the NNA SEC Reports (i) complied in all material respects with the requirements of applicable Law (including the Exchange Act, the Securities Act and the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder (the “Sarbanes-Oxley Act”)), and (ii) as of its effective date (in the case of NNA SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and as of its filing date did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except for any statements in any NNA SEC Report that may have been modified by an amendment to such report or a subsequent report filed with the SEC prior to the Execution Date.

(b) NNA makes and keeps books, records, and accounts and has devised and maintains a system of internal controls, in each case, as required pursuant to Section 13(b)(2) under the Exchange Act. NNA has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act and the applicable listing standards of the NYSE. Such disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by NNA in the reports that it files under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to its management as appropriate to allow timely decisions regarding required disclosure. NNA’s principal executive officer and its principal financial officer have disclosed, based on their most recent evaluation, to NNA’s auditors and the audit committee of the NNA Board (x) all significant deficiencies in the designation or operation of internal controls which could adversely affect NNA’s ability to record, process, summarize and report financial data and have identified for NNA’s auditors any material weakness in internal controls and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in NNA’s internal controls.

 

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SECTION 3.6 Financial Statements; Undisclosed Liabilities.

(a) NNA’s Annual Report on Form 20-F for the year ended December 31, 2020 filed with the SEC on April 28, 2021 (the “NNA 20-F”) sets forth a true and complete copy of the consolidated audited statements of operations, cash flows and changes in partners’ capital for each of years ended December 31, 2020, December 31, 2019 and December 31, 2018 and consolidated audited balance sheets as of December 31, 2020 and as of December 31, 2019 for NNA, including the notes thereto, and NNA’s Report on Form 6-K (“Latest NNA Quarter 6-K”) filed with the SEC on June 14, 2021 sets forth a true and correct copy of the consolidated unaudited statements of operations, cash flows and changes in partners’ capital for the three month periods ended March 31, 2021 and March 31, 2020 and consolidated unaudited balance sheet as of March 31, 2021 for NNA, including the notes thereto (the referenced financial statements set forth in the NNA 20-F and the Latest NNA Quarter 6-K are collectively referred to as the “NNA Financial Statements”). The NNA Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto) and present fairly in all material respects the consolidated financial position of NNA as of the dates indicated therein and the consolidated results of operations and cash flows of NNA for the periods indicated therein, except as otherwise noted therein. Except as set forth in the NNA Financial Statements, there are no off-balance sheet arrangements that would, individually or in the aggregate, have an NNA Material Adverse Effect. NNA has not had any disagreement with its independent public accounting firm that required disclosure in the NNA SEC Reports.

(b) There are no liabilities or obligations of NNA or the NNA Subsidiaries (whether known or unknown and whether accrued, absolute, contingent or otherwise) of a type that are required by GAAP to be reflected or reserved against in a consolidated balance sheet of NNA, other than (i) liabilities or obligations reflected or reserved against in the consolidated balance sheet as of March 31, 2021 included in the NNA Financial Statements, (ii) current liabilities incurred in the ordinary course of business since March 31, 2021, (iii) liabilities and obligations incurred under or in accordance with this Agreement or in connection with the transactions contemplated by this Agreement, and (iv) liabilities or obligations (whether known or unknown and whether accrued, absolute, contingent or otherwise) that would not, individually or in the aggregate, have an NNA Material Adverse Effect.

SECTION 3.7 Litigation; Laws and Regulations. Except as would not, individually or in the aggregate, have an NNA Material Adverse Effect:

(a) There are no (i) civil, criminal, regulatory or administrative actions, suits, claims, hearings, demands, arbitrations, inquiries, subpoenas, investigations or proceedings (“Proceedings”) pending or, to the knowledge of NNA, threatened against or affecting the NNA Group Entities, their assets, or any of the operations of the NNA Group Entities related thereto or (ii) judgments, orders, decrees or injunctions of any Governmental Entity, whether at law or in equity (“Orders”), against or affecting the NNA Group Entities, their assets, or any of the operations of the NNA Group Entities related thereto.

 

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(b) None of the NNA Group Entities (i) is in violation of or in default under its Governing Documents or (ii) is in violation of any applicable Law, except in the case of each of clause (i) and (ii) for such violations or defaults that would not, individually or in the aggregate, have an NNA Material Adverse Effect.

(c) Without limiting the generality of Section 3.7(b), none of the NNA Group Entities or, to the knowledge of NNA, any Representative of any of the foregoing (in their respective capacities as such), (i) has violated the U.S. Foreign Corrupt Practices Act, and any other U.S. and foreign anti-corruption Laws that are applicable to any NNA Group Entity; (ii) has, to the knowledge of NNA, been given written notice by any Governmental Entity of any facts which, if true, would constitute a violation of the U.S. Foreign Corrupt Practices Act or any other U.S. or foreign anti-corruption Laws by any such person; and (iii) to the knowledge of NNA, is being (or has been) investigated by any Governmental Entity except, in each case of the foregoing clauses (i) through (iii), as would not have, individually or in the aggregate, an NNA Material Adverse Effect.

SECTION 3.8 No Adverse Changes. (a) Since March 31, 2021, there has not been an NNA Material Adverse Effect; and (b) since March 31, 2021, (i) except for this Agreement and the Transactions, NNA and its consolidated Subsidiaries have carried on and operated their respective businesses in all material respects in the ordinary course of business consistent with past practice and (ii) neither NNA nor any of its Subsidiaries has taken any action described in Section 5.2(b) that, if taken after the date of this Agreement and prior to the Effective Time without the prior written consent of Parent, would violate such provisions.

SECTION 3.9 Taxes.

(a) Except as would not, individually or in the aggregate, have an NNA Material Adverse Effect: (i) all Tax Returns required to be filed by or with respect to NNA or any of the NNA Subsidiaries or their assets have been filed on a timely basis (taking into account all extensions of due dates) and all such Tax Returns are true, complete and accurate; (ii) all Taxes owed by NNA or any of the NNA Subsidiaries, which are or have become due, have been timely paid in full; (iii) there are no Liens on any of the assets of NNA or any of the NNA Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax, other than Liens for Taxes that are not due and payable or that may thereafter be paid without penalty; (iv) there is no pending Proceeding for assessment or collection of Taxes and no Tax assessment, deficiency or adjustment has been asserted or proposed with respect to NNA or any of the NNA Subsidiaries or their assets; (v) NNA and the NNA Subsidiaries have withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, equityholder or other third party; and (vi) no claim has ever been made in writing by a Governmental Entity of a jurisdiction where NNA or an NNA Subsidiary has not filed Tax Returns that NNA or an NNA Subsidiary is or may be subject to taxation by that jurisdiction.

(b) Neither NNA nor any of the NNA Subsidiaries is a party to or bound by or has any obligation under any Tax indemnification, separation, sharing or similar agreement or arrangement (other than such an agreement or arrangement entered into in the ordinary course of business which does not relate primarily to Taxes).

 

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(c) Neither NNA nor any of the NNA Subsidiaries has entered into any “listed transaction” within the meaning of Section 6707A(c)(2) of the Code and U.S. Treasury Regulation Section 1.6011-4(b)(2) (or any similar provision of state, local or non-U.S. Law).

(d) During the last five (5) years, neither NNA nor any of the NNA Subsidiaries has been a “distributing corporation” or a “controlled corporation” in a transaction intended to qualify under Section 355 of the Code.

(e) Neither NNA nor any of the NNA Subsidiaries (i) has filed any extension of time within which to file any Tax Returns that have not been filed, except in the ordinary course of business nor (ii) will be required to include any item of income or gain in, nor be required to exclude any item of deduction of loss from, any period ending after the Closing Date as a result of any “closing agreement,” change in method of accounting, installment sale or open transaction made on or prior to the Closing Date or prepaid amount received prior to the Closing Date.

(f) Neither NNA nor any of the NNA Subsidiaries is a “passive foreign investment company” within the meaning of Section 1297 of the Code.

(g) Neither NNA nor any of the NNA Subsidiaries is or has been a resident for Tax purposes of any jurisdiction other than its jurisdiction of organization.

(h) NNA is currently (and has been since its formation) properly classified as a corporation for U.S. federal income tax purposes.

(i) Neither NNA nor any of the NNA Subsidiaries has taken or agreed to take any action, and NNA is not aware of any fact or circumstance, that would prevent or impede the Intended Tax Treatment.

SECTION 3.10 Licenses; Permits.

(a) The NNA Group Entities have all licenses, franchises, tariffs, grants, easements, variances, exceptions, permits and authorizations (other than environmental permits) issued or granted by Governmental Entities that are necessary for the conduct of their respective businesses as now being conducted or have obtained valid waivers therefrom (collectively, “Permits”), except where the failure to obtain such Permit would not, individually or in the aggregate, have an NNA Material Adverse Effect.

(b) All Permits are validly held by the NNA Group Entities and are in full force and effect, except as would not, individually or in the aggregate, have an NNA Material Adverse Effect.

(c) The NNA Group Entities have complied with all terms and conditions of the Permits, except as would not, individually or in the aggregate, have an NNA Material Adverse Effect. No suspension or cancellation of any Permit is pending or, to the knowledge of NNA, threatened, except as would not, individually or in the aggregate, have an NNA Material Adverse Effect.

 

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(d) The Permits will not be subject to suspension, modification, revocation or non-renewal as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except, in each case, as would not, individually or in the aggregate, have an NNA Material Adverse Effect.

(e) No Proceeding is pending or, to the knowledge of NNA, threatened with respect to any alleged failure by NNA Group Entities to have any material Permit necessary for the operation of any asset or the conduct of their businesses or to be in compliance therewith.

SECTION 3.11 Contracts.

(a) Except for this Agreement or as filed or publicly furnished with the SEC prior to the Execution Date, none of the NNA Group Entities is a party to or bound by, as of the Execution Date, any contract or other agreement (whether written or oral) of the type required to be filed as an Exhibit to an Annual Report on Form 20-F filed by NNA (each contract that is described in this Section 3.11(a) being an “NNA Material Contract”).

(b) Except as would not, individually or in the aggregate, have an NNA Material Adverse Effect, with respect to each of the NNA Group Entities: (i) each NNA Material Contract to which such entity is a party is legal, valid and binding on and enforceable against such entity, and in full force and effect; (ii) each NNA Material Contract to which such entity is a party will continue to be legal, valid and binding on and enforceable against such entity, and in full force and effect on identical terms following the consummation of the Transactions; (iii) such entity that is a party to each NNA Material Contract is not in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default by any such party, or permit termination, modification, or acceleration, under the NNA Material Contract; and (iv) to the knowledge of NNA, no other party to any NNA Material Contract is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default by such other party, or permit termination, modification or acceleration under any NNA Material Contract other than in accordance with its terms nor has any other party repudiated any provision of the NNA Material Contract.

SECTION 3.12 Insurance. Except as would not, individually or in the aggregate, have an NNA Material Adverse Effect, (a) the businesses and assets of the NNA Group Entities are covered by, and insured under, insurance policies underwritten by reputable insurers that include coverages and related limits and deductibles that are customary in the crude oil tanking industry, (b) all such insurance policies are in full force and effect and all premiums due and payable on such policies have been paid, and (c) no notice of cancellation of, material premium increase of, or indication of an intention not to renew, any such insurance policy has been received by the Parent Parties other than in the ordinary course of business.

SECTION 3.13 Condition of Assets. Except as would not, individually or in the aggregate, have an NNA Material Adverse Effect, the assets of the NNA Group Entities have been maintained and repaired in the same manner as would a prudent operator of such assets, and are adequate for the purposes for which they are currently used.

 

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SECTION 3.14 Investment Company Act. NNA is not, nor immediately after the Closing will be, subject to regulation under the Investment Company Act of 1940, as amended.

SECTION 3.15 Brokerage Arrangements. Except for NNA’s obligations to Pareto Securities AS, the fees and expenses of which will be paid by NNA, none of the NNA Group Entities has entered (directly or indirectly) into any agreement with any Person that would obligate any of them to pay any commission, brokerage or “finder’s fee” or other similar fee in connection with this Agreement or the transactions contemplated hereby.

SECTION 3.16 Opinion of Financial Advisor. The NNA Special Committee has received the opinion of Pareto Securities AS, dated as of the Execution Date, to the effect that, as of the date thereof and subject to the assumptions, limitations, qualifications and other matters considered in the preparation thereof, the Exchange Ratio is fair, from a financial point of view, to the Holders of NNA Public Stock (the “NNA Fairness Opinion”). NNA has been authorized by Pareto Securities AS to permit the inclusion of the NNA Fairness Opinion in the Registration Statement and the NNA Proxy Statement.

SECTION 3.17 Information Supplied. None of the information supplied (or to be supplied) in writing by or on behalf of NNA specifically for inclusion or incorporation by reference in (a) the registration statement on Form F-4 to be filed with the SEC by Parent with respect to the issuance of Parent Common Units in connection with the Merger (as amended or supplemented from time to time, the “Registration Statement”) will, at the time the Registration Statement, or any amendment or supplement thereto, is filed with the SEC or at the time it becomes effective under the Securities Act, and (b) in the NNA Proxy Statement will, on the date it is first mailed to the Holders of shares of NNA Common Stock, and at the time of the NNA Stockholders Meeting, in each case, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of circumstances under which they are made, not misleading. Notwithstanding the foregoing, NNA makes no representation or warranty with respect to information supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference in the Registration Statement and the NNA Proxy Statement.

SECTION 3.18 Waivers and Disclaimers. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES MADE BY NNA IN THIS ARTICLE III, NNA HAS NOT MADE, DOES NOT MAKE, AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT REGARDING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF ITS ASSETS, (B) THE INCOME TO BE DERIVED FROM ITS ASSETS, (C) THE SUITABILITY OF ITS ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON, (D) THE COMPLIANCE OF OR BY ITS ASSETS OR ITS OPERATION WITH ANY LAWS, OR (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ITS ASSETS.

 

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ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF PARENT

Except as disclosed in the Parent SEC Reports (excluding any disclosures set forth in such Parent SEC Report under the heading “Risk Factors” or in any section related to forward-looking statements (other than any factual information contained within such headings, disclosures or statements)) filed or publicly furnished on or after January 1, 2019 and prior to the Execution Date (without giving effect to any Parent SEC Report or any amendment to any Parent SEC Report in each case filed or publicly furnished on or after the Execution Date), Parent hereby represents and warrants to NNA that:

SECTION 4.1 Organization and Existence.

(a) Each of the Parent Parties is a limited partnership or corporation duly formed, validly existing and in good standing under the Laws of the Republic of the Marshall Islands and has all requisite power and authority to own, operate and lease its properties and assets and to carry on its business as now conducted.

(b) Each of the Parent Subsidiaries (other than Merger Sub) is an entity duly organized or formed, as applicable, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of its respective jurisdiction of organization or formation and has all requisite power and authority to own, operate and lease its properties and assets and to carry on its business as now conducted.

(c) Each of the Parent Group Entities is duly licensed or qualified to do business and is in good standing in the states in which the character of the properties and assets owned or held by it or the nature of the business conducted by it requires it to be so licensed or qualified, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have a Parent Material Adverse Effect.

(d) All of the issued and outstanding shares of common stock of Merger Sub are owned, beneficially and of record, by Parent. Merger Sub was formed solely for the purpose of engaging in the Merger and the other transactions contemplated by this Agreement. Merger Sub has not incurred, directly or indirectly, any obligations or conducted any business other than incident to its formation and pursuant to this Agreement, the Merger, and the other Transactions.

SECTION 4.2 Authority and Approval. Each of the Parent Parties has all requisite power and authority to execute and deliver this Agreement, to consummate the Transactions to which it is a party and to perform all of the terms and conditions hereof to be performed by it. The execution and delivery of this Agreement by each of the Parent Parties, the consummation of the Transactions to which either of the Parent Parties is a party and the performance of all of the terms and conditions hereof to be performed by the Parent Parties have been duly authorized and approved by all requisite action on the part of each of the Parent Parties. At a meeting duly called and held, the Parent Conflicts Committee, by unanimous vote, (a) determined that this Agreement and the Transactions are in the best interests of Parent and the holders of Parent Common Units (excluding the general partner of Parent and its Affiliates), and (b) granted a Special Approval (as defined in the Parent Partnership Agreement) of this Agreement and each of the Transactions. At

 

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a meeting duly called and held, the Parent Board (a) determined that this Agreement, and the Transactions, including the Merger and the Parent Equity Issuance, are in the best interests of Parent and its unitholders, and (b) approved and declared advisable this Agreement and the Transactions to which a Parent Party is party, including the Merger and the Parent Equity Issuance. Parent, in its capacity as sole member of Merger Sub, has approved this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of the Parent Parties and constitutes the valid and legally binding obligation of each of the Parent Parties, enforceable against each of the Parent Parties in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (whether applied in a Proceeding at law or in equity).

SECTION 4.3 No Conflict; Consents.

(a) Subject to the consent, approval, license, permit, order, authorization, filings and notices referred to in Section 4.3(b), the execution, delivery and performance of this Agreement by each of the Parent Parties does not, and the fulfillment and compliance with the terms and conditions hereof and the consummation of the Transactions hereby will not, (i) contravene, violate, conflict with any of, result in any breach of, or require the consent of any Person under, the terms, conditions or provisions of the Governing Documents of any of the Parent Parties; (ii) contravene, conflict with or violate any provision of applicable Law; (iii) conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, or result in the suspension, termination or cancellation of, or in a right of suspension, termination or cancellation of, any indenture, deed of trust, mortgage, debenture, note, agreement, contract, commitment, license, concession, permit, lease, joint venture, obligation or other instrument to which any of the Parent Group Entities is a party or by which any of the Parent Group Entities or any of their assets are bound; or (iv) result in the creation of any Lien (other than Permitted Liens) on any of the assets or businesses of any of the Parent Group Entities under any such indenture, deed of trust, mortgage, debenture, note, agreement, contract, commitment, license, concession, permit lease, joint venture, obligation or other instrument, except in the case of clauses (ii), (iii) and (iv), for those items that would not, individually or in the aggregate, have a Parent Material Adverse Effect.

(b) No consent, approval, license, permit, order or authorization of, or any filing with or notice to, any Governmental Entity is required to be obtained or made by any of the Parent Group Entities in connection with the execution, delivery, and performance of this Agreement or the consummation of the Transactions , except (i) as have been waived or obtained or with respect to which the time for asserting such right has expired, (ii) for (A) such filings and reports as may be required pursuant to the applicable requirements of the Securities Act, the Exchange Act, and any other applicable U.S. state or federal or non-U.S. securities, takeover and “blue sky” Laws, (B) any filings and approvals required under the rules and regulations of the NYSE, or (C) the filing of the Certificate of Merger with the Office of the Registrar of Corporations of the Republic of the Marshall Islands, or (iii) for those which would not, individually or in the aggregate, have a Parent Material Adverse Effect (including such consents, approvals, licenses, permits, orders or authorizations that are not customarily obtained prior to the Closing and are reasonably expected to be obtained in the ordinary course of business following the Closing).

 

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SECTION 4.4 Capitalization.

(a) As of the Execution Date, the outstanding capitalization of Parent consists of 553,408 General Partner Units (as defined in the Parent Partnership Agreement) of Parent, 26,808,861 Parent Common Units and Parent Incentive Distribution Rights. All of such Parent Common Units and the Parent Incentive Distribution Rights and the limited partnership interest represented thereby, have been duly authorized and validly issued in accordance with the Parent Partnership Agreement. As of the Execution Date, no Parent Common Units were subject to outstanding options, unit appreciation rights, restricted units, or equity awards of any kind. Except as set forth above in this Section 4.4(a), as of the Execution Date there are not any Parent Common Units, partnership interests, voting securities or equity interests of Parent issued and outstanding or any Rights with respect to Parent Common Units, partnership interests, voting securities or equity interests of Parent issued or granted by, or binding upon, any of the Parent Group Entities, except as set forth in the Parent Partnership Agreement as in effect on the Execution Date. Except as set forth in the Parent Partnership Agreement as in effect on the Execution Date, there are no outstanding obligations of Parent or any Parent Group Entity to repurchase, redeem or otherwise acquire any Parent Common Units or other partnership interests, voting securities or equity interests or any Rights with respect to Parent Common Units, partnership interests, voting securities or equity interests of Parent. There are no outstanding bonds, debentures, notes or other indebtedness, the holders of which have the right to vote (or which are convertible or exchangeable into or exercisable for securities having the right to vote) with the limited partners of Parent on any matter.

(b) The Parent Common Units issued and outstanding as of the date hereof were, and the Parent Common Units to be issued pursuant to the Merger will, upon issuance, be, duly authorized and validly issued.

SECTION 4.5 SEC Documents; Internal Controls; Investment Representations.

(a) Since January 1, 2020, all reports, including but not limited to the Annual Reports on Form 20-F, and the Reports on Form 6-K (whether filed on a voluntary basis or otherwise), forms, schedules, certifications, prospectuses, registration statements and other documents required to be filed or furnished by Parent or any Parent Subsidiary with or to the SEC have been or will be timely filed or furnished (the “Parent SEC Reports”). Each of the Parent SEC Reports (i) complied in all material respects with the requirements of applicable Law (including the Exchange Act, the Securities Act and the Sarbanes-Oxley Act), and (ii) as of its effective date (in the case of Parent SEC Reports that are registration statements filed pursuant to the Securities Act) and as of its filing date did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except for any statements in any Parent SEC Report that may have been modified by an amendment to such report or a subsequent report filed with the SEC prior to the Execution Date.

 

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(b) Parent makes and keeps books, records, and accounts and has devised and maintains a system of internal controls, in each case, as required pursuant to Section 13(b)(2) under the Exchange Act. Parent has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act and the applicable listing standards of the NYSE. Such disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by Parent in the reports that it files under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to its management as appropriate to allow timely decisions regarding required disclosure. Parent’s principal executive officer and its principal financial officer have disclosed, based on their most recent evaluation, to Parent’s auditors and the audit committee of the Parent Board (x) all significant deficiencies in the designation or operation of internal controls which could adversely affect Parent’s ability to record, process, summarize and report financial data and have identified for Parent’s auditors any material weakness in internal controls and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in Parent’s internal controls.

(c) Since January 1, 2020, the principal executive officer and principal financial officer of Parent have made all certifications (without qualification or exceptions to the matters certified, except as to knowledge) required by the Sarbanes-Oxley Act, and the statements contained in any such certifications are complete and correct, and none of such entities or its officers have received notice from any Governmental Entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certification. As of the Execution Date, and except as disclosed in a Parent SEC Report filed with the SEC prior to the Execution Date, none of such entities has any knowledge of any material weakness in the design or operation of such internal controls over financial reporting.

(d) Parent is an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) and is acquiring the Equity Issuance Shares pursuant to the NNA Equity Issuance only for its own account and not for the account of others and is not acquiring Equity Issuance Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act. Parent acknowledges that the Equity Issuance Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the such shares have not been registered under the Securities Act. Parent acknowledges and agrees that the Equity Issuance Shares may not be offered, resold, transferred or otherwise disposed of by Parent absent an effective registration statement under the Securities Act, except pursuant to an applicable exemption from the registration requirements of the Securities Act.

SECTION 4.6 Financial Statements; Undisclosed Liabilities.

(a) Parent’s Annual Report on Form 20-F for the year ended December 31, 2020 filed with the SEC on March 31, 2021 (the “Parent 20-F”) sets forth a true and complete copy of the consolidated audited statements of operations, cash flows and changes in equity for each of years ended December 31, 2020, December 31, 2019 and December 31, 2018 and consolidated audited balance sheets as of December 31, 2020 and as of December 31, 2019 for Parent, including the notes thereto, and Parent’s Report on Form 6-K (“Latest Parent Quarter 6-K”) filed with the

 

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SEC on May 18, 2021 sets forth a true and correct copy of the consolidated unaudited statements of operations, cash flows and changes in equity for the three month periods ended March 31, 2021 and March 31, 2021 and consolidated unaudited balance sheet as of March 31, 2021 for Parent, including the notes thereto (the referenced financial statements set forth in the Parent 20-F and the Latest Parent Quarter 6-K are collectively referred to as the “Parent Financial Statements”). The Parent Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto) and present fairly in all material respects the consolidated financial position of Parent as of dates indicated therein and the consolidated results of operations and cash flows of Parent for the periods indicated therein, except as otherwise noted therein. Except as set forth in the Parent Financial Statements, there are no off-balance sheet arrangements that would, individually or in the aggregate, have a Parent Material Adverse Effect. Parent has not had any disagreement with its independent public accounting firm that required disclosure in the NNA SEC Reports.

(b) There are no liabilities or obligations of Parent or the Parent Subsidiaries (whether known or unknown and whether accrued, absolute, contingent or otherwise) of a type that are required by GAAP to be reflected or reserved against in a consolidated balance sheet of Parent, other than (i) liabilities or obligations reflected or reserved against in the consolidated balance sheet as of March 31, 2021 included in the Parent Financial Statements, (ii) current liabilities incurred in the ordinary course of business since March 31, 2021, (iii) liabilities and obligations incurred under or in accordance with this Agreement or in connection with the transactions contemplated by this Agreement, and (iv) liabilities or obligations (whether known or unknown and whether accrued, absolute, contingent or otherwise) that would not, individually or in the aggregate, have a Parent Material Adverse Effect.

SECTION 4.7 Litigation; Laws and Regulations. Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect:

(a) There are no (i) Proceedings pending or, to the knowledge of Parent, against or affecting the Parent Group Entities, their assets, or any of the operations of the Parent Group Entities related thereto or (ii) Orders, against or affecting the Parent Group Entities, their assets, or any of the operations of the Parent Group Entities related thereto.

(b) None of the Parent Group Entities (i) is in violation of or in default under its Governing Documents or (ii) is in violation of any applicable Law, except in the case of each of clause (i) and (ii) for such violations or defaults that would not, individually or in the aggregate, have a Parent Material Adverse Effect.

(c) Without limiting the generality of Section 4.7(b), none of the Parent Group Entities or, to the knowledge of Parent, any Representative of any of the foregoing (in their respective capacities as such), (i) has violated the U.S. Foreign Corrupt Practices Act, and any other U.S. and foreign anti-corruption Laws that are applicable to any Parent Group Entity; (ii) has, to the knowledge of Parent, been given written notice by any Governmental Entity of any facts which, if true, would constitute a violation of the U.S. Foreign Corrupt Practices Act or any other U.S. or foreign anti-corruption Laws by any such person; and (iii) to the knowledge of Parent, is being (or has been) investigated by any Governmental Entity except, in each case of the foregoing clauses (i) through (iii), as would not have, individually or in the aggregate, a Parent Material Adverse Effect.

 

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SECTION 4.8 No Adverse Changes. (a) Since March 31, 2021, there has not been a Parent Material Adverse Effect; and (b) since March 31, 2021, (i) except for this Agreement and the Transactions, Parent and its consolidated Subsidiaries have carried on and operated their respective businesses in all material respects in the ordinary course of business consistent with past practice and (ii) neither Parent nor any of its Subsidiaries has taken any action described in Section 5.2(b) that, if taken after the date of this Agreement and prior to the Effective Time without the prior written consent of NNA, would violate such provisions.

SECTION 4.9 Taxes.

(a) Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect; (i) all Tax Returns required to be filed by or with respect to Parent or any of the Parent Subsidiaries or their assets have been filed on a timely basis (taking into account all extensions of due dates) and all such Tax Returns are true, complete and accurate; (ii) all Taxes owed by Parent or any of the Parent Subsidiaries, which are or have become due, have been timely paid in full; (iii) there are no Liens on any of the assets of Parent or any of the Parent Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax, other than Liens for Taxes that are not due and payable or that may thereafter be paid without penalty; (iv) there is no pending Proceeding for assessment or collection of Taxes and no Tax assessment, deficiency or adjustment has been asserted or proposed with respect to Parent or any of the Parent Subsidiaries or their assets; (v) Parent and the Parent Subsidiaries have withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, equityholder or other third party; and (vi) no claim has ever been made in writing by a Governmental Entity of a jurisdiction where Parent or a Parent Subsidiary has not filed Tax Returns that Parent or a Parent Subsidiary is or may be subject to taxation by that jurisdiction.

(b) Neither Parent nor any of the Parent Subsidiaries is a party to or bound by or has any obligation under any Tax indemnification, separation, sharing or similar agreement or arrangement (other than such an agreement or arrangement entered into in the ordinary course of business which does not relate primarily to Taxes).

(c) Neither Parent nor any of the Parent Subsidiaries has entered into any “listed transaction” within the meaning of Section 6707A(c)(2) of the Code and U.S. Treasury Regulation Section 1.6011-4(b)(2) (or any similar provision of state, local or non-U.S. Law).

(d) During the last five (5) years, neither Parent nor any of the Parent Subsidiaries has been a “distributing corporation” or a “controlled corporation” in a transaction intended to qualify under Section 355 of the Code.

(e) Neither Parent nor any of the Parent Subsidiaries (i) has filed any extension of time within which to file any Tax Returns that have not been filed, except in the ordinary course of business nor (ii) will be required to include any item of income or gain in, nor be required to exclude any item of deduction of loss from, any period ending after the Closing Date as a result of any “closing agreement,” change in method of accounting, installment sale or open transaction made on or prior to the Closing Date or prepaid amount received prior to the Closing Date.

 

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(f) Neither Parent nor any of the Parent Subsidiaries is a “passive foreign investment company” within the meaning of Section 1297 of the Code.

(g) Neither Parent nor any of the Parent Subsidiaries is or has been a resident for Tax purposes of any jurisdiction other than its jurisdiction of organization.

(h) Parent is currently (and has been since its formation) properly classified as a corporation for U.S. federal income tax purposes.

(i) Other than in acquisitions by Navios Maritime Holdings Inc. occurring more than five years ago, the NNA Equity Issuance and the NSH Equity Issuance, neither Parent nor any person “related” to Parent (within the meaning of Treasury Regulation Section 1.368-1(e)(4)) has, directly or indirectly, acquired any NNA Common Stock since the formation of NNA.

(j) Neither Parent nor any of the Parent Subsidiaries has taken or agreed to take any action, and Parent is not aware of any fact or circumstance, that would prevent or impede the Intended Tax Treatment.

SECTION 4.10 Licenses; Permits.

(a) The Parent Group Entities have all Permits that are necessary for the conduct of their respective businesses as now being conducted or have obtained valid waivers therefrom, except where the failure to obtain such Permit would not, individually or in the aggregate, have a Parent Material Adverse Effect.

(b) All Permits are validly held by the Parent Group Entities and are in full force and effect, except as would not, individually or in the aggregate, have a Parent Material Adverse Effect.

(c) The Parent Group Entities have complied with all terms and conditions of the Permits, except as would not, individually or in the aggregate, have a Parent Material Adverse Effect. No suspension or cancellation of any Permit is pending or, to the knowledge of Parent, threatened, except as would not, individually or in the aggregate, have a Parent Material Adverse Effect.

(d) The Permits will not be subject to suspension, modification, revocation or non-renewal as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except, in each case, as would not, individually or in the aggregate, have a Parent Material Adverse Effect.

(e) No Proceeding is pending or, to the knowledge of Parent, threatened with respect to any alleged failure by Parent Group Entities to have any material Permit necessary for the operation of any asset or the conduct of their businesses or to be in compliance therewith.

SECTION 4.11 Contracts.

 

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(a) Except for this Agreement or as filed or publicly furnished with the SEC prior to the Execution Date, none of the Parent Group Entities is a party to or bound by, as of the Execution Date, any contract or other agreement (whether written or oral) of the type required to be filed as an Exhibit to an Annual Report on Form 20-F filed by Parent (each contract that is described in this Section 4.11(a) being an “Parent Material Contract”).

(b) Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, with respect to each of the Parent Group Entities: (i) each Parent Material Contract to which such entity is a party is legal, valid and binding on and enforceable against such entity, and in full force and effect; (ii) each Parent Material Contract to which such entity is a party will continue to be legal, valid and binding on and enforceable against such entity, and in full force and effect on identical terms following the consummation of the Transactions; (iii) such entity that is a party to each Parent Material Contract is not in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default by any such party, or permit termination, modification, or acceleration, under the Parent Material Contract; and (iv) to the knowledge of Parent, no other party to any Parent Material Contract is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default by such other party, or permit termination, modification or acceleration under any Parent Material Contract other than in accordance with its terms nor has any other party repudiated any provision of the Parent Material Contract.

SECTION 4.12 Insurance. Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, (a) the businesses and assets of the Parent Group Entities are covered by, and insured under, insurance policies underwritten by reputable insurers that include coverages and related limits and deductibles that are customary in the crude oil tanking industry, (b) all such insurance policies are in full force and effect and all premiums due and payable on such policies have been paid, and (c) no notice of cancellation of, material premium increase of, or indication of an intention not to renew, any such insurance policy has been received by the Parent Parties other than in the ordinary course of business.

SECTION 4.13 Condition of Assets. Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, the assets of the Parent Group Entities have been maintained and repaired in the same manner as would a prudent operator of such assets, and are adequate for the purposes for which they are currently used.

SECTION 4.14 Investment Company Act. Parent is not, nor immediately after the Closing will be, subject to regulation under the Investment Company Act of 1940, as amended.

SECTION 4.15 Brokerage Arrangements. Except for Parent’s obligations to Jefferies LLC and S. Goldman Advisors LLC, the fees and expenses of which will be paid by Parent, none of the Parent Group Entities has entered (directly or indirectly) into any agreement with any Person that would obligate any of them to pay any commission, brokerage or “finder’s fee” or other similar fee in connection with this Agreement or the transactions contemplated hereby.

 

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SECTION 4.16 Opinion of Financial Advisor. The Parent Conflicts Committee and the Parent Board have received the opinion of Jefferies LLC, dated as of the Execution Date, to the effect that, as of the date thereof and subject to the assumptions, limitations, qualifications and other matters considered in the preparation thereof, the Aggregate Purchase Price and the and the aggregate Merger Consideration to be paid by Parent pursuant to this Agreement, taking into account the NNA Debt Financing, the NNA Notes Cancellation and Discharge, and the NSH Loan Amendment, is fair, from a financial point of view, to Parent.

SECTION 4.17 Information Supplied. None of the information supplied (or to be supplied) in writing by or on behalf of Parent specifically for inclusion or incorporation by reference in (a) the Registration Statement will, at the time the Registration Statement, or any amendment or supplement thereto, is filed with the SEC or at the time it becomes effective under the Securities Act, and (b) the NNA Proxy Statement will, on the date it is first mailed to Holders of shares of NNA Common Stock, and at the time of the NNA Stockholders Meeting, in each case, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading. The Registration Statement will comply as to form in all material respects with the applicable requirements of the Securities Act. Notwithstanding the foregoing, Parent makes no representation or warranty with respect to information supplied by or on behalf of NNA for inclusion or incorporation by reference in the Registration Statement and the NNA Proxy Statement.

SECTION 4.18 Waivers and Disclaimers. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES MADE BY PARENT IN THIS ARTICLE IV, PARENT HAS NOT MADE, DOES NOT MAKE, AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT REGARDING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF ITS ASSETS, (B) THE INCOME TO BE DERIVED FROM ITS ASSETS, (C) THE SUITABILITY OF ITS ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON, (D) THE COMPLIANCE OF OR BY ITS ASSETS OR ITS OPERATION WITH ANY LAWS, OR (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ITS ASSETS.

ARTICLE V.

ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

SECTION 5.1 Preparation of Certain Filings; Meeting of Holders of NNA Common Stock; Commitment to Vote.

(a) As promptly as practicable following the Execution Date (i) Parent and NNA shall jointly prepare the Registration Statement, which shall include a prospectus with respect to the Parent Common Units to be issued in the Parent Equity Issuance and a proxy statement to be provided to the Holders of shares of NNA Common Stock (the “NNA Proxy Statement”), (ii) Parent shall file the Registration Statement with the SEC, (iii) Parent shall use its reasonable best efforts to cause the Parent Common Units to be issued in the Merger to be approved for listing on the NYSE (subject, if applicable, to notice of issuance) prior to the Effective Time,

 

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and (iv) the parties hereto shall make all required filings under applicable state securities and “blue sky” Laws; provided, however, that no such filings shall be required in any jurisdiction where, as a result thereof, Parent would become subject to general service of process or to taxation or qualification to do business as a foreign corporation doing business in such jurisdiction solely as a result of such filing. No filing of, or amendment or supplement to, the Registration Statement or the NNA Proxy Statement will be made by Parent without providing NNA a reasonable opportunity to review and comment thereon. Each of Parent and NNA agrees to use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as practicable after filing thereof and keep the Registration Statement effective until the earlier of the consummation of the Transactions and the termination of this Agreement in accordance with its terms and NNA shall promptly thereafter mail the NNA Proxy Statement to the Holders of shares of NNA Common Stock. Each of Parent and NNA agrees to furnish to the other party all information concerning the Parent Group Entities or the NNA Group Entities, as applicable, and to take such other action as may be reasonably requested in connection with the foregoing.

(b) Each of Parent and NNA agrees, as to itself and its Subsidiaries, that (i) none of the information supplied or to be supplied by it for inclusion or incorporation by reference in the Registration Statement will, at the time the Registration Statement and each amendment or supplement thereto, if any, becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) none of the information supplied or to be supplied by it for inclusion or incorporation by reference in the NNA Proxy Statement and any amendment or supplement thereto will, on the date the NNA Proxy Statement is first mailed to the Holders of shares of NNA Common Stock, and at the time of the NNA Stockholders Meeting, in each case, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of Parent and NNA further agrees that, if it shall become aware prior to the Closing Date of any information that would cause any of the statements in the Registration Statement or the NNA Proxy Statement to be false or misleading with respect to any material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not false or misleading, it will promptly inform the other party thereof and take the necessary steps to correct such information in an amendment or supplement to the Registration Statement or the NNA Proxy Statement.

(c) Each of NNA and Parent shall (i) promptly notify the other of receipt of any comments from the SEC or its staff or any other applicable government official and of any requests by the SEC or its staff or any other applicable government official for amendments or supplements to any of the filings with the SEC in connection with the Merger and other transactions contemplated hereby or for additional information and (ii) promptly supply the other with copies of all correspondence between NNA or any of its representatives, or Parent or any of its representatives, as the case may be, on the one hand, and the SEC or its staff or any other applicable government official, on the other hand, with respect thereto. Parent and NNA shall use their respective reasonable best efforts to respond to any comments of the SEC or its staff with respect to the Registration Statement as promptly as practicable.

 

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(d) NNA shall distribute to the Holders of shares of NNA Common Stock the NNA Proxy Statement as promptly as practicable after the Registration Statement is declared effective under the Securities Act.

(e) NNA shall, as promptly as practicable following the date of this Agreement, establish a record date for, duly call, give notice of, convene and hold a special meeting of the Holders of shares of NNA Common Stock (the “NNA Stockholders Meeting”) for the purpose of obtaining the NNA Stockholders Approval. Subject to Section 5.3, NNA shall, through the NNA Board and the NNA Special Committee, recommend to the Holders of shares of NNA Common Stock adoption of this Agreement pursuant to the NNA Board Recommendation. NNA shall use its reasonable best efforts to solicit from the Holders of shares of NNA Common Stock proxies in favor of the Merger and to take all other action necessary or advisable to secure the NNA Stockholders Approval. The NNA Proxy Statement shall include a copy of the NNA Fairness Opinion and (subject to Section 5.3), the NNA Special Committee Recommendation and the NNA Board Recommendation. Notwithstanding anything in this Agreement to the contrary, unless this Agreement is terminated in accordance with Sections 7.1, 7.2, 7.3 or 7.4, NNA shall submit this Agreement for approval by the Holders of shares of NNA Common Stock at such NNA Stockholders Meeting. Notwithstanding anything in this Agreement to the contrary, NNA may, and at the request of Parent shall, postpone or adjourn the NNA Stockholders Meeting (i) to solicit additional proxies for the purpose of obtaining the NNA Stockholders Approval, (ii) for the absence of a quorum, and (iii) to allow reasonable additional time for the filing and/or mailing of any supplemental or amended disclosure that after consultation with outside legal counsel is determined to be necessary under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the Holders of shares of NNA Common Stock prior to the NNA Stockholders Meeting.

(f) Parent covenants and agrees that, until the Effective Time or the earlier of a termination of this Agreement, (i) at the NNA Stockholders Meeting or any other meeting of Holders of shares of NNA Common Stock or any vote of shares of NNA Common Stock in connection with a vote of the Holders of shares of NNA Common Stock, however called, Parent will vote, or cause to be voted, all shares of NNA Common Stock then owned beneficially or of record by it or any other Parent Group Entity as of the record date for such meeting, (A) in favor of the approval of this Agreement (as it may be amended or otherwise modified from time to time) and the Transactions, including the Merger, and the approval of any actions required in furtherance thereof and (B) against any other matter presented at such meeting or otherwise presented for approval by written consent that would reasonably be expected to (x) result in the breach of any covenant, representation or warranty of NNA under this Agreement, (y) result in, or contribute to, any of the conditions to the consummation of the Merger under this Agreement not being fulfilled, or (y) impede, frustrate, interfere with, delay, postpone or adversely affect the Transactions, and (ii) that Parent will not, and will cause each other Parent Group Entity not to, directly or indirectly, transfer, assign or otherwise dispose of any shares of NNA Common Stock owned by Parent or such other Parent Group Entity. Parent consents to, and has caused or shall cause, to the extent necessary and to the extent permitted by the Governing Documents thereof, each other Parent Group Entity to consent to, this Agreement and the transactions contemplated by this Agreement.

SECTION 5.2 Conduct of Parties.

 

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(a) After the date of this Agreement and prior to the earlier of the termination of this Agreement in accordance with its terms and the Effective Time, except (i) as required by applicable Law or as may be reasonably necessary to respond to the COVID-19 or other pandemic, (ii) as otherwise expressly required by this Agreement or (iii) as consented to by Parent (in the case of NNA) or NNA (in the case of Parent) in writing (in each case, which written consent will not be unreasonably withheld, delayed or conditioned), each of NNA and Parent will, and each agrees that it will cause each of the NNA Group Entities (in the case of NNA) or each of the Parent Group Entities (in the case of Parent) to (A) conduct its business, in all material respects, in, the ordinary course of business consistent with past practice, (B) use commercially reasonable efforts to maintain and preserve intact its business organization and the goodwill of those having business relationship with it and retain the services of its present officers and key employees, and (C) use commercially reasonable efforts to keep in full force and effect all material permits all material insurance policies maintained by such party and its Subsidiaries, other than changes to such policies made in the ordinary course of business.

(b) Without limiting the generality of the foregoing, after the date of this Agreement and prior to the earlier of the termination of this Agreement in accordance with its terms and the Effective Time, except (A) as required by applicable Law or as may be reasonably necessary to respond to the COVID-19 or other pandemic (B) as otherwise expressly required by this Agreement or (C) as consented to by Parent (in the case of NNA) or NNA (in the case of Parent) in writing (in each case, which written consent will not be unreasonably withheld, delayed or conditioned), each of NNA and Parent will not, and each agrees that it will cause each of the NNA Group Entities (in the case of NNA) or each of the Parent Group Entities (in the case of Parent) not to:

(i) make any material change to the nature of its business and operations;

(ii) make any change to its Governing Documents as in effect on the Execution Date in any manner that would reasonably be expected to (A) prohibit or materially impede or delay the Merger or the consummation of the other Transactions or (B) adversely affect in a material way the rights of holders of its securities or the securities of any other party hereto;

(iii) recommend, propose, announce, adopt or vote to adopt a plan or agreement of complete or partial dissolution or liquidation, dissolution, restructuring, recapitalization, merger, consolidation or other reorganization or business combination transaction or agreement, in each case, that would reasonably be expected to (A) prevent or materially impede or delay the ability of the parties to satisfy any of the conditions to, or the consummation of, the Transactions , or (B) adversely affect in a material way the rights of holders of the securities of any party hereto;

(iv) declare, authorize, set aside or pay any dividend or distribution payable in cash or property in respect of the shares of NNA Common Stock (in the case of NNA) or in respect of the Parent Common Units (in the case of Parent), other than in the case of Parent, regular quarterly cash dividends or distributions in the ordinary course, consistent with past practice (including with declaration dates, record dates, payment dates and amounts consistent with past practice), in respect of the Parent Common Units, which shall be no greater than $0.05 per Parent Common Unit;

 

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(v) waive, release, assign, settle or compromise any claims, demands, lawsuits or Proceedings seeking damages or an injunction or other equitable relief where such waivers, releases, assignments, settlements or compromises would, in the aggregate, have a Parent Material Adverse Effect, in the case of Parent, or an NNA Material Adverse Effect, in the case of NNA;

(vi) issue, deliver or sell equity securities, or Rights to acquire equity securities, (x) of NNA, in the case of NNA other than the shares of NNA Common Stock issued in in the NNA Equity Issuance and the NSH Equity Issuance, or (y) of Parent, in the case of Parent, other than Parent Common Units or rights to acquire Parent Common Units having a fair market value (as reasonably determined by the Parent Board) not to exceed $75 million in the aggregate;

(vii) make any changes in financial accounting methods, principles or practices (or change an annual financial accounting period), except insofar as may be required by a change in GAAP or applicable Law;

(viii) incur any indebtedness or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of any NNA Group Entity (in the case of NNA) or any Parent Group Entity (in the case of Parent), in each case, other than the incurrence of any Permitted Indebtedness (including, without limitation, through the issuance or sale of any debt securities or options, warrants, calls or other rights to acquire any debt securities);

(ix) (A) make (other than consistent with past practice), change or revoke any material Tax election, (B) file any amended Tax Return with respect to any material Tax, (C) adopt (other than consistent with past practice) or change any method of Tax accounting or Tax accounting period, or (D) enter into any closing agreement relating to any material Tax; or

(x) agree, authorize or commit to do any of the foregoing.

(c) From the Execution Date until the Closing Date, each of Parent and NNA shall, and shall cause the NNA Group Entities (in the case of NNA) or Parent Group Entities (in the case of Parent) to, promptly notify the other party in writing of (i) any event, condition or circumstance that could reasonably be expected to result in any of the conditions set forth in Article VI not being satisfied at the Effective Time, and (ii) any material breach by the notifying party of any covenant, obligation, or agreement contained in this Agreement; provided, however, that the delivery of any notice pursuant to this Section 5.2(c) shall not limit or otherwise affect the remedies available hereunder to the notified party.

SECTION 5.3 No Solicitation; Recommendation of Merger.

(a) Except as permitted by this Section 5.3, without the prior written consent of Parent, (i) NNA shall not, and shall cause its Subsidiaries not to, and shall use its reasonable best efforts to cause its Representatives not to, directly or indirectly (x) solicit, initiate, knowingly facilitate, knowingly encourage (including by way of furnishing confidential information) or knowingly induce or take any other action intended to lead to any inquiries or any proposals that

 

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constitute or could reasonably be expected to lead to an NNA Alternative Proposal, (y) grant any waiver or release of any standstill or similar agreement with respect to any shares or units of NNA or of any of its Subsidiaries, or (z) enter into any merger agreement, letter of intent, agreement in principle, share or unit purchase agreement, asset purchase agreement or share or unit exchange agreement, option agreement or other similar agreement relating to an NNA Alternative Proposal, and (ii) the NNA Board and the NNA Special Committee shall not withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in a manner adverse to Parent, the NNA Special Committee Recommendation or the NNA Board Recommendation or publicly recommend the approval or adoption of, or publicly approve or adopt, or propose to publicly recommend, approve or adopt, any NNA Alternative Proposal, (the taking of any action described in clause (i)(z) or clause (ii) being referred to as an “NNA Adverse Recommendation Change”);

(b) Notwithstanding anything to the contrary contained in Section 5.3(a), if at any time following the date of this Agreement and prior to obtaining the NNA Stockholders Approval, (i) NNA has received a written NNA Alternative Proposal that the NNA Special Committee believes is bona fide, (ii) the NNA Special Committee, after consultation with the NNA Special Committee’s outside legal counsel and financial advisors, determines in good faith that (A) such NNA Alternative Proposal constitutes or could reasonably be expected to lead to or result in an NNA Superior Proposal and (B) failure to take such action would be inconsistent with its duties under applicable Law, and (iii) such NNA Alternative Proposal did not result from a material breach of Section 5.3(a), then at the direction of the NNA Special Committee, NNA may, subject to clauses (x) and (y) below, (A) furnish information, including confidential information, with respect to NNA and its Subsidiaries to the Person making such NNA Alternative Proposal and (B) participate in discussions or negotiations regarding such NNA Alternative Proposal; provided that (x) NNA will not, and will cause its Representatives not to, disclose any non-public information to such Person unless NNA has, or first enters into, a customary confidentiality agreement with such Person and (y) NNA will provide to Parent non-public information about NNA or its Subsidiaries that was not previously provided or made available to Parent prior to or substantially concurrently with providing or making available such non-public information to such other Person.

(c) In addition to the other obligations of NNA set forth in this Section 5.3, NNA shall promptly advise Parent, orally and in writing, and in no event later than 36 hours after receipt, if any proposal, offer, inquiry or other contact is received by, any information is requested from, or any discussions or negotiations are sought to be initiated or continued with, NNA in respect of any NNA Alternative Proposal, and shall, in any such notice to Parent, indicate the identity of the Person making such proposal, offer, inquiry or other contact and the terms and conditions of any proposals or offers or the nature of any inquiries or contacts (and shall include with such notice copies of any written materials received from or on behalf of such Person relating to such proposal, offer, inquiry or request), and thereafter shall promptly keep Parent reasonably informed of all material developments affecting the status and terms of any such proposals, offers, inquiries or requests (and NNA shall promptly provide Parent with copies of any additional material written materials received by NNA or that NNA has delivered to any third party making an NNA Alternative Proposal that relate to such proposals, offers, inquiries or requests) and of the status of any such discussions or negotiations.

 

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(d) Notwithstanding any other provision of this Agreement, at any time prior to obtaining the NNA Stockholders Approval, the NNA Board (at the direction of the NNA Special Committee) and the NNA Special Committee may effect an NNA Adverse Recommendation Change in response to an NNA Alternative Proposal or an NNA Changed Circumstance if the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee, after consultation by the NNA Special Committee with the NNA Special Committee’s outside legal counsel and financial advisors, determines in good faith that the failure to take such action would be reasonably likely to be inconsistent with its duties under applicable Law, and:

(i) if the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee intends to effect an NNA Adverse Recommendation Change in response to an NNA Alternative Proposal:

(A) such NNA Alternative Proposal is bona fide, in writing and has not been withdrawn or abandoned;

(B) the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee has determined, after consultation with the NNA Special Committee’s outside legal counsel and financial advisors, that such NNA Alternative Proposal constitutes an NNA Superior Proposal after giving effect to all of the adjustments offered by Parent pursuant to clause (E) below;

(C) NNA has provided prior written notice to Parent in accordance with Section 8.1 (the “NNA Superior Proposal Notice”) of the NNA Board’s or the NNA Special Committee’s intention to effect an NNA Adverse Recommendation Change with respect to such NNA Superior Proposal, and such NNA Superior Proposal Notice has specified the identity of the Person making such NNA Alternative Proposal and the material terms and conditions of such NNA Alternative Proposal, and included complete copies of any written proposal or offers (including proposed agreements) received by NNA in connection with such NNA Alternative Proposal;

(D) during the period that commences on the date of delivery of the NNA Superior Proposal Notice as determined in accordance with Section 8.1 and ends at 11:59 p.m. Eastern European Standard time on the date that is the fifth calendar day following the date of such delivery (the “NNA Superior Proposal Notice Period”), NNA shall, at the direction of the NNA Special Committee, (1) negotiate with Parent in good faith (to the extent Parent seeks to negotiate) to make such adjustments to the terms and conditions of this Agreement as would permit the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee not to effect an NNA Adverse Recommendation Change; and (2) keep Parent reasonably informed with respect to the status and changes in the material terms and conditions of such NNA Alternative Proposal or other change in circumstances related thereto; provided, however, that any material revisions to such NNA Alternative Proposal (it being agreed that any change in the purchase price in such NNA Alternative Proposal shall be deemed a material revision) shall require delivery of a subsequent NNA Superior Proposal Notice and a subsequent NNA Superior Proposal Notice Period in respect of such revised NNA Alternative Proposal, except that such subsequent NNA Superior Proposal Notice Period shall expire upon the later of (x) the end of the initial NNA Superior Proposal Notice Period and (y) 11:59 p.m. Eastern European Standard time on the date that is the third calendar day following the date of the delivery of such subsequent NNA Superior Proposal Notice; and

 

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(E) the NNA Special Committee shall have considered all revisions to the terms of this Agreement irrevocably offered in writing by Parent and, at the end of the NNA Superior Proposal Notice Period, and the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee, as applicable, shall have determined in good faith that (i) such NNA Alternative Proposal continues to constitute an NNA Superior Proposal even if such revisions were to be given effect and (ii) failure to effect an NNA Adverse Recommendation Change would reasonably be likely to be inconsistent with the NNA Board’s or the NNA Special Committee’s duties under applicable Law, even if such revisions were to be given effect.

(ii) if the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee intends to effect such NNA Adverse Recommendation Change in response to an NNA Changed Circumstance:

(A) NNA shall provide prior written notice to Parent in accordance with Section 8.1 (the “NNA Recommendation Change Notice”) of the NNA Board’s or the NNA Special Committee’s intention to effect an NNA Adverse Recommendation Change, and such NNA Recommendation Change Notice shall specify the details of such NNA Changed Circumstance and the reasons for the NNA Adverse Recommendation Change;

(B) during the period that commences on the date of delivery of the NNA Recommendation Change Notice as determined in accordance with Section 8.1 and ends at 11:59 p.m. Eastern European Standard time on the date that is the fifth calendar day following the date of such delivery (the “NNA Recommendation Change Notice Period”), at the direction of the NNA Special Committee, NNA shall (i) negotiate with Parent in good faith to make such adjustments to the terms and conditions of this Agreement as would permit the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee, as applicable, not to effect an NNA Adverse Recommendation Change; and (ii) keep Parent reasonably informed of any change in circumstances related thereto; and

(C) the NNA Special Committee shall have considered all revisions to the terms of this Agreement irrevocably offered in writing by Parent and, at the end of the NNA Recommendation Change Notice Period, the NNA Board (upon the recommendation of the NNA Special Committee) or the NNA Special Committee, as applicable, shall have determined in good faith that the failure to effect an NNA Adverse Recommendation Change would be inconsistent with its duties under applicable Law, even if such revisions were to be given effect.

SECTION 5.4 Commercially Reasonable Efforts; Further Assurances. From and after the Execution Date, upon the terms and subject to the conditions hereof, each of the parties hereto shall use its commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action, and to do or cause to be done, all things necessary, proper or advisable under applicable Law to consummate and make effective the transactions contemplated by this Agreement as

 

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promptly as practicable and (ii) defend any lawsuits or other Proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated by this Agreement or seek to have lifted or rescinded any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, including the Merger. Without limiting the foregoing but subject to the other terms of this Agreement, the parties hereto agree that, from time to time, whether before, at or after the Closing Date, each of them will execute and deliver, or cause to be executed and delivered, such instruments of assignment, transfer, conveyance, endorsement, direction or authorization as may be necessary to consummate and make effective the transactions contemplated by this Agreement. Notwithstanding the foregoing, nothing in this Agreement will require any party hereto to hold separate or make any divestiture not expressly contemplated herein of any asset or otherwise agree to any restriction on its operations or other condition in order to obtain any consent or approval or other clearance required by this Agreement.

SECTION 5.5 Public Announcement. On the Execution Date, Parent and NNA shall issue a joint press release with respect to the execution of this Agreement and the Merger, which press release shall be reasonably satisfactory to Parent, NNA and the NNA Special Committee. From and after the Execution Date, neither NNA nor Parent shall issue any other press release or make any other public announcement concerning this Agreement or the transactions contemplated by this Agreement (to the extent not previously issued or made in accordance with this Agreement) (other than public announcements at industry road shows and conferences or as may be required by applicable Law or by obligations pursuant to any listing agreement with the NYSE in which event the party making the public announcement or press release shall, to the extent practicable, notify Parent and NNA in advance of such public announcement or press release) without the prior approval of the other, which approval shall not be unreasonably withheld, delayed or conditioned.

SECTION 5.6 Expenses. Whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement, including legal fees, accounting fees, financial advisory fees and other professional and non-professional fees and expenses, shall be paid by the party hereto incurring such expenses, (i) except as otherwise set forth in Section 7.5 and (ii) except that Parent and NNA shall each pay for one-half of (a) any filing fees with respect to the Registration Statement and (b) the costs of filing, printing and mailing of the NNA Proxy Statement.

SECTION 5.7 Regulatory Issues. NNA and Parent shall cooperate fully with respect to any filing, submission or communication with a Governmental Entity having jurisdiction over the Merger. Such cooperation shall include each of the parties hereto: (i) providing, in the case of oral communications with a Governmental Entity, advance notice of any such communication and, to the extent permitted by applicable Law, an opportunity for the other party to participate; (ii) providing, in the case of written communications, an opportunity for the other party to comment on any such communication and provide the other with a final copy of all such communications; and (iii) complying promptly with any request for information from a Governmental Entity (including an additional request for information and documentary material). All cooperation shall be conducted in such a manner so as to preserve all applicable privileges.

 

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SECTION 5.8 Tax Opinion.

(a) Parent and NNA shall cooperate with each other in obtaining, and shall use their respective reasonable efforts to obtain, a tax opinion from Fried, Frank, Harris, Shriver & Jacobson LLP (“Parent Tax Counsel”) to NNA, dated as of the Closing Date, in form and substance reasonably satisfactory to NNA (and any similar opinion to be attached as an exhibit to the Registration Statement), substantially to the effect that for U.S. federal income tax purposes the Merger (either alone or together with the Second Merger, if applicable) should be treated as a “reorganization” within the meaning of Section 368(a) of the Code and that Section 367(a) of the Code should not cause Parent to be treated as other than a corporation with respect to any transfer of property thereto in connection with the Merger (other than, in certain circumstances, a transfer by a holder of NNA Common Stock that is a United States person and that holds 5% or more by vote or by value (within the meaning of Treasury Regulations Section 1.367(a)-3(b)(1)(i)) of Parent immediately following the Merger) (the “Merger Tax Opinion”). For the avoidance of doubt, the Merger Tax Opinion shall not be a condition to closing. Each of Parent and NNA shall use its reasonable efforts to deliver to Parent Tax Counsel for purposes of the Merger Tax Opinion a “Tax Representation Letter,” dated as of the Closing Date (and, if requested, dated as of the date the Registration Statement shall have been declared effective by the SEC), signed by an officer of Parent or NNA, as applicable, and containing representations of Parent or NNA, as applicable, in each case, as shall be reasonably necessary or appropriate to enable Parent Tax Counsel to render the Merger Tax Opinion and any opinion required to be issued in connection with the filing of the Registration Statement.

(b) Parent and NNA shall cooperate, including by making structural changes that are not reasonably expected to impede or materially delay consummation of the Merger, with each other and shall use their reasonable efforts to obtain the Intended Tax Treatment. Each of Parent and NNA shall not, and shall cause each of its Subsidiaries not to, take any action that is reasonably likely to, or fail to take any action which failure is reasonably likely to, prevent or impede the Intended Tax Treatment. Without limiting the generality of the foregoing, Parent and NNA agree that at the request of NNA, or if Parent so elects, Parent shall, as part of the plan of reorganization, cause the Surviving Entity to merge with and into a newly organized entity that is treated as an entity disregarded as separate from Parent for U.S. federal income tax purposes (“Newco”), with Newco as the surviving entity (the “Second Merger”); provided, that the Second Merger shall occur as promptly as practicable after both (i) the Effective Time shall have occurred and (ii) all third party consents necessary to consummate the Second Merger shall have been obtained; provided, further that, from the time NNA makes the request or Parent makes the election, as applicable, for the Second Merger, each of the parties hereto shall use its commercially reasonable efforts to take, or cause to be taken, all appropriate action, and to do or cause to be done, all things necessary, proper or advisable under applicable Law to consummate and make effective the Second Merger as promptly as practicable after the Effective Time.

SECTION 5.9 D&O Insurance.

(a) For a period of six years after the Effective Time, to the fullest extent permitted under applicable Law, the Surviving Entity shall, and Parent shall cause the Surviving Entity to, (i) indemnify and hold harmless against any reasonable costs or expenses (including reasonable attorneys’ fees and all other reasonable costs, expenses and obligations (including experts’ fees, travel expenses, court costs, retainers, transcript fees, duplicating, printing and binding costs, as well as telecommunications, postage and courier charges) paid or incurred in

 

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connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in, any Proceeding arising from acts or omissions occurring at or prior to the Effective Time (including the transactions contemplated by this Agreement), including any Proceeding relating to a claim for indemnification or advancement brought by an NNA D&O Indemnified Party), judgments, fines, losses, claims, damages or liabilities, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of any thereof) in connection with any actual or threatened Proceeding arising from acts or omissions occurring at or prior to the Effective Time (including the transactions contemplated by this Agreement), and, upon receipt by the Surviving Entity of an undertaking by or on behalf of the NNA D&O Indemnified Party to repay such amount if it shall be determined in a final and non-appealable judgment entered by a court of competent jurisdiction that the NNA D&O Indemnified Party is not entitled to be indemnified, provide advancement of expenses with respect to each of the foregoing to, all NNA D&O Indemnified Parties and (ii) honor all rights to indemnification, advancement of expenses, elimination of liability and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time (including the transactions contemplated by this Agreement) now existing in favor of the NNA D&O Indemnified Parties as provided in the Governing Documents of any NNA Group Entity, under applicable the Law of the Republic of the Marshall Islands or otherwise, and shall ensure that the Governing Documents of NNA (or their successor entities) shall, for a period of six years following the Effective Time, contain provisions substantially no less advantageous with respect to indemnification, advancement of expenses, elimination of liability and exculpation of their present and former directors and officers, than are set forth in the Governing Documents of NNA as of the Execution Date. Any right of an NNA D&O Indemnified Party pursuant to this Section 5.9(a) shall not be amended, repealed, terminated or otherwise modified at any time in a manner that would adversely affect the rights of such NNA D&O Indemnified Party as provided herein, and shall be enforceable by such NNA D&O Indemnified Party and their respective heirs and Representatives against Parent, the Surviving Entity and their respective successors and assigns.

(b) For a period of six years after the Effective Time, the Surviving Entity shall, Parent shall cause the Surviving Entity to, maintain officers’ and directors’ liability insurance with a nationally reputable carrier covering each NNA D&O Indemnified Party who is or at any time prior to the Second Effective Time was covered by the existing officers’ and directors’ liability insurance applicable to the NNA Group Entities (“D&O Insurance”), on terms substantially no less advantageous to the NNA D&O Indemnified Parties, as applicable, than such existing insurance with respect to acts or omissions, or alleged acts or omissions, at or prior to the Effective Time (whether claims, actions or other Proceedings relating thereto are commenced, asserted or claimed before or after the Effective Time); provided, however, that the Surviving Entity shall not be required to pay an annual premium for the D&O Insurance for the NNA D&O Indemnified Parties in excess of 300% of the current annual premium currently paid by the NNA Group Entities for such insurance, but shall purchase as much of such coverage as possible for such applicable amount. Parent shall have the right to cause such coverage to be extended under the applicable D&O Insurance by obtaining a six-year “tail” policy on terms and conditions no less advantageous to the NNA D&O Indemnified Parties than the existing D&O Insurance, and such “tail” policy shall satisfy the provisions of this Section 5.9.

 

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(c) The provisions of this Section 5.9 shall survive the consummation of the Merger for a period of six years and expressly are intended to benefit each of the NNA D&O Indemnified Parties; provided, however, that in the event that any claim or claims for indemnification or advancement set forth in this Section 5.9 are asserted or made within such six-year period, all rights to indemnification and advancement in respect of any such claim or claims shall continue until disposition of all such claims. The rights of any NNA D&O Indemnified Party under this Section 5.9 shall be in addition to any other rights such NNA D&O Indemnified Party may have under the Governing Documents of any NNA Group Entity or applicable Law.

(d) In the event Parent or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then and in either such case, Parent shall cause proper provision to be made so that its successors and assigns, as the case may be, shall assume the obligations set forth in this Section 5.9.

SECTION 5.10 Litigation. NNA shall give Parent the opportunity to participate in the defense or settlement of any securityholder litigation against NNA and/or the members of the NNA Board, in each case, relating to the Merger, this Agreement or any of the Transactions, provided that NNA shall not be required to provide information if doing so would be reasonably expected to threaten the loss of any attorney-client privilege or other applicable legal privilege or protective doctrine; provided, further, that NNA shall not settle any such litigation without the written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed).

SECTION 5.11 Special Committee. Prior to the Effective Time, none of the NNA Group Entities shall, without the consent of the NNA Special Committee, eliminate the NNA Special Committee, or revoke or diminish the authority of the NNA Special Committee, or remove or cause the removal of any director of the NNA Board that is a member of the NNA Special Committee either as a member of such board or such committee without the affirmative vote of the members of the NNA Board, including the affirmative vote of each of the other members of the NNA Special Committee. For the avoidance of doubt, this Section 5.11 shall not apply to the filling in accordance with the provisions of the applicable Governing Documents of any vacancies caused by the death, incapacity or resignation of any director.

SECTION 5.12 Stock Exchange Listing; Delisting and Deregistration. Parent shall use its reasonable best efforts to cause the Parent Common Units to be issued in the Merger to be approved for listing on the NYSE (subject, if applicable, to notice of issuance), and NNA shall use its reasonable best efforts to cause the shares of NNA Common Stock issued in the NNA Equity Issuance to be and remain listed on the NYSE until the Closing. NNA will cooperate and use its reasonable best efforts to cause the delisting of shares NNA Common Stock from the NYSE and the deregistration of such securities under the Exchange Act as promptly as practicable following the Closing in compliance with applicable Law.

 

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ARTICLE VI.

CONDITIONS TO CLOSING

SECTION 6.1 Conditions to Each Partys Obligations. The obligation of the parties hereto to proceed with the Closing is subject to the satisfaction on or prior to the Closing Date of all of the following conditions, any one or more of which may be waived (to the extent legally permissible) in writing, in whole or in part, as to a party by such other parties:

(a) NNA Stockholders Approval. The NNA Stockholders Approval shall have been obtained in accordance with applicable Law.

(b) Registration Statement. The Registration Statement shall have become effective under the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no Proceedings for that purpose shall have been initiated or threatened by the SEC.

(c) NYSE Listing. The Parent Common Units to be issued in the Merger shall have been approved for listing on the NYSE subject to official notice of issuance.

(d) No Governmental Restraint. No order, decree or injunction of any Governmental Entity shall be in effect, and no Laws shall have been enacted or adopted, that enjoin, prohibit or make illegal the consummation of any of the transactions contemplated by this Agreement.

SECTION 6.2 Conditions to the Parent Parties Obligations. The obligation of the Parent Parties to proceed with the Closing is subject to the satisfaction on or prior to the Closing Date of all of the following conditions, any one or more of which may be waived in writing, in whole or in part, by the Parent Parties (in their sole discretion):

(a) Representations and Warranties; Performance. (i) The representations and warranties of NNA set forth in (x) Section 3.1(a), Section 3.2, and Section 3.4(a) shall be true and correct in all material respects as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), and (y) Article III (other than Section 3.1(a), Section 3.2, Section 3.4(a) and Section 3.8) shall be true and correct (without regard to any materiality, “NNA Material Adverse Effect” and similar qualifiers therein) as of the Closing, as if remade on the date thereof (except for representations and warranties made as of a specific date, which shall be true and correct as of such specific date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, result in an NNA Material Adverse Effect, (ii) the representation and warranty set forth in Section 3.8 shall be true and correct as of the Closing Date as if made on the date thereof, and (iii) NNA shall have performed or complied with all agreements and covenants required to be performed by it hereunder prior to the Closing Date that have materiality, “NNA Material Adverse Effect” or similar qualifiers, and shall have performed or complied in all material respects with all other agreements and covenants required to be performed by it hereunder prior to the Closing Date that are not so qualified.

(b) Parent shall have received a certificate, dated as of the Closing Date, of an executive officer of NNA certifying to the matters set forth in Section 6.2(a).

 

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SECTION 6.3 Conditions to NNAs Obligations. The obligation of NNA to proceed with the Closing is subject to the satisfaction on or prior to the Closing Date of all of the following conditions, any one or more of which may be waived in writing, in whole or in part, by NNA (in its sole discretion):

(a) Representations and Warranties; Performance. (i) The representations and warranties of the Parent Parties set forth in (x) Section 4.1(a), Section 4.2 (other than the third sentence thereof), and Section 4.4(a) shall be true and correct in all material respects as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), (y) the third sentence of Section 4.2 shall be true and correct in all material respects as of the Closing Date as if made as of the Closing Date and (z) Article IV (other than Section 4.1(a), Section 4.2, Section 4.4(a) and Section 4.8) shall be true and correct (without regard to any materiality, “Parent Material Adverse Effect” and similar qualifiers therein) as of the Closing, as if remade on the date thereof (except for representations and warranties made as of a specific date, which shall be true and correct as of such specific date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, result in a Parent Material Adverse Effect, (ii) the representation and warranty set forth in Section 4.8 shall be true and correct as of the Closing Date as if made on the date thereof, and (iii) each of the Parent Parties shall have performed or complied with all agreements and covenants required to be performed by it hereunder prior to the Closing Date that have materiality, “Parent Material Adverse Effect” or similar qualifiers, and shall have performed or complied in all material respects with all other agreements and covenants required to be performed by it hereunder prior to the Closing Date that are not so qualified.

(b) NNA shall have received a certificate, dated as of the Closing Date, of an executive officer of Parent certifying to the matters set forth in Section 6.3(a).

SECTION 6.4 Frustration of Conditions. None of parties to this Agreement may rely on the failure of any condition set forth in this Article VI to be satisfied if such failure was caused by such party’s failure to act in good faith or such party’s failure to observe in any material respect any of its obligations under this Agreement.

ARTICLE VII.

TERMINATION

SECTION 7.1 Termination by Mutual Consent. This Agreement may be terminated at any time prior to the Effective Time by the mutual written agreement of the parties hereto duly authorized by Parent Board, on behalf of Parent, and by the NNA Special Committee, on behalf of NNA.

SECTION 7.2 Termination by NNA or Parent. At any time prior to the Effective Time, this Agreement may be terminated by NNA or Parent if:

(a) the Effective Time shall not have occurred on or before August 31, 2022 (the “Outside Date”); provided that the right to terminate this Agreement pursuant to this Section 7.2(a) shall not be available to Parent if the Parent Parties fail to perform or observe in any material respect or to NNA if it fails to perform or observe in any material respect any of their respective obligations under this Agreement in any manner that shall have been the principal cause of, or resulted in, the failure of the Effective Time to occur on or before such date; or

 

48


(b) a Governmental Entity shall have issued an order, decree or ruling or taken any other action (including the enactment of any statute, rule, regulation, decree or executive order) permanently restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action (including the enactment of any statute, rule, regulation, decree or executive order) shall have become final and non-appealable; provided, however, that the Person seeking to terminate this Agreement pursuant to this Section 7.2(b) shall have complied with Section 5.3, Section 5.4 and Section 5.7.

SECTION 7.3 Termination by NNA. This Agreement may be terminated by NNA (which termination may be effected by the NNA Special Committee without the consent, authorization or approval of the NNA Board) at any time prior to the Effective Time if the Parent Parties shall have breached or failed to perform any of their respective representations, warranties, covenants or agreements set forth in this Agreement (or if any of the representations or warranties of the Parent Parties set forth in this Agreement shall fail to be true), which breach or failure (i) would (if it occurred or was continuing as of the Closing Date) give rise to the failure of a condition set forth in Section 6.3(a) (with or without the passage of time) and (ii) is incapable of being cured, or is not cured, by the Parent Parties prior to the Outside Date; provided that the right to terminate this Agreement pursuant to this Section 7.3 shall not be available to NNA if, at such time, the condition set forth in Section 6.2(a) cannot be satisfied (with or without the passage of time).

SECTION 7.4 Termination by Parent. This Agreement may be terminated by Parent at any time prior to the Effective Time (a) if NNA shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (or if any of the representations or warranties of NNA set forth in this Agreement shall fail to be true), which breach or failure (i) would (if it occurred or was continuing as of the Closing Date) give rise to the failure of a condition set forth in Section 6.2(a) (with or without the passage of time) and (ii) is incapable of being cured, or is not cured, by NNA prior to the Outside Date; provided that the right to terminate this Agreement pursuant to this Section 7.4(a) shall not be available to Parent if, at such time, the condition set forth in Section 6.3(a) cannot be satisfied (with or without the passage of time); or (b) prior to the receipt of the NNA Stockholders Approval, if an NNA Adverse Recommendation Change shall have occurred.

SECTION 7.5 Expenses.

(a) If this Agreement is validly terminated by Parent pursuant to Section 7.4(a), then NNA shall pay to Parent (or its designated Affiliate) by wire transfer of immediately available funds to an account designated by Parent an amount equal to the Parent Expenses, and such payment shall be made within five Business Days after such termination.

(b) If this Agreement is validly terminated by NNA pursuant to Section 7.3, then Parent shall pay to NNA (or its designated Affiliate) by wire transfer of immediately available funds to an account designated by NNA an amount equal to the NNA Expenses, and such payment shall be made within five Business Days after such termination.

 

49


(c) Each party acknowledges that the agreements contained in this Section 7.5 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Parent and Merger Sub, on the one hand, and NNA, on the other hand, would not enter into this Agreement. The parties acknowledge that payment of the Parent Expenses or the NNA Expenses, as applicable, if, as and when requires pursuant to this Section 7.5 shall constitute the sole and exclusive remedy with respect thereto, except as expressly set forth in Section 7.6.

SECTION 7.6 Effect of Certain Terminations. In the event of termination of this Agreement pursuant to this Article VII, written notice thereof shall be given to the other party or parties, specifying the provision of this Agreement pursuant to which such termination is made, and this Agreement, except for the provisions of Section 2.1(a), Section 4.5(d), Section 5.5, Section 5.6, this Article VII and Article VIII, shall forthwith become null and void and there shall be no liability on the part of any party to this Agreement and all rights and obligations of the parties hereto under this Agreement shall terminate, except for the provisions of Section 2.1(a), Section 4.5(d), Section 5.5, Section 5.6, this Article VII and Article VIII shall survive such termination; except that nothing herein shall relieve any party hereto from any liability for any intentional or willful and material breach by such party of any of its representations, warranties, covenants or agreements set forth in this Agreement and all rights and remedies of a non-breaching party under this Agreement in the case of such intentional or willful and material breach, at law or in equity, shall be preserved. For the avoidance of doubt, no termination of this Agreement pursuant to this Article VII shall affect the transactions contemplated by Section 2.1, including the consummation of the NNA Equity Issuance.

SECTION 7.7 Survival. None of the representations, warranties, agreements, covenants or obligations in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the consummation of the Merger, except for those covenants and agreements contained herein that by their terms apply or are to be performed in whole or in part after the Effective Time.

SECTION 7.8 Enforcement of this Agreement. The parties hereto acknowledge and agree that an award of money damages would be inadequate for any breach of this Agreement by any party and any such breach would cause the non-breaching parties irreparable harm. Accordingly, the parties hereto agree that prior to the termination of this Agreement, in the event of any breach or threatened breach of this Agreement by one of the parties, the parties will also be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance, provided such party is not in material default hereunder. Subject to Section 7.5(e), such remedies will not be the exclusive remedies for any breach of this Agreement but will be in addition to all other remedies available at law or equity to each of the parties.

SECTION 7.9 No Waiver Relating to Claims for Fraud/Willful Misconduct. The liability of any party under this Article VII shall be in addition to, and not exclusive of, any other liability that such party may have at law or in equity based on such party’s (a) fraudulent acts or omissions or (b) willful misconduct. None of the provisions set forth in this Agreement shall be deemed to be a waiver by or release of any party of any right or remedy that such party may have at law or equity based on any other party’s fraudulent acts or omissions or willful misconduct nor shall any such provisions limit, or be deemed to limit, (i) the amounts of recovery sought or awarded in any such claim for fraud or willful misconduct, (ii) the time period during which a claim for fraud or willful misconduct may be brought, or (iii) the recourse that any such party may seek against another party with respect to a claim for fraud or willful misconduct.

 

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ARTICLE VIII.

MISCELLANEOUS

SECTION 8.1 Notices. Any notice, request, instruction, correspondence or other document to be given hereunder by any party to another party (each, a “Notice”) shall be in writing and delivered in person or by courier service requiring acknowledgment of receipt of delivery or mailed by U.S. registered or certified mail, postage prepaid and return receipt requested, or by facsimile or e-mail, as follows; provided that copies to be delivered below shall not be required for effective notice and shall not constitute notice:

If to NNA, addressed to:

Strathvale House, 90 N Church Street,

PO Box 309, Grand Cayman

KY1-1104 Cayman Islands

Attention: Vasiliki Papaefthymiou

Facsimile:    +30 210 417 2070

E-mail:         vpapaefthymiou@navios.com

with a copy to (which shall not constitute notice):

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

Attention:   Ryan J. Maierson

                    Nick S. Dhesi

E-mail:        ryan.maierson@lw.com

                    nick.dhesi@lw.com

If to any of the Parent Parties, addressed to:

7 Avenue de Grande Bretagne, Office 11B2

Monte Carlo, MC 98000 Monaco

Attention: Vasiliki Papaefthymiou

Facsimile:     +30 210 417 2070

E-mail:         vpapaefthymiou@navios.com

with a copy to (which shall not constitute notice):

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004

Attention:     Philip Richter

E-mail:         philip.richter@friedfrank.com

 

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Notice given by personal delivery, courier service or mail shall be effective upon actual receipt. Notice given by facsimile or e-mail shall be effective upon written confirmation of receipt by facsimile, e-mail or otherwise. Any party may change any address to which Notice is to be given to it by giving Notice as provided above of such change of address.

SECTION 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial. To the maximum extent permitted by applicable Law, this Agreement and all claims or causes of action (whether in contract, tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement shall be governed and construed in accordance the Laws of the Marshall Islands, without regard to principles of conflicts of law. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought exclusively in a court of competent jurisdiction of the Marshall Islands, and each of the parties hereby irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER IN CONTRACT OR TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 8.3 Entire Agreement; Amendments, Consents and Waivers. This Agreement and the exhibits and schedules hereto and thereto constitute the entire agreement between and among the parties hereto pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements between or among the parties in connection with the subject matter hereof except as set forth specifically herein or contemplated hereby. Except as expressly set forth in this Agreement (including the representations and warranties set forth in Articles III and IV), (a) the parties acknowledge and agree that neither the NNA Group Entities nor any other Person has made, and the Parent Group Entities are not relying upon, any covenant, representation or warranty, expressed or implied, as to the NNA Group Entities or as to the accuracy or completeness of any information regarding any NNA Group Entity furnished or made available to any Parent Group Entity, (b) the parties hereto acknowledge and agree that, except as set forth in this Agreement, neither the Parent Group Entities nor any other Person has made, and the NNA Group Entities are not relying upon, any covenant, representation or warranty, expressed or implied, as to the Parent Group Entities or as to the accuracy or completeness of any information regarding any Parent Group Entity furnished or made available to any NNA Group Entity, and (c) NNA and the Parent Parties shall not have or be subject to any liability to any Parent Group Entity or any other Person or any NNA Group Entity

 

52


or any other Person, as applicable, or any other remedy in connection herewith, based upon the distribution to any Parent Group Entity or any NNA Group Entity of, or any Parent Group Entity’s or any NNA Group Entity’s use of or reliance on, any such information or any information, documents or material made available to the Parent Group Entities or NNA Group Entities, as applicable, in any “data rooms,” “virtual data rooms,” management presentations or in any other form in expectation of, or in connection with, the transactions contemplated hereby. Subject to compliance with applicable Law, prior to the Closing, any provision of this Agreement may be (a) consented to or waived in writing by the party benefited by the provision or (b) amended or modified at any time by an agreement in writing by the parties hereto; provided, however, that, in addition to any other approvals required by NNA’s constituent documents or under this Agreement, the foregoing consents, waivers, amendments or modifications in clauses (a) and (b), and any decision or determination by NNA under this Agreement (including, for the avoidance of doubt, any decision or determination by NNA to (x) terminate this Agreement pursuant to Section 7.2 or Section 7.3 or (y) enforce this Agreement (including pursuant to Section 7.8)), must be approved by, in the case of consents, waivers, amendments or modifications, or such decisions or determinations, by the NNA Special Committee. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the parties hereto. The failure of a party to exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided. Notwithstanding anything in this Agreement to the contrary, following receipt of the NNA Stockholders Approval, there shall be no amendment or change to the provisions of this Agreement which by applicable Laws or stock exchange rule would require further approval by the Holders of NNA Public Stock, as applicable, without such approval.

SECTION 8.4 Binding Effect; No Third-Party Beneficiaries; and Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the parties hereto and their respective permitted successors and assigns, any rights, benefits or obligations hereunder, except (i) as provided in Section 5.9 and (ii) for the right of the Holders of NNA Common Stock to receive the Merger Consideration. No party hereto may assign, transfer, dispose of or otherwise alienate this Agreement or any of its rights, interests or obligations under this Agreement (whether by operation of law or otherwise). Any attempted assignment, transfer, disposition or alienation in violation of this Agreement shall be null, void and ineffective.

SECTION 8.5 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of applicable Law, or public policy, all other conditions or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement are not affected in any matter materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the fullest extent possible.

 

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SECTION 8.6 Counterparts. This Agreement may be executed in multiple counterparts each of which shall be deemed an original and all of which shall constitute one instrument.

[The remainder of this page is blank.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers or agents hereunto duly authorized, all as of the date first written above.

 

NAVIOS MARITIME PARTNERS L.P.

/s/ Efstratios Desypris

Name: Efstratios Desypris

Title: Chief Financial Officer

NAVIOS ACQUISITION MERGER SUB. INC.

/s/ Efstratios Desypris

Name: Efstratios Desypris

Title: Director

NAVIOS MARITIME ACQUISITION CORP.

/s/ Leonidas Korres

Name: Leonidas Korres

Title: Chief Financial Officer

 

[Signature Page to Agreement and Plan of Merger]

Exhibit 4.2

NOTICE OF FULL REDEMPTION

TO THE HOLDERS OF

NAVIOS MARITIME ACQUISITION CORPORATION

NAVIOS ACQUISITION FINANCE (US) INC.

CUSIP Nos. 63938M AD8 and Y62150 AC4*

8.125% FIRST PRIORITY SHIP MORTGAGE NOTES DUE 2021

Dated: August 26, 2021

Notice is hereby given in accordance with Section 3.03 of the Indenture, dated as of November 13, 2013, among Navios Maritime Acquisition Corporation, a Marshall Islands corporation (the “Company”), Navios Acquisition Finance (US) Inc., a Delaware corporation (together with the Company, the “Co-Issuers”), the guarantors party thereto and Wilmington Trust, National Association, in its capacity as successor trustee (the “Trustee”) and as successor collateral trustee (as amended and supplemented, the “Indenture”), pursuant to which the Co-Issuers’ 8.125% First Priority Ship Mortgage Notes due 2021 (CUSIP No. 63938M AD8 and Y62150 AC4) (the “Notes”) were issued, that the Co-Issuers have elected to redeem in full the aggregate principal amount of Notes then outstanding on September 25, 2021 (the “Redemption Date”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Indenture.

Pursuant to Section 5 of the Notes and Section 3.07 of the Indenture, the Notes will be redeemed at a redemption price equal to 100.00% of the principal amount thereof (the “Redemption Price”) plus accrued and unpaid interest, if any, to, but not including, the Redemption Date, which will be an aggregate of $29.340278 per $1,000 principal amount of Notes redeemed. Unless the Co-Issuers default in making the redemption payment, interest (including Additional Interest) on Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price upon surrender to the Paying Agent of the Notes redeemed.

Notes must be surrendered to Wilmington Trust, National Association, as the Paying Agent, to collect the Redemption Price plus accrued and unpaid interest, if any, to, but not including, the Redemption Date at the addresses below:

Wilmington Trust, National Association

1100 North Market Street

Wilmington, Delaware 19890

Attention: Workflow Administration - 5th Floor

This Notice of Redemption has been sent to each Holder and shall constitute a “notice of redemption” under the Indenture. For questions about the transactions described in this Notice of Redemption, please contact Navios Maritime Acquisition Corporation, Investor Relations, at +1.212.906.8644 or info@navios-acquisition.com.

 

*

No representation is made as to the correctness or accuracy of the CUSIP number printed on this Notice of Redemption or on the Notes.


IMPORTANT NOTICE

For holders of Notes who have not established an exemption, payments made upon the redemption of the Notes may be subject to U.S. federal income tax backup withholding of 24% of the payments to be made, as and to the extent required by the provisions of the U.S. Internal Revenue Code. To establish an exemption from such withholding, holders of Notes should submit a completed and signed Internal Revenue Service Form W-9 (or applicable Form W-8) when surrendering their Notes for payment. Backup withholding is not an additional tax. Taxpayers may use amounts withheld as a credit against their U.S. federal income tax liability or may claim a refund of any excess amounts withheld by timely filing a claim for refund with the Internal Revenue Service.

 

Dated: August 26, 2021     By:   Navios Maritime Acquisition Corporation
      Navios Acquisition Finance (US) Inc.,

Exhibit 4.3

Private and Confidential

Date 25th August 2021

NAVIOS MARITIME ACQUISITION CORPORATION (1)

as Borrower

-and-

NAVIOS SHIPMANAGEMENT HOLDINGS CORPORATION (2)

as Lender

 

 

SUPPLEMENTAL AGREEMENT

 

 

in relation to a Loan Agreement

dated 19 March 2021

 

LOGO

PIRAEUS


Index

 

Clause        Page No  

1

  INTERPRETATION      2  

2

  AGREEMENT OF THE LENDER      2  

3

  CONDITIONS PRECEDENT      2  

4

  REPRESENTATIONS AND WARRANTIES      3  

5

  AMENDMENTS TO LOAN AGREEMENT AND OTHER SECURITY DOCUMENTS      4  

6

  FURTHER ASSURANCES      5  

7

  FEES AND EXPENSES      5  

8

  NOTICES      5  

9

  SUPPLEMENTAL      6  

10

  LAW AND JURISDICTION      6  


THIS SUPPLEMENTAL AGREEMENT is made on 25th August 2021

BETWEEN

 

(1)

NAVIOS MARITIME ACQUISITION CORPORATION, a corporation incorporated in the Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, as borrower (hereinafter called, the “Borrower”); and

 

(2)

NAVIOS SHIPMANAGEMENT HOLDINGS CORPORATION a corporation incorporated in the Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, as lender (hereinafter called, the “Lender”).

BACKGROUND

 

(A)

By a loan agreement dated 19 March 2021 (the “Loan Agreement”) and made between (1) the Borrower as borrower and (2) the Lender as lender, the Lender made available to the Borrower a term loan facility of up to USD100,000,000 upon the terms and for the purposes therein specified.

 

(B)

As security for the Borrower’s obligations under the Loan Agreement the following (amongst others) security documents have been executed in favour of the Lender (together, the “Existing Security Documents”):

 

  (a)

a first priority pledge dated 22 March 2021 of all of the partnership interests of and in Navios Maritime Midstream Partners L.P. of the Marshall Islands (“Midstream”) made by the Borrower and Navios Maritime Midstream Partners GP LLC (“GP LLC”) in favour of the Lender;

 

  (b)

an exchange option agreement (the “Exchange Option Agreement”) dated 22 March 2021 in respect of all of the partnership interests of and in Midstream made by the Borrower and Midstream with the Lender;

 

  (c)

a first priority charge dated 22 March 2021 of the shares of and in Cyrus Investments Corp. of Liberia made by Aegean Sea Maritime Holdings Inc. of the Marshall Islands (“Aegean”) in favour of the Lender;

 

  (d)

a first priority charge dated 22 March 2021 of the shares of and in Olivia Enterprises Corp. of Liberia made by Aegean in favour of the Lender; and

 

  (e)

an account pledge dated 22 March 2021 of an account of the Borrower with UBS AG in favour of the Lender.

 

(C)

The Borrower has requested that the Lender to give its consent to the following (together, the “Requests”): (a) release of the Existing Security Documents, (b) deletion of clause 4.7 (Exchange option – Midstream) of the Loan Agreement and (c) amendment of the repayment schedule of the Loan as follows:

 

  (i)

USD30,000,000 to be deemed to be on receipt by the Lender of 8,823,529 shares of and in the Borrower (the “Shares”);

 

  (ii)

USD35,000,000 to be prepaid on the date of this Supplemental Agreement; and

 

1


  (iii)

USD33,112,000 to be repaid on 7 January 2022.

 

(D)

This Supplemental Agreement sets out the terms and conditions on which the Lender agrees, with effect on and from the Effective Date (as hereinafter defined), to the requests of the Borrower set out in Recital (C) and to the consequential amendments to the Loan Agreement.

IT IS AGREED as follows:

 

1

INTERPRETATION

 

1.1

Defined expressions. Words and expressions defined in the Loan Agreement shall have the same meaning when used in this Supplemental Agreement unless the context otherwise requires.

 

1.2

Definitions. In this Supplemental Agreement, unless the contrary intention appears:

Effective Date” means the Banking Day on which all the conditions precedent referred to in Clause 3.1 have been fulfilled by the Borrower;

New Facility Agreements” means together (a) a facility agreement made or to be made between (i) the Borrower (as borrower) and (ii) Navios Maritime Partners LP, of the Marshall Islands (as lender) for a loan of up to USD45,000,000 and (b) two facility agreements made or to be made between (amongst others) (i) the Borrower (as borrower) and BNP Paribas S.A. (as lender) and (ii) the Borrower (as Borrower) and Hamburg Commercial Bank AG (as lender) for loans of up to USD 291,385,000 and in the singular means any of them; and

Released Parties” means together, the Borrower, Midstream, GP LLC and Aegean and in the singular means any one of them.

 

1.3

Application of construction and Interpretation provisions of Loan Agreement. Clause 1.3 of the Loan Agreement apply, with any necessary modifications, to this Supplemental Agreement.

 

2

AGREEMENT OF THE LENDER

 

2.1

Agreement of the Lender. The consent of the Lender to the Requests is conditional upon:

 

2.1.1

the Lender having received the documents and evidence specified in Clause 3.1 in form and substance satisfactory to the Lender;

 

2.1.2

the representations and warranties contained in Clause 4 being then true and correct as if each was made with respect to the facts and circumstances existing at such time; and

 

2.1.3

no Event of Default having occurred or will arise following the amendment of the Loan Agreement pursuant to this Supplemental Agreement.

 

2.2

Effective Date. The agreement of the Lender contained in Clause 2.1 shall have effect on and from the Effective Date.

 

3

CONDITIONS PRECEDENT

 

3.1

Conditions Precedent. The conditions referred to in Clause 2.1 are that the Lender shall have received the following documents:

 

2


3.1.1

Corporate documents

 

(a)

a certificate from a duly authorised officer of the Borrower confirming that none of the documents delivered to the Lender pursuant to paragraph (a) of schedule 2 of the Loan Agreement have been amended or modified in any way since the date of their delivery to the Lender, or copies, certified by a duly authorised officer of the Borrower as true, complete, accurate and neither amended nor revoked, of any documents which have been amended or modified;

 

3.1.2

Corporate authorities

 

(a)

a list of directors and officers of the Borrower specifying the names and positions of such persons, certified by an officer of the Borrower to be true, complete and up to date;

 

(b)

original resolutions of the directors of the Borrower approving this Supplemental Agreement and authorising the execution and delivery hereof and performance of the Borrower’s obligations hereunder, additionally certified by an officer of the Borrower as having been duly passed at a duly convened meeting of the directors and shareholders of Borrower and not having been amended, modified or revoked and being in full force and effect; and

 

(c)

an original of any power of attorney issued by the Borrower pursuant to such resolutions stated above;

 

3.1.3

New Facility Agreements

copies of the New Facility Agreements;

 

3.1.4

Prepayment of the Loan

 

(a)

evidence of the transfer of the Shares from the Borrower to the Lender; and

 

(b)

a prepayment of the Loan in an amount of USD35,000,000;

 

3.1.5

English legal opinion

if requested by the Lender, an opinion of Messrs Ince, special legal advisers to the Lender in respect of English law or confirmation that such opinion will be issued in the form required by the Lender;

 

3.1.6

London agent

documentary evidence that the agent for service of process named in Clause 18.2.1 of the Loan Agreement has accepted its appointment in respect of this Supplemental Agreement; and

 

3.2

Conditions Subsequent. The Borrower shall deliver or cause to be delivered to the Lender on, or as soon as practicable after, the Effective Date, the following additional documents and evidence:

 

3.2.1

the legal opinion referred to in Clause 3.1.5; and

 

3.2.2

the process agent acceptance letter referred to in Clause 3.1.6.

 

4

REPRESENTATIONS AND WARRANTIES

 

3


Repetition of Loan Agreement representations and warranties. The Borrower represents and warrants to the Lender that the representations and warranties in Clause 7 of the Loan Agreement, updated with appropriate modifications to refer to this Supplemental Agreement, remain true and not misleading if repeated on the date of this Supplemental Agreement with reference to the circumstances now existing.

 

5

AMENDMENTS TO LOAN AGREEMENT AND OTHER SECURITY DOCUMENTS

 

5.1

Specific amendments to Loan Agreement. With effect on and from the Effective Date the Loan Agreement shall be, and shall be deemed by this Supplemental Agreement to be, amended as follows:

 

5.1.1

by deleting Clause 4.1 thereof and replacing it with the following:

“4.1 Repayment

Subject as otherwise provided in this Agreement, the Borrower will repay the Loan in full on 7 January 2022”;

 

5.1.2

by deleting (a) the following definitions contained in clause 1.2 (Definitions) thereof: Gross Aggregate Asset Value, Limited Partnership Agreement, Midstream Partnership Interests Pledge, Partnership Interests and Springing Maturity Date and all such references throughout the Loan Agreement and (b) clause 4.7 (Exchange option – Midstream) and sub-clause 4.4.5 of clause 4.4 (Mandatory Prepayment) thereof; and

 

5.1.3

by construing references throughout to “this Agreement”, “hereunder” and other like expressions as if the same referred to the Loan Agreement as amended and supplemented by this Supplemental Agreement.

All other terms and conditions of the Loan Agreement shall remain unaltered and in full force and effect.

 

5.2

Repayment of USD30,000,000 of the Loan

With effect from the Effective Date and in consideration of the transfer of the Shares from the Borrower to the Lender, the Lender hereby agrees that part of the Loan in the amount of USD30,000,000 shall be deemed to have been repaid.

 

5.3

Release of Released Parties

With effect on and from the Effective Date and without prejudice to the obligations of the Borrower under the Loan Agreement the Lender hereby:

 

  (a)

releases and discharges each Released Party from all its obligations under the Existing Security Documents with the exception of any indemnities contained in any of the Existing Security Documents which are intended to survive; and

 

  (b)

reassigns and releases to each Released Party all its right, title and interest in and to all the property assigned to the Lender or charged in favour of the Lender under the Existing Security Documents including, without limitation, any insurances.

The Lender makes and gives no representation, warranty or covenant in relation to the property reassigned herein except that they have not assigned or charged that property.

 

4


6

FURTHER ASSURANCES

 

6.1

Borrower to execute further documents etc. The Borrower shall:

 

  (a)

execute and deliver to the Lender (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Lender may, in any particular case, specify; and

 

  (b)

effect any registration or notarisation, give any notice or take any other step, which the Lender may, by notice to the Borrower or other party, specify

for any of the purposes described in Clause 6.2 or for any similar or related purpose.

 

6.2

Purposes of further assurances. Those purposes are:

 

  (a)

validly and effectively to create any Encumbrance or right of any kind which the Lender intended should be created by or pursuant to the Loan Agreement or any other Security Document, each as amended and supplemented by this Supplemental Agreement; and

 

  (b)

implementing the terms and provisions of this Supplemental Agreement.

 

6.3

Terms of further assurances. The Lender may specify the terms of any document to be executed by the Borrower or any other party under Clause 6.1, and those terms may include any covenants, powers and provisions which the Lender considers appropriate to protect its interests.

 

6.4

Obligation to comply with notice. The Borrower shall comply with a notice under Clause 6.1 by the date specified in the notice.

 

6.5

Additional corporate action. At the same time as the Borrower or any other party deliver to the Lender any document executed under Clause 6.1(a), the Borrower or such other party shall also deliver to the Lender a certificate signed by the Borrower’s directors, or 2 of that other party’s directors which shall:

 

  (a)

set out the text of resolutions of the Borrower or that other party’s directors specifically authorising the execution of the document specified by the Lender; and

 

  (b)

state that either the resolution was duly passed at a meeting of the directors validly convened and held throughout which a quorum of directors entitled to vote on the resolution was present or that the resolution has been signed by all the directors and is valid under the Borrower’s or that other party’s articles of association or other constitutional documents.

 

7

FEES AND EXPENSES

 

7.1

Fees and Expenses. The provisions of Clause 5 (Fees and expenses) of the Loan Agreement shall apply to this Supplemental Agreement as if they were expressly incorporated in this Supplemental Agreement with any necessary modifications.

 

8

NOTICES

General. The provisions of Clause 16 (Notices) of the Loan Agreement (as amended by this Supplemental Agreement) shall apply to this Supplemental Agreement as if they were expressly incorporated in this Supplemental Agreement with any necessary modifications.

 

5


9

SUPPLEMENTAL

 

9.1

Counterparts. This Supplemental Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of the Supplemental Agreement.

 

9.2

Third party rights. A person who is not a party to this Supplemental Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Supplemental Agreement.

 

10

LAW AND JURISDICTION

Incorporation of the Loan Agreement provisions. The provisions of Clause 17 (Governing Law) and Clause 18 (Jurisdiction) of the Loan Agreement shall apply to this Supplemental Agreement as if they were expressly incorporated in this Supplemental Agreement with any necessary modifications.

 

6


IN WITNESS whereof the parties to this Supplemental Agreement have caused this Supplemental Agreement to be duly executed as a deed on the date first above written.

THE BORROWER

 

SIGNED and delivered as a Deed    )    /s/ Leonidas Korres                
by Leonidas Korres    )   
for and on behalf of    )   
NAVIOS MARITIME ACQUISITION    )   
CORPORATION    )   
Witnessed by: Foteini Papargyri    )    /s/ Foteini Papargyri                

Signature

Name:

Address: Akti Miaouli 85 Piraeus

THE LENDER

 

SIGNED and delivered as a Deed by    )    /s/ George Akhniotis                
and by George Akhniotis    )   
for and on behalf of    )   

NAVIOS SHIPMANAGEMENT

HOLDINGS CORPORATION

   )   
Witnessed by: Foteini Papargyri    )    /s/ Foteini Papargyri                

Signature

Name:

Address: Akti Miaouli 85 Piraeus

 

7

Exhibit 4.4

Dated 23 August 2021

NAVIOS MARITIME ACQUISITION CORPORATION

as Borrower

and

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

and

HAMBURG COMMERCIAL BANK AG

as Agent, Mandated Lead Arranger

and Security Trustee

LOAN AGREEMENT

relating to a secured term

loan facility of up to US$195,385,000

to provide finance secured on seven tankers

 

LOGO


Index

 

Clause        Page  

1

  Intepretation      3  

2

  Facility      25  

3

  Position of the Lenders      25  

4

  Drawdown      26  

5

  Interest      27  

6

  Interest Periods      30  

7

  Default Interest      30  

8

  Repayment and Prepayment      32  

9

  Conditions Precedent      35  

10

  Representations and Warranties      36  

11

  General Undertakings      40  

12

  Corporate Undertakings      46  

13

  Insurance      47  

14

  Ship Covenants      54  

15

  Security Cover      60  

16

  Payments and Calculations      63  

17

  Application of Receipts      65  

18

  Application of Earnings      66  

19

  Events of Default      69  

20

  Fees and Expenses      74  

21

  Indemnities      75  

22

  No Set-Off or Tax Deduction      78  

23

  Illegality, etc.      81  

24

  Increased Costs      81  

25

  Set-Off      83  

26

  Transfers and Changes in Lending Offices      84  

27

  Variations and Waivers      89  

28

  Notices      92  

29

  Supplemental      95  

30

  Law and Jurisdiction      96  

Schedules

  

Schedule 1 Lenders and Commitments

     98  

Schedule 2 Drawdown Notice

     100  

Schedule 3 Condition Precedent Documents

     102  

Part A

     104  

Part B

     106  

Schedule 4 Mandatory Cost Formula

     108  

Schedule 5 Transfer Certificate

     110  

Schedule 6 Power of Attorney

     112  

Schedule 7 Details of Ships and other definitions

     114  

Schedule 8 Form of Compliance Certificate

     116  

 

Execution       

Execution Pages

     118  


THIS AGREEMENT is made on          August 2021

PARTIES

 

(1)

Navios Maritime Acquisition Corporation, a corporation incorporated in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960, as Borrower;

 

(2)

THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 (Lenders and Commitments), as Lenders;

 

(3)

HAMBURG COMMERCIAL BANK AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, as Agent;

 

(4)

HAMBURG COMMERCIAL BANK AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, as Mandated Lead Arranger; and

 

(5)

HAMBURG COMMERCIAL BANK AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, as Security Trustee.

BACKGROUND

The Lenders have agreed to make available to the Borrower a secured post-delivery term loan facility in:

 

(a)

one senior advance in an amount of up to the lesser of (i) US$164,310,000 and (ii) 62.5 per cent. of the aggregate Initial Market Value of the Ships; and

 

(b)

one junior advance in an amount of up to the lesser of (i) US$31,075,000 and (ii) 12.5 per cent. of the aggregate Initial Market Value of the Ships,

for the purpose of refinancing the Existing Indebtedness secured on Ship A, Ship B, Ship C, Ship D, Ship E, Ship F and Ship G.

OPERATIVE PROVISIONS

IT IS AGREED as follows:

 

1

INTEPRETATION

 

1.1

Definitions

Subject to Clause 1.5 (General Interpretation), in this Agreement:

Account” means each of the Earnings Accounts, the Minimum Liquidity Account, the Reserve Account and the Retention Account and, in the plural, means all of them;

Account Bank” means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, or any successor;

Account Pledge” means, in relation to each Account, a pledge agreement creating security in respect of that Account and/or any time deposit held with the Account Bank in the Agreed Form and, in the plural, means all of them;

 

3


Accounting Information” means the annual audited consolidated accounts or, as the case may be, the semi–annual unaudited consolidated accounts to be provided by the Borrower to the Agent in accordance with Clause 11.6 (Provision of financial statements) and 11.7 (Form of financial statements), respectively, of the Loan Agreement;

Additional Minimum Liquidity Amount” has the meaning given to such term in Schedule 7 (Details of Ship and other definitions);

Advance” means a Senior Advance or a Junior Advance (as the case may be);

Affected Lender” has the meaning given in Clause 5.7 (Market disruption);

Agency and Trust Agreement” means the agency and trust agreement executed or to be executed between the Borrower and the Creditor Parties in the Agreed Form;

Agent” means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

Agreed Form” means in relation to any document, that document in the form approved in writing by the Agent (acting on the instructions of the Majority Lenders) or as otherwise approved in accordance with any other approval procedure specified in any relevant provisions of any Finance Document;

Applicable Lender” has the meaning given in Clause 5.2 (Normal rate of interest);

Approved Broker” means each of Arrow Valuations Ltd, Barry Rogliano Salles, H. Clarkson & Co. Ltd., Maersk Brokers K/S, Howe Robinson & Co Ltd London, Fearnleys and Simpson Spence Young and, in the plural, means all of them;

Approved Classification Society” means a first class classification society acceptable to the Agent, being one of Lloyd’s Registry, American Bureau of Shipping (ABS), Det Norske Veritas (DNV), Bureau Veritas (BV), Korean Registry of Shipping, Nippon Kaiji Kyoykai, Registro Italiano Navale or China Classification or any other member of the International Association of Classification Societies;

“Approved Flag” means, in relation to a Ship, the Hong Kong, Liberian, Maltese, Marshall Islands flag or such other flag as the Agent may approve (with the authorisation of the Majority Lenders) as the flag on which that Ship is or, as the case may be, shall be registered;

“Approved Flag State” means, in relation to a Ship, Hong Kong, the Republic of Liberia, Malta, the Republic of the Marshall Islands or any other country in which the Agent may approve (with the authorisation of the Majority Lenders) that that Ship is or, as the case may be, shall be registered;

“Approved Manager” means:

 

  (a)

in respect of a Ship, Navios Tankers Management Inc., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960, or any other company which is a subsidiary or affiliate of Navios Shipmanagement Inc. or of Angeliki Frangou or any other company or sub-manager which the Agent (acting on the instructions of the Majority Lenders) may approve from time to time as the commercial and/or technical manager of that Ship;

 

4


  (b)

in respect of Ship A, each of Synergy Marine Ptd Ltd., Synergy Maritime Private Limited and Synergy Maritime Recruitment Services Private Limited as the sub-managers of Ship A;

 

  (c)

in respect of Ship B and Ship C, each of Anglo-Eastern (Labuan) Limited, Anglo-eastern Tanker Management (Hong Kong) Limited, Anglo-eastern Ship Management (India) Pvt. Ltd and Anglo-Eastern Tanker Crew Management Philippines Inc. as the sub-managers of Ship B and Ship C;

 

  (d)

in respect of Ship D and Ship E, Synergy Maritime Recruitment Services Private Limited as the crew sub-manager of Ship D and Ship E;

Approved Manager’s Undertaking” means, in relation to a Ship, a letter of undertaking including (inter alia) an assignment of the Approved Manager’s rights, title and interest in the Insurances of that Ship executed or to be executed by the Approved Manager in favour of the Security Trustee in the Agreed Form agreeing certain matters in relation to the Approved Manager serving as manager and subordinating its rights against that Ship and the Owner which is the owner thereof to the rights of the Creditor Parties under the Finance Documents and, in the plural, means all of them;

Assignable Charter” means any time charterparty, consecutive voyage charter or contract of affreightment in respect of a Ship having a duration (or capable of exceeding a duration) equal or more than 12 months and any guarantee of the obligations of the charterer under such charter or any bareboat charter in respect of that Ship and any guarantee of the obligations of the charterer under such bareboat charter, entered or to be entered into by the Owner which is the owner thereof and a charterer or, as the context may require, bareboat charterer and, in the plural, means all of them;

“Availability Period” means the period commencing on the date of this Agreement and ending on:

 

  (a)

15 December 2021 (or such later date as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrower); or

 

  (b)

if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

Basel III” means, together:

 

  (a)

the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

 

  (b)

the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement—Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

 

5


  (c)

any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”;

Break Costs” has the meaning given in Clause 21.2 (Break costs);

Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business:

 

  (a)

in Hamburg, Piraeus, Athens, New York and London regarding the fixing of any interest rate which is required to be determined under this Agreement or any Finance Document;

 

  (b)

in Hamburg, New York, Athens and Piraeus in respect of any payment which is required to be made under a Finance Document; and

 

  (c)

in Hamburg, Athens and Piraeus regarding any other action to be taken under this Agreement or any other Finance Document;

Cancellation Notice” has the meaning given in Clause 8.6 (Optional facility cancellation);

Change of Control” means, in relation to:

 

  (a)

an Owner, a change in:

 

  (i)

the beneficial ownership of any of the shares in that Owner; or

 

  (ii)

the legal ownership of any of those shares; or

 

  (b)

the Borrower, a change which results in Mrs Angeliki Frangou either directly or indirectly (through entities owned and controlled by her or trusts or foundations of which she is the beneficiary) and/or Navios Maritime Holdings Inc. or any of their affiliates together being the ultimate beneficial owners of, or having ultimate control of the voting rights attaching to, less than 10 per cent. of all the issued shares in the Borrower.

Charterparty Assignment” means, in relation to an Assignable Charter, an assignment of the rights of the Owner who is a party to that Assignable Charter under that Assignable Charter and any guarantee of such Assignable Charter executed or to be executed by that Owner in favour of the Security Trustee in the Agreed Form and, in the plural, means all of them;

Code” means the US Internal Revenue Code of 1986;

Collateral Guarantee” means, in relation to each Owner, a guarantee of the obligations of the Borrower under this Agreement and the other Finance Documents to which the Borrower is a party, in the Agreed Form;

Commitment” means, in relation to a Lender, the amount in respect of each Advance set opposite its name in Schedule 1 (Lenders and commitments), or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

 

6


Compliance Certificate” means a certificate in the form set out in Schedule 8 (Form of Compliance Certificate) (or in any other form which the Agent approves or requires) to be provided at the times and in the manner set out in Clause 11.22 (Compliance Certificate);

Contractual Currency” has the meaning given in Clause 21.6 (Currency Indemnity);

Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

Correction Rate” means, at any relevant time in relation to an Applicable Lender, the amount (expressed as a rate per annum) by which that Lender’s Cost of Funding exceeds LIBOR;

Cost of Funding” means, in relation to a Lender, the rate per annum determined by that Lender to be the rate at which deposits in Dollars are offered to that Lender by leading banks in the Relevant Interbank Market at that Lender’s request at or about the Specified Time on the Quotation Date for an Interest Period and for a period equal to that Interest Period and for delivery on the first Business Day of it, or, if that Lender uses other ways to fund deposits in Dollars, such rate as determined by that Lender to be the Lender’s cost of funding deposits in Dollars for that Interest Period, such determination being conclusive and binding in the absence of manifest error;

Creditor Party” means the Agent, the Security Trustee, the Mandated Lead Arranger or any Lender, whether as at the date of this Agreement or at any later time and, in the plural, means all of them;

Disruption Event” means either or both of:

 

  (a)

a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

 

  (b)

the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other, Party:

 

  (i)

from performing its payment obligations under the Finance Documents; or

 

  (ii)

from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted;

Dollars” and “$” means the lawful currency for the time being of the United States of America;

Drawdown Date” means, the date requested by the Borrower for the Advances to be borrowed, or (as the context requires) the date on which the Advances are actually borrowed;

Drawdown Notice” means a notice in the form set out in Schedule 2 (Drawdown Notice )(or in any other form which the Agent approves or reasonably requires);

 

7


Earnings” means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Owner owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

 

  (a)

except to the extent that they fall within paragraph (b);

 

  (i)

all freight, hire and passage moneys;

 

  (ii)

compensation payable to that Owner or the Security Trustee in the event of requisition of its Ship for hire;

 

  (iii)

remuneration for salvage and towage services;

 

  (iv)

demurrage and detention moneys;

 

  (v)

damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and

 

  (vi)

all moneys which are at any time payable under any Insurances in respect of loss of hire; and

 

  (b)

if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

Earnings Account” means, in relation to a Ship, an account in the name of the Owner owning that Ship with the Account Bank designated “[name of relevant Owner] - Earnings Account”, or any other account (with that or another office of the Account Bank) which replaces such account and is designated by the Agent as that Earnings Account for the purposes of this Agreement;

Environmental Claim” means:

 

  (a)

any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

 

  (b)

any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

Environmental Incident” means, in relation to a Ship:

 

  (a)

any release of Environmentally Sensitive Material from that Ship; or

 

8


  (b)

any incident in which Environmentally Sensitive Material is released from a vessel other than that Ship and which involves a collision between that Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which that Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or that Ship and/or the Owner which is the owner thereof and/or any operator or manager of that Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

 

  (c)

any other incident in which Environmentally Sensitive Material is released otherwise than from that Ship and in connection with which that Ship is actually or potentially liable to be arrested and/or where the Owner which is the owner thereof and/or any operator or manager of that Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

Environmental Law” means any law, regulation, convention and agreement relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

Event of Default” means any of the events or circumstances described in Clause 19.1 (Events of Default);

Existing Bond” means the indenture dated as of 13 November 2013, as amended and supplemented entered into by NMAC and Navios Acquisition Finance (US) Inc. in respect of the 8.125% First Priority Ship Mortgage Notes due 2021 in respect of Ship A, Ship B, Ship, C and Ship E.

Existing Bond Indebtedness” means, at any date, any outstanding Financial Indebtedness (or part thereof) on that date under the Existing Bond.

Existing Indebtedness” means together the Existing Bond Indebtedness and the Existing Loan Indebtedness.

Existing Loan Indebtedness” means, at any date, any outstanding Financial Indebtedness (or part thereof) on that date under the Existing Loan Agreements;

Existing Loan Agreements” means together:

 

  (a)

the loan agreement dated 7 June 2017 secured against Ship F and Ship G and made between (i) Amorgos Shipping Corporation and Andros Shipping Corporation as joint and several borrowers and (ii) Hamburg Commercial Bank AG as lender, agent and security trustee; and

 

  (b)

the loan agreement dated 8 October 2019 (as amended and restated on 16 October 2020) secured against Ship D and made between (i) Lefkada Shipping Corporation as borrower and (ii) Hamburg Commercial Bank AG as lender, agent and security trustee.

Existing Security Interest” means any Security Interest created pursuant to the Existing Loan Agreements or the Existing Bond;

FATCA” means:

 

  (a)

sections 1471 to 1474 of the Code or any associated regulations;

 

9


  (b)

any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or

 

  (c)

any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA;

FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction;

Final Repayment Date” means:

 

  (a)

in respect of the Senior Advance, the date falling on the earlier of (i) 29 April 2025 and (ii) 4 years from the Drawdown Date; and

 

  (b)

in respect of the Junior Advance, the date falling on the earlier of (i) 29 April 2024 and (ii) 3 years from the Drawdown Date.

Finance Documents” means together:

 

  (a)

this Agreement;

 

  (b)

the Agency and Trust Agreement;

 

  (c)

the Account Pledges;

 

  (d)

the Collateral Guarantees;

 

  (e)

the Mortgages;

 

  (f)

the General Assignments;

 

  (g)

the Charterparty Assignments;

 

  (h)

the Approved Manager’s Undertakings; and

 

  (i)

any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower, an Owner, the Approved Manager or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition and, in the singular, means any of them;

Financial Indebtedness” means, in relation to a person (the “debtor”), any actual or contingent liability of the debtor:

 

  (a)

for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

 

  (b)

under any loan stock, bond, note or other security issued by the debtor;

 

10


  (c)

under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

 

  (d)

under a financial lease, a deferred purchase consideration arrangement (in each case, other than in respect of assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

 

  (e)

under any foreign exchange transaction, any interest or currency swap, exchange or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

 

  (f)

under receivables sold or discounted (other than any receivables to the extent that they are sold on a non-recourse basis); or

 

  (g)

under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (f) if the references to the debtor referred to the other person;

Financial Year” means, in relation to the Borrower, an Owner and the Group, each period of one year commencing on 1 January in respect of which its individual or, as the case may be, consolidated accounts are or ought to be prepared;

“Fleet Vessels” means all of the vessels (including, but not limited to, the Ships) from time to time wholly owned by members of the Group and, in the singular, means any of them;

General Assignment” means, in relation to a Ship, a general assignment of (inter alia) the Earnings, the Insurances and any Requisition Compensation relative to that Ship in the Agreed Form and, in the plural, means all of them;

Group” means the Borrower, each Owner and all subsidiaries directly or indirectly owned by the Borrower and “member of the Group” shall be construed accordingly;

Initial Market Value” means, in relation to a Ship, the Market Value thereof calculated in accordance with the valuation(s) relative thereto referred to in paragraph 5 of Schedule 3 (Condition Precedent Documents), Schedule 1Part B;

Instalment” has the meaning given in Clause 8.1 (Amount of Instalments);

Insurances” means, in relation to a Ship:

 

  (a)

all policies and contracts of insurance (including, without limitation, any loss of hire insurance) and any reinsurance, policies or contracts, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, its Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and

 

  (b)

all rights (including, without limitation, any and all rights or claims which the Owner owning that Ship may have under or in connection with any cut-through clause relative to any reinsurance contract relating to the aforesaid policies or contracts of insurance) and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement;

 

11


Interest Period” means a period determined in accordance with Clause 6 (Interest Periods);

Interpolated Screen Rate” means, in relation to an Interest Period, the rate which results from interpolating on a linear basis between:

 

  (a)

the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than that Interest Period; and

 

  (b)

the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds that Interest Period,

each as of the Specified Time on the Quotation Date for that Interest Period;

ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation as the same may be amended or supplemented from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code);

ISPS Code” means the International Ship and Port Facility Security Code as adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time;

ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

Junior Advance” means the Maximum Junior Advance Amount borrowed or to be borrowed by the Borrower under this Agreement or, as the context may require, the principal amount outstanding of the Junior Advance under this Agreement;

Junior Repayment Date” means 29 October 2021 and the dates falling at three-monthly intervals thereafter and the Final Repayment Date in respect of the Junior Advance;

Lender” means, subject to Clause 26.6 (Lenders re – Organisation), a bank or financial institution listed in Schedule 1 (Lenders and Commitments)and acting through its branch indicated in Schedule 1 (Lenders and Commitment) (or through another branch notified to the Agent under Clause 26.16 (Change of Lending office)) or its transferee, successor or assign;

LIBOR” means, for an Interest Period:

 

  (a)

the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on the Screen Rate; or;

 

  (b)

(if no Screen Rate is available for that Interest Period), the applicable Interpolated Screen Rate for that Interest Period; or

 

12


  (c)

if no Screen Rate is available and it is not possible to calculate an Interpolated Screen Rate for that Interest Period, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards, if necessary, to the nearest fifth decimal point) of the rate(s) per annum notified to the Agent by each, or if there is only one Reference Bank, that Reference Bank as the rate at which deposits in Dollars are offered to that Reference Bank by leading banks in the Relevant Interbank Market at that Reference Bank’s request,

at or about the Specified Time on the Quotation Date for that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it and, if any such rate is below zero, LIBOR will be deemed to be zero;

Liquid Funds” means, as at the date of calculation or, as the case may be, for any accounting period, the aggregate of any cash deposits legally or beneficially held by all members of the Group which are freely available at the relevant member’s disposal and including any funds held with the Agent and other banks from time to time as minimum liquidity requirements.

“Loan” means the principal amount for the time being outstanding under this Agreement;

“Loan Shortfall Prepayment Date” has the meaning given in Clause 15.2 (Prepayment; provision of additional security);

“LSW 1189” means the London Standard Wording for marine insurances which incorporates the German Direct Mortgage Clause;

“Major Casualty” means, in relation to a Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

“Majority Lenders” means:

 

  (a)

before an Advance is made, Lenders whose Commitments total 66 2/3 per cent. of the Total Commitments; and

 

  (b)

after an Advance is made, Lenders whose Contributions total 66 2/3 per cent. of the Loan;

“Mandated Lead Arranger” means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, or any successor;

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory Cost Formula);

“Mandatory Minimum Liquidity Amount” has the meaning given to such term in Schedule 7 (Details of Ship and other definitions);

“Margin” means:

 

  (a)

in respect of the Senior Advance, 3.90 per cent. per annum; and

 

  (b)

in respect of the Junior Advance, 7.00 per cent. per annum.

“Market Value” means, in relation to a Ship or a Fleet Vessel, the market value thereof determined in accordance with Clause 15.3 (Valuation of Ships);

 

13


Market Value Adjusted Leverage” means, at any relevant time, the ratio of:

 

  (a)

the Total Debt less cash (which shall have the meaning given thereto under the US GAAP); to

 

  (b)

the Market Value Adjusted Total Assets less cash (which shall have the meaning given thereto under the US GAAP).

Market Value Adjusted Total Assets” means, at any time, Total Assets adjusted to reflect the difference between the book values of all Fleet Vessels and the aggregate Market Value of all Fleet Vessels (taking into account the benefit of any charters).

Material Adverse Change” means any event or series of events which, in the opinion of the Majority Lenders, is likely to have a Material Adverse Effect;

“Material Adverse Effect” means, in the reasonable opinion of the Majority Lenders, a material adverse effect on:

 

  (a)

the business, property, assets, liabilities, operations or condition (financial or otherwise) of the Borrower and/or any Security Party taken as a whole;

 

  (b)

the ability of the Borrower, the Approved Manager and/or any Security Party to (i) comply with or perform any of its obligations or (ii) discharge any of its liabilities, under any Finance Document as they fall due; or

 

  (c)

the validity, legality or enforceability of any Finance Document;

Maximum Junior Advance Amount” means an amount of up to the lesser of (i) US$31,075,000 and (ii) 12.5 per cent. of the aggregate Initial Market Value of the Ships;

Maximum Senior Advance Amount” means an amount up to the lesser of (i) US$164,310,000 and (ii) 62.5 per cent. of the aggregate Initial Market Value of the Ships;

Minimum Liquidity Account” means an account in the name of the Borrower with the Account Bank designated “Navios Maritime Acquisition Corporation – Minimum Liquidity Account”, or any other account (with that or another office of the Account Bank) which replaces such account and is designated by the Agent as the Minimum Liquidity Account for the purposes of this Agreement;

Mortgage” means, in relation to a Ship, the first preferred ship mortgage or, as the case may be, first priority ship mortgage and deed of covenants collateral thereto, on that Ship in the Agreed Form and, in the plural, means all of them;

Mortgaged Ship” means a Ship which is subject to a Mortgage at the relevant time and, in the plural, means all of them;

Negotiation Period” has the meaning given in Clause 5.10 (Negotiation of alternative rate of interest);

 

14


Net Worth” means the amount by which the Total Assets (based on book values) exceed the Total Liabilities on a consolidated group level.

Notifying Lender” has the meaning given in Clause 21.2 (Break costs), Clause 23.1 (Illegality) or Clause 24.1 (Increased costs) as the context requires;

Owner” means each of Owner A, Owner B, Owner C, Owner D, Owner E, Owner F and Owner G, and, in the plural, means all of them;

Owner A” means Samos Shipping Corporation, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960;

Owner B” means Shinyo Saowalak Limited, a corporation incorporated and existing under the laws of the British Virgin Islands whose registered address is at Kingston Chambers, PO Box 173, Tortola, Road Town, BVI;

Owner C” means Shinyo Kieran Limited, a corporation incorporated and existing under the laws of the British Virgin Islands whose registered address is at Kingston Chambers, PO Box 173, Tortola, Road Town, BVI;

Owner D” means Lefkada Shipping Corporation, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960;

Owner E” means Tilos Shipping Corporation, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960;

Owner F” means Amorgos Shipping Corporation, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960;

Owner G” means Andros Shipping Corporation, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Marshall Islands MH96960;

Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union;

Party” means a party to a Finance Document;

Payment Currency” has the meaning given in Clause 21.6 (Currency Indemnity);

Permitted Security Interests” means:

 

  (a)

Security Interests created by the Finance Documents;

 

  (b)

at any time prior to or on the Drawdown Date, any Existing Security Interest;

 

  (c)

liens for unpaid master’s and crew’s wages in accordance with usual maritime practice;

 

15


  (d)

liens for salvage;

 

  (e)

liens arising by operation of law for not more than one month’s prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;

 

  (f)

liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the relevant Owner in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.15(d) (Restrictions on Chartering, appointment of managers etc.);

 

  (g)

any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while an Owner is actively prosecuting or defending such proceedings or arbitration in good faith; and

 

  (h)

Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made.

Pertinent Document” means:

 

  (a)

any Finance Document;

 

  (b)

any policy or contract of insurance contemplated by or referred to in Clause 13 (Insurance)or any other provision of this Agreement or another Finance Document;

 

  (c)

any other document contemplated by or referred to in any Finance Document; and

 

  (d)

any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (b) or (c);

Pertinent Jurisdiction” in relation to a company, means:

 

  (a)

England and Wales;

 

  (b)

the country under the laws of which the company is incorporated or formed;

 

  (c)

a country in which the company has the centre of its main interests or which the company’s central management and control is or has recently been exercised;

 

  (d)

a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

 

  (e)

a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

 

16


  (f)

a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company, whether as a main or territorial or ancillary proceedings, or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c);

Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a reasonable determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

Prepayment Notice” has the meaning given in Clause 8.5 (Conditions for voluntary prepayment);

Quotation Date” means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the Relevant Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

“Reference Banks” means, subject to Clause 26.19 (Replacement of a Reference Bank), together, the Hamburg branch of Hamburg Commercial Bank AG, the head office of any other bank which is a Lender at the relevant time (unless such Lender has advised the Agent in writing that it does not wish to be a Reference Bank) and any of their respective successors;

“Relevant Interbank Market” means the London interbank market;

Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;

Relevant Person” has the meaning given in Clause 19.9 (Relevant Persons);

Replacement Benchmark” means a benchmark rate which is:

 

  (a)

formally designated, nominated or recommended as the replacement for a Screen Rate by:

 

  (i)

the administrator of that Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Screen Rate); or

 

  (ii)

any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;

 

  (b)

in the opinion of the Majority Lenders and the Borrower, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Screen Rate; or

 

  (c)

in the opinion of the Majority Lenders and the Borrower, an appropriate successor to a Screen Rate.

 

17


Repayment Date” means the Senior Repayment Date or the Junior Repayment Date (as the case may be);

Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

Reserve Account” means an account in the name of the Borrower with the Account Bank designated “Navios Maritime Acquisition Corporation – Reserve Account”, or any other account (with that or another office of the Account Bank) which replaces this account and is designated by the Agent as the Reserve Account for the purposes of this Agreement;

Reserve Amount” has the meaning given to such term in Schedule 7(Details of Ship and other definitions);

Retention Account” means an account in the name of the Borrower with the Account Bank designated “ Navios Maritime Acquisition Corporation – Retention Account”, or any other account (with that or another office of the Account Bank) which replaces this account and is designated by the Agent as the Retention Account for the purposes of this Agreement;

Screen Rate” means the London interbank offered rate administered by the ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower;

Screen Rate Replacement Event” means, in relation to a Screen Rate:

 

  (a)

the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Majority Lenders, and the Borrower materially changed;

 

  (b)

 

  (i)

 

  (A)

the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

 

  (B)

information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;

 

  (ii)

the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

 

18


  (iii)

the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

 

  (iv)

the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or

 

  (c)

in the opinion of the Majority Lenders and the Borrower, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.

Secured Liabilities” means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Cover Ratio” means, at any relevant time, the aggregate of (i) the aggregate of the Market Value of the Mortgaged Ships, (ii) the aggregate credit balances standing at such time to the credit of the Retention Account and the Reserve Account and (iii) the net realisable value of any additional security provided at that time under Clause 15 (Security Cover) at that time expressed as a percentage of the Loan;

Security Interest” means:

 

  (a)

a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; and

 

  (b)

the rights of a plaintiff under an action in rem;

Security Party” means the Borrower, each Owner and any other person (except a Creditor Party or the Approved Manager) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of “Finance Documents”;

Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the other Creditor Parties that:

 

  (a)

all amounts which have become due for payment by the Borrower, the Approved Manager or any Security Party under the Finance Documents have been paid;

 

  (b)

no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

 

  (c)

neither the Borrower, the Approved Manager nor any Security Party has any future or contingent liability under Clauses 20 (Fees and Expenses), 21 (Indemnities) or 22 (No Set-Off of Tax Deduction) or any other provision of this Agreement or another Finance Document; and

 

  (d)

the Agent, the Mandated Lead Arranger, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower, the Approved Manager or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

 

19


Security Trustee” means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

Senior Advance” means the Maximum Senior Advance Amount borrowed or to be borrowed by the Borrower under this Agreement or, as the context may require, the principal amount outstanding of the Senior Advance under this Agreement;

“Senior Advance Security Cover Ratio” means, at any relevant time, the aggregate of (i) the aggregate of the Market Value of the Mortgaged Ships, (ii) the aggregate credit balances standing at such time to the credit of the Retention Account and the Reserve Account and (iii) the net realisable value of any additional security provided at that time under Clause 15 (Security Cover) at that time expressed as a percentage of the Senior Advance;

“Senior Advance Shortfall Prepayment Date” has the meaning given in Clause 15.2 (Prepayment; provision of additional security);

Senior Balloon Instalment” has the meaning given in Clause 8.1 (Amount of Instalments);

Senior Repayment Date” means 29 October 2021 and the dates falling at three-monthly intervals thereafter and the Final Repayment Date in respect of the Senior Advance;

Servicing Bank” means the Agent or the Security Trustee;

Ship” means each of Ship A, Ship B, Ship C, Ship D, Ship E, Ship F and Ship G, and, in the plural, means all of them;

Ship A” has the meaning ascribed thereto in Schedule 7 (Details of Ships);

Ship B” has the meaning ascribed thereto in Schedule 7 (Details of Ships);

Ship C” has the meaning ascribed thereto in Schedule 7 (Details of Ships);

Ship D” has the meaning ascribed thereto in Schedule 7 (Details of Ships);

Ship E” has the meaning ascribed thereto in Schedule 7 (Details of Ships);

Ship F” has the meaning ascribed thereto in Schedule 7 (Details of Ships);

Ship G” has the meaning ascribed thereto in Schedule 7 (Details of Ships);

 

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Specified Time” means 11.00 a.m. London time;

Total Assets” means, as at the date of calculation or, as the case may be, for any accounting period, the total assets of the Group (including, without limitation, the Ships) as at that date or for that period as shown in the most recent Accounting Information delivered by the Borrower pursuant to Clause 11.6 (Provision of financial statements);

Total Debt” means, as at the date of calculation or, as the case may be, for any accounting period, the total debt of the Group as at that date or for that period as shown in the most recent Accounting Information delivered by the Borrower pursuant to Clause 11.6 (Provision of financial statements);

Total Liabilities” means, as at the date of calculation or, as the case may be, for any accounting period, the total liabilities of the Group as at that date or for that period as shown in the most recent Accounting Information delivered by the Borrower pursuant to Clause 11.6 (Provision of financial statements);

Total Loss” means, in relation to a Ship:

 

  (a)

actual, constructive, compromised, agreed or arranged total loss of that Ship;

 

  (b)

any expropriation, confiscation, requisition or acquisition of that Ship, whether for full or part consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority unless it is within one month from the date of such occurrence redelivered to the full control of the Owner owning that Ship excluding a requisition for hire a fixed period not exceeding 90 days without any right to an extension;

 

  (c)

any condemnation of that Ship by any tribunal or by any person or person claiming to be a tribunal; and

 

  (d)

any arrest, capture, seizure, confiscation or detention of that Ship (including any hijacking or theft) unless it is within the Relevant Period redelivered to the full control of the Owner owning that Ship;

Relevant Period” means:

 

  (a)

in the case of any arrest, capture, seizure, confiscation or detention of a Ship (including any hijacking or theft), other than piracy, within 90 days; and

 

  (b)

in the case of piracy, if the relevant underwriters confirm to the Agent in writing prior to the end of the 90-day period referred to in (i) above that the relevant Ship is subject to an approved piracy insurance cover, the earlier of 270 days after the date on which that Ship is captured by pirates and the date on which the piracy insurance cover expires;

Total Loss Date” means, in relation to a Ship:

 

  (a)

in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;

 

21


  (b)

in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earlier of:

 

  (i)

30 days after the date on which a notice of abandonment is given to the insurers; and

 

  (ii)

the date of any compromise, arrangement or agreement made by or on behalf of the Owner owning that Ship with that Ship’s insurers in which the insurers agree to treat the Ship as a total loss; and

 

  (c)

in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

Transfer Certificate” has the meaning given in Clause 26.2 (Transfer by a Lender);

Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Agreement;

“Underlying Documents” means any Assignable Charters and, in the singular, means any of them;

US” means the United States of America;

US GAAP” means generally accepted accounting principles as from time to time in effect in the US; and

US Tax Obligor” means:

 

  (a)

the Borrower if it is resident for tax purposes in the US; or

 

  (b)

the Borrower or a Security Party some or all whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.

 

1.2

Construction of certain terms

In this Agreement:

administration notice” means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;

approved” means, for the purposes of Clause 13 (Insurance), approved in writing by the Agent at its discretion;

asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

company” includes any partnership, joint venture and unincorporated association;

consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

 

22


document” includes a deed; also a letter or fax;

excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims;

expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

gross negligence” means a form of negligence which is distinct from ordinary negligence, in which the due diligence and care which are generally to be exercised have been disregarded to a particularly high degree, in which the plainest deliberations have not been made and that which should be most obvious to everybody has not been followed;

law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

months” shall be construed in accordance with Clause 1.3 (Meaning of “month”);

obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Owner owning that Ship is obliged to effect in respect of that Ship, under Clause 13 (Insurance) or any other provision of this Agreement or another Finance Document;

parent company” has the meaning given in Clause 1.4 (Meaning of “Subsidiary”);

person” includes any individual, any partnership, any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

policy” in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls) (1/10/83) or clause 6 of the International Hull Clauses (1/11/02) (1/11/03) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

“regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency (monetary or otherwise), department, central bank, regulatory, self-regulatory or other authority or organisation;

subsidiary” has the meaning given in Clause 1.4 (Meaning of “Subsidiary”);

 

23


successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

war risks” includes the risk of mines and all risks excluded by clauses 29, 30 or 31 of the International Hull Clauses (1/11/02), clauses 29 or 30 of the International Hull Clauses (1/11/03), clauses 24, 25 or 26 of the Institute Time Clauses (Hulls) (1/11/95) or clauses 23, 24 or 25 of the Institute Time Clauses (Hulls) (1/10/83) or any equivalent provision.

 

1.3

Meaning of “month”

A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

 

(a)

on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

 

(b)

on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and “month” and “monthly” shall be construed accordingly.

 

1.4

Meaning of “subsidiary”

A company (S) is a subsidiary of another company (P) if a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P and any company of which S is a subsidiary is a parent company of S.

 

1.5

General Interpretation

In this Agreement:

 

(a)

references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

 

(b)

references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

 

(c)

words denoting the singular number shall include the plural and vice versa; and

 

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(d)

Clauses 1.1 (Definitions) to 1.5 (General Interpretation) apply unless the contrary intention appears.

 

1.6

Headings

In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.

 

2

FACILITY

 

2.1

Amount of facility

Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower a secured term loan facility of up to US$195,385,000 in two Advances.

 

2.2

Lenders’ participations in the Advances

Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.

 

2.3

Purpose of the Advances

The Borrower undertakes with each Creditor Party to use the Advances only for the purpose stated in the preamble to this Agreement.

 

3

POSITION OF THE LENDERS

 

3.1

Interests several

The rights of the Lenders under this Agreement are several.

 

3.2

Individual right of action

Each Lender shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement without joining the Agent, the Security Trustee or any other Lender as additional parties in the proceedings.

 

3.3

Proceedings requiring Majority Lender consent

Except as provided in Clause 3.2 (Individual right of action) no Lender may commence proceedings against the Borrower, the Approved Manager or any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.

 

3.4

Obligations several

The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement shall not result in:

 

(a)

the obligations of the other Lenders being increased; nor

 

(b)

the Borrower, the Approved Manager, any Security Party or any other Lender being discharged (in whole or in part) from its obligations under any Finance Document;

 

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and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.

 

4

DRAWDOWN

 

4.1

Request for an Advance

Subject to the following conditions, the Borrower may request an Advance to be borrowed by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg time) three Business Days prior to the Drawdown Date.

 

4.2

Availability

The conditions referred to in Clause 4.1 (Request for an Advance) are that:

 

(a)

the Drawdown Date has to be a Business Day during the Availability Period;

 

(b)

both Advances shall be borrowed on the Drawdown Date;

 

(c)

the Senior Advance shall not exceed the Maximum Senior Advance Amount;

 

(d)

the Junior Advance shall not exceed the Maximum Junior Advance Amount;

 

(e)

any undrawn portion of the Total Commitments in respect of an Advance, upon the determination of the aggregate Initial Market Value of the Ships, shall be automatically cancelled as at the Drawdown Date; and

 

(f)

the aggregate amount of the Advances shall not exceed the Total Commitments.

 

4.3

Notification to Lenders of receipt of a Drawdown Notice

The Agent shall promptly notify the Lenders that it has received the Drawdown Notice in respect of the Advance and shall inform each Lender of:

 

(a)

the amount of that Advance and the Drawdown Date;

 

(b)

the amount of that Lender’s participation in that Advance; and

 

(c)

the duration of the first Interest Period in respect of that Advance.

 

4.4

Drawdown Notice irrevocable

The Drawdown Notice must be signed by a duly authorised signatory of the Borrower; and once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Lenders.

 

4.5

Lenders to make available Contributions

Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender in respect of each Advance on the Drawdown Date under Clause 2.2 (Lenders’ participation in the Advances).

 

26


4.6

Disbursement of an Advance

Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts in respect of each Advance which the Agent receives from the Lenders under Clause 4.5 (Lenders to make available Contributions) and that payment to the Borrower shall be made:

 

(a)

to the account which the Borrower specifies in the Drawdown Notice; and

 

(b)

in like funds as the Agent received the payments from the Lenders.

The payment by the Agent under this Clause 4.6 (Disbursement of an Advance) shall constitute the making of the relevant Advance and the Borrower shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender’s participation in the relevant Advance.

 

5

INTEREST

 

5.1

Payment of normal interest

Subject to the provisions of this Agreement, interest on each Advance in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

 

5.2

Normal rate of interest

Subject to the provisions of this Agreement, the rate of interest on an Advance in respect of an Interest Period shall be the aggregate of (i) the Margin, (ii) the Mandatory Cost (if any), (iii) LIBOR for that Interest Period and (iv) if a Lender (the “Applicable Lender”) notifies the Agent at least 5 Business Days before the start of that Interest Period that its Cost of Funding exceeds LIBOR (including the amount of such excess) on the Quotation Date for that Interest Period, additionally in respect of that Applicable Lender’s Contribution in the relevant Advance, the Correction Rate applicable to the Applicable Lender for that Interest Period.

 

5.3

Payment of accrued interest

In the case of an Interest Period of longer than three months (subject to the prior agreement of the Agent in accordance with Clause 5.4(b) (Notification of Interest Periods and rates of normal interest)), accrued interest shall be paid every three months during that Interest Period and on the last day of that Interest Period.

 

5.4

Notification of Interest Periods and rates of normal interest

The Agent shall notify the Borrower and each Lender of:

 

(a)

each rate of interest; and

 

(b)

the duration of each Interest Period,

as soon as reasonably practicable after each is determined.

 

5.5

Obligation of Reference Banks to quote

A Reference Bank which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement unless that Reference Bank ceases to be a Lender pursuant to Clause 26.19 (Replacement of a Reference Bank).

 

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5.6

Absence of quotations by Reference Banks

If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank(s) but if two or more of the Reference Banks fail (or, if at any time there is only one Reference Bank, that Reference Bank fails) to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5 (Interest).

 

5.7

Market disruption

The following provisions of this Clause 5 (Interest )apply if:

 

(a)

no rate is quoted on the Screen Rate, it is not possible to calculate an Interpolated Screen Rate for that Interest Period and two or more of the Reference Banks do not (or, if at any time there is only one Reference Bank, that Reference Bank does not), before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide a quotation to the Agent in order to fix LIBOR; or

 

(b)

at least three Business Days before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the Relevant Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

 

5.8

Notification of market disruption

The Agent shall promptly notify the Borrower and each of the Lenders stating the circumstances falling within Clause 5.7 (Market disruption) which have caused its notice to be given.

 

5.9

Suspension of drawdown

If the Agent’s notice under Clause 5.8 (Notification of market disruption) is served before an Advance is made:

 

(a)

In a case falling within Clause 5.7(a) (Market disruption), the Lender’s obligation to make that Advance; and

 

(b)

In a case falling within Clause 5.7(b) (Market disruption)5.7(b), the Affected Lender’s obligation to participate in that Advance,

shall be suspended while the circumstances referred to in the Agent’s notice continue.

 

5.10

Negotiation of alternative rate of interest

 

(a)

If the Agent’s notice under Clause 5.8 (Notification of market disruption) is served after an Advance is borrowed, the Borrower, the Agent, the Lenders (subject to Clause 27.5 (Replacement of Screen Rate)) or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within 30 days after the date on which the Agent serves its notice under Clause 5.8 (Notification of market disruption )(the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

 

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(b)

During the Negotiation Period the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the Cost of Funding of the Lenders or (as the case may be) the Affected Lender in Dollars, in each case as determined by the relevant Lender, or in any available currency of their or its Contribution plus the Margin and the Mandatory Cost (if any).

 

5.11

Application of agreed alternative rate of interest

Subject to Clause 27.5 (Replacement of Screen Rate), any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

 

5.12

Alternative rate of interest in absence of agreement

Subject to Clause 27.5 (Replacement of Screen Rate), 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 procedure provided for in Clause 5.10(b) (Negotiation of alternative rate of interest) shall be repeated at the end of the interest period set by the Agent pursuant to that Clause.

 

5.13

Notice of prepayment

If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12 (Alternative rate of interest in absence of agreement), the Borrower may give the Agent not less than 5 Business Days’ notice of its intention to prepay the Loan at the end of the interest period set by the Agent.

 

5.14

Prepayment; termination of Commitments

A notice under Clause 5.13 (Notice of prepayment) shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower’s notice of intended prepayment; and:

 

(a)

on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

 

(b)

on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

 

5.15

Application of prepayment

The provisions of Clause 8 (Repayment and Prepayment) shall apply in relation to the prepayment.

 

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6

INTEREST PERIODS

 

6.1

Commencement of Interest Periods

The first Interest Period applicable to an Advance shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

 

6.2

Duration of normal Interest Periods

Subject to Clauses 6.3 (Duration if interest Periods for Instalments) and 6.4 (Non-availability of matching deposits for interests Periods selected), each Interest Period in respect of an Advance shall be:

 

(a)

3 months;

 

(b)

6 months; or

 

(c)

such other period (as proposed by the Borrower to the Agent not later than 11:00 a.m. (Hamburg time) 5 Business Days before the commencement of the Interest Period in respect of that Advance) as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrower (failing which the Interest Period shall be three months).

 

6.3

Duration of Interest Periods for Instalments

In respect of an amount due to be repaid under Clause 8 (Repayment and Prepayment) on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

 

6.4

Non-availability of matching deposits for Interest Period selected

If, after the Borrower has proposed and the Lenders have agreed an Interest Period longer than three months, any Lender notifies the Agent by 11.00 a.m. (Hamburg time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the Relevant Interbank Market when the Interest Period commences, the Interest Period shall be of three months.

 

7

DEFAULT INTEREST

 

7.1

Payment of default interest on overdue amounts

The Borrower shall pay interest in accordance with the following provisions of this Clause 7 (Default Interest) on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

 

(a)

the date on which the Finance Documents provide that such amount is due for payment; or

 

(b)

if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

 

(c)

if such amount has become immediately due and payable under Clause 19.4 (Acceleration of Loan) the date on which it became immediately due and payable.

 

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7.2

Default rate of interest

Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2.00 per cent. above:

 

(a)

in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and 7.3(b) (Calculation of Default rate of interest); or

 

(b)

in the case of any other overdue amount, the rate set out at Clause 7.3(b) (Calculation of Default rate of interest). 7.3(b)

 

7.3

Calculation of default rate of interest

The rates referred to in Clause 7.2 (Default rate of interest) are:

 

(a)

the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);

 

(b)

the aggregate of the Margin, any Correction Rate and the Mandatory Cost (if any) plus, in respect of successive periods of any duration (including at call) up to three months which the Agent may select from time to time:

(i) LIBOR; or

(ii) if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the Relevant Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine.

 

7.4

Notification of interest periods and default rates

The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 (Calculation of default rate of interest) and of each period selected by the Agent for the purposes of paragraph 7.3(b) (Calculation of default rate of interest) of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent’s notification.

 

7.5

Payment of accrued default interest

Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

 

7.6

Compounding of default interest

Any such interest which is not paid at the end of the period by reference to which it was determined shall be compounded every 6 months and shall be payable on demand.

 

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8

REPAYMENT AND PREPAYMENT

 

8.1

Amount of Instalments

 

(a)

The Borrower shall repay the Senior Advance by:

(i) 15 consecutive instalments, each of which shall be in the amount of US$4,665,000 (each a “Senior Instalment” and, together, the “Senior Instalments”); and

(ii) together with the last Senior Instalment, a balloon instalment in the amount of US$94,335,000 (the “Senior Balloon Instalment”),

Provided that, if the Senior Advance advanced is less than US$164,310,000, the aggregate amount of the Senior Instalments and the Senior Balloon Instalment shall be reduced by an amount equal to the undrawn amount on a pro rata basis.

 

(b)

The Borrower shall repay the Junior Advance by 11 consecutive instalments, each of which shall be in the amount of US$2,825,00] (each a “Junior Instalment” and, together, the “Junior Instalments” and together with the Senior Instalments, the “Instalments”), Provided that, if the Junior Advance advanced is less than US$31,075,000, the aggregate amount of the Junior Instalments shall be reduced by an amount equal to the undrawn amount on a pro rata basis.

 

8.2

Repayment Dates

 

(a)

The first Senior Instalment shall be repaid on 29 October 2021, each subsequent Senior Instalment shall be repaid at three-monthly intervals thereafter and the last Senior Instalment, shall be repaid together with the Senior Balloon Instalment, on the Final Repayment Date in respect of the Senior Advance; and

 

(b)

The first Junior Instalment shall be repaid on 29 October 2021, each subsequent Junior Instalment shall be repaid at three-monthly intervals thereafter and the last Junior Instalment, shall be repaid on the Final Repayment Date in respect of the Junior Advance.

 

8.3

Final Repayment Date in respect of Senior Advance

On the Final Repayment Date in respect of the Senior Advance, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.

 

8.4

Voluntary prepayment

Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan on the last day of an Interest Period or on such other date agreed between the Borrower and the Agent.

 

8.5

Conditions for voluntary prepayment

The conditions referred to in Clause 8.4 (Voluntary prepayment) are as follows:

 

(a)

the Agent has received from the Borrower at least 3 Business Days’ prior irrevocable written notice (each, a “Prepayment Notice”) specifying the amount to be prepaid, the date on which the prepayment is to be made and against which advance the Prepayment needs to be applied;

 

32


(b)

the Borrower has provided evidence satisfactory to the Agent that any consent required by any Owner or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects any Owner or any Security Party has been complied with;

 

(c)

the Borrower is in compliance with Clause 8.10 (Amounts payable on prepayment) on or prior to the date of prepayment;

 

(d)

In respect of the Senior Advance a partial prepayment shall be $500,000 or a higher integral multiple thereof (or such other amount acceptable to the Agent in its sole discretion);

 

(e)

In respect of the Junior Advance:

 

  (i)

the prepayment is made after 29 April 2022;

 

  (ii)

a partial prepayment shall be $500,000 or a higher integral multiple thereof (or such other amount acceptable to the Agent in its sole discretion) with; and

 

  (iii)

the Borrower shall pay to the Agent a prepayment fee of 2.00 per cent on such prepayment amount.

 

8.6

Optional facility cancellation

The Borrower shall be entitled, upon giving to the Agent not less than 5 Business Days’ prior written notice, to cancel, in whole or in part, and, if in part, by an aggregate amount not less than $500,000 or a higher integral multiple thereof (or such other amount acceptable to the Agent in its sole discretion), the undrawn balance of the Total Commitments (the “Cancellation Notice”) which notice shall be irrevocable. Upon such cancellation taking effect on expiry of a Cancellation Notice the several obligations of the Lenders to make their respective Commitments available in relation to the portion of the Total Commitments to which such Cancellation Notice relates shall terminate.

 

8.7

Cancellation Notice or Prepayment Notice

The Agent shall notify the Lenders promptly upon receiving a Cancellation Notice or Prepayment Notice, and shall provide, in the case of a Prepayment Notice, any Lender which so requests with a copy of any document delivered by the Borrower under Clauses 8.5(a) (Conditions for voluntary prepayment) and 8.5(b) (Conditions for voluntary prepayment).

 

8.8

Mandatory prepayment

The Borrower shall be obliged to prepay the Relevant Amount:

 

(a)

if a Ship is sold, on or before the date on which the sale is completed by delivery of the Ship to the buyer; or

 

(b)

if a Ship becomes a Total Loss, on the earlier of the date falling 90 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

In this Clause 8.8 (Mandatory prepayment)

 

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Relevant Amount” means:

 

  (i)

an amount equal to the Relevant Fraction of the Loan on the date on which (1) the relevant Ship is sold or (2) the relevant Ship becomes a Total Loss; or

 

  (i)

if the relevant Ship is the last Ship subject to a Mortgage, the whole of the Loan.

Relevant Fraction” means a fraction of which the numerator is the Market Value of that Ship, being sold or which has become a Total Loss and the denominator is the aggregate Market Value of all Mortgaged Ships at the relevant time.

 

8.9

Effect of Prepayment Notice and Cancellation Notice

Neither a Prepayment Notice nor a Cancellation Notice may be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and:

 

(a)

in the case of a Prepayment Notice, the amount specified in that Prepayment Notice shall become due and payable by the Borrower on the date for prepayment specified in that Prepayment Notice; and

 

(b)

in the case of a Cancellation Notice, the amount cancelled shall be permanently cancelled and may not be borrowed.

 

8.10

Amounts payable on prepayment

A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 (Indemnities) or otherwise) in respect of the amount prepaid, the prepayment fee set out in Clause 8.5(e)(i) (Conditions for voluntary prepayment )(if applicable) and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.2 (Break costs) but without premium or penalty.

 

8.11

Application of partial prepayment or cancellation

Each partial prepayment shall be applied:

 

(a)

if made pursuant to Clauses 5.13 (Notice of prepayment), 8.8 (Repayment and prepayment), 15.2 (Prepayment; provision of additional security), 19.2 (Actions following an Event of Default), 23.3 (Prepayment; termination of Commitment) or 24.6 (Prepayment; termination of Commitment), pro rata against the Senior Advance and the Junior advance and thereafter, pro rata against the relevant Instalments and, in the case of the Senior Advance, the Senior Balloon Instalment; and

 

(b)

if made pursuant to Clause 8.4 (Voluntary Prepayment) against the Advance being prepaid in order of maturity of the relevant Instalments and, in the case of the Senior Advance, the Senior Balloon Instalment.

 

8.12

No reborrowing

No amount prepaid or cancelled may be (re)borrowed.

 

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9

CONDITIONS PRECEDENT

 

9.1

Documents, fees and no default

Each Lender’s obligation to contribute to each Advance is subject to the following conditions precedent:

 

(a)

that, on or before the date of this Agreement, the Agent receives the documents described in Part A of Schedule 3(Condition Precedent Documents) in form and substance satisfactory to the Agent and its lawyers; and

 

(b)

that, on the Drawdown Date, the Agent receives:

 

  (i)

the documents and conditions described in Part B of Schedule 3 (Condition Precedent Documents) in form and substance satisfactory to the Agent and its lawyers;

 

  (ii)

any fee payable pursuant to Clause 20.1 (Fees); and

 

  (iii)

payment of any expenses payable pursuant to Clause 20.2 (Costs of negotiation, preparation) which are due and payable on the Drawdown Date;

 

(c)

that both at the date of the Drawdown Notice and at the Drawdown Date:

 

  (i)

no Event of Default or Potential Event of Default has occurred or would result from the borrowing of the relevant Advance;

 

  (ii)

the representations and warranties in Clause 10 (Representation and Warranties) and those of the Borrower, the Approved Manager or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing;

 

  (iii)

none of the circumstances contemplated by Clause 5.7 (Market Disruption) has occurred and is continuing; and

 

  (iv)

there has been no Material Adverse Change; and

 

(d)

that, if the Senior Advance Security Cover Ratio were applied immediately following the making of the Senior Advance and the Security Cover Ratio were applied immediately following the making of both Advances, the Borrower would not be obliged to provide additional security or prepay part of the Senior Advance or the Loan respectively under that Clause; and

 

(e)

that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrower prior to the Drawdown Date.

 

9.2

Waiver of conditions precedent

If the Majority Lenders, at their discretion, permit the relevant Advance to be borrowed before certain of the conditions referred to in Clause 9.1 (Document, fees and no default) are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify).

 

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10

REPRESENTATIONS AND WARRANTIES

 

10.1

General

The Borrower represents and warrants to each Creditor Party as follows.

 

10.2

Status

The Borrower is duly incorporated, validly existing and in good standing under the laws of the Republic of the Marshall Islands.

 

10.3

Share capital and ownership

 

(a)

The Borrower is authorised to issue 250,000,000 shares of common stock with a par value of US$.0001 per share and 10,000,000 shares of preferred stock with a par value of US$.0001 per share, of which 17,735,966 common shares are issued and outstanding at the date hereof. Mrs Angeliki Frangou either directly or indirectly (through entities owned and controlled by her or trusts or foundations of which she is the beneficiary) and/or Navios Maritime Holdings Inc. or any of their affiliates together being the ultimate beneficial owners of, or having ultimate control of the voting rights attaching to, less than 10 per cent. of all the issued shares in the Borrower.

 

(b)

Each of Owner A, Owner D and Owner E is authorised to issue 500 registered shares, with a par value of one US Dollar (US$1.00) per share, all of which shares have been issued in registered form and are fully paid and are held, free of any Security Interest or other claim on and from the Drawdown Date, by the Borrower.

 

(c)

Each of Owner F and Owner G is authorised to issue 500 registered and/or bearer shares, with a par value of one US Dollar (US$1.00) per share, all of which shares have been issued in registered form and are fully paid and are held, free of any Security Interest or other claim on and from the Drawdown Date, by the Borrower.

 

(d)

Each of Owner B and Owner C is authorised to issue 50,000 ordinary shares with a par value of US$1.0 per share, of which one share of US$1.0 has been issued and is fully paid and are held, free of any Security Interest or other claim on and from the Drawdown Date, by the Borrower.

 

10.4

Corporate power

The Borrower or, as the case may be, each Owner has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

 

(a)

in the case of each Owner, to execute the Underlying Documents to which it is a party and to maintain the relevant Ship in its ownership under the applicable Approved Flag;

 

(b)

to execute the Finance Documents to which it is a party; and

 

(c)

in the case of the Borrower, to borrow under this Agreement and, in the case of the Borrower and/or each Owner to make all the payments contemplated by, and to comply with, those Finance Documents to which it is a party.

 

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10.5

Consents in force

All the consents referred to in Clause 10.4 (Corporate Power) remain in force and nothing has occurred which makes any of them liable to revocation.

 

10.6

Legal validity; effective Security Interests

The Finance Documents to which the Borrower or, as the case may be, each Owner is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

 

(a)

constitute the Borrower’s or that Owner’s legal, valid and binding obligations enforceable against the Borrower or that Owner in accordance with their respective terms (having the requisite corporate benefit which is legally and economically sufficient); and

 

(b)

create legal, valid and binding Security Interests (having the priority specified in the relevant Finance Document) enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

subject to any relevant insolvency laws affecting creditors’ rights generally.

 

10.7

No third party Security Interests

Without limiting the generality of Clause 10.6 (Legal validity; effective security interests) at the time of the execution and delivery of each Finance Document to which the Borrower and each other Security Party is a party:

 

(a)

the Borrower, or as the case may be, each other Security Party will have the right to create all the Security Interests which that Finance Document purports to create; and

 

(b)

no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

 

10.8

No conflicts

The execution by the Borrower, the Approved Manager and each other Security Party of each Finance Document and each Underlying Document to which it is a party, and the borrowing by the Borrower of the Loan (or any part thereof), and the compliance by the Borrower, the Approved Manager and each other Security Party with each Finance Document and each Underlying Document to which it is a party:

 

(a)

will not involve or lead to a contravention of:

 

  (i)

any law or regulation; or

 

  (ii)

the constitutional documents of the Borrower, the Approved Manager or other Security Party (as the case may be); or

 

  (iii)

any contractual or other obligation or restriction which is binding on the Borrower, the Approved Manager or other Security Party (as the case may be) or any of its assets, and

 

37


(b)

will not have a Material Adverse Effect; and

 

(c)

is for the corporate benefit of the Borrower, the Approved Manager and/or each other Security Party.

 

10.9

No withholding taxes

All payments which the Borrower or any Owner is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

 

10.10

No default

No Event of Default or Potential Event of Default has occurred.

 

10.11

Information

All information which has been provided in writing by or on behalf of the Borrower, the Approved Manager or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5 (Information provided to be accurate); all audited and unaudited accounts and financial statements which have been so provided satisfied the requirements of Clause 11.7 (Form of financial statements)and are true, correct and not misleading and present fairly and accurately the financial position of the Borrower, the Owners or the Group (as the case may be); and there has been no change in the financial position or state of affairs of the Borrower, the Owners or the Group (or any member thereof) from that disclosed in the latest of those accounts which is likely to have a Material Adverse Effect.

 

10.12

No litigation

No legal or administrative action involving the Borrower, the Approved Manager or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrower’s knowledge, is likely to be commenced or taken which would, in either case, be likely to have a Material Adverse Effect.

 

10.13

Validity and completeness of Underlying Documents

Each Underlying Document constitutes valid, binding and enforceable obligations of the parties thereto in accordance with its terms and:

 

(a)

each of the copies of that Underlying Document delivered to the Agent before the date of this Agreement is a true and complete copy; and

 

(b)

no amendments or additions to that Underlying Document have been agreed nor has any party which is the party to that Underlying Document, waived any of their respective rights thereunder.

 

10.14

Compliance with certain undertakings

At the date of this Agreement, the Borrower and, as the case may be, the Owners are in compliance with Clauses 11.2 (Title and negative Pledge), 11.3(b)(i) (No disposal of assets), 11.10 (Maintenance of Security Interest), 11.11 (Notification of litigation), 13.3 (Terms of obligatory insurances) 14.3 (Repair and classification) and 14.12 (Compliance with laws) and none of the events listed in Clause 19.1(f) (Events of Default) has occurred in respect of the Borrower or any Security Party.

 

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10.15

Taxes paid

The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower and its business.

 

10.16

ISM Code and ISPS Code compliance

All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Owners, the Approved Manager and the Ships have been complied with.

 

10.17

No Money laundering

The Borrower:

 

(a)

will not, and will procure that neither the Approved Manager nor a Security Party, to the extent applicable, will, in connection with this Agreement or any of the other Finance Documents, contravene or permit any subsidiary to contravene, any law, official requirement or other regulatory measure or procedure implemented to combat “money laundering” (as defined in Article 1 of the Directive 2015/849/EC of the European Parliament and of the Council of the European Communities) and comparable United States Federal and state laws. The Borrower shall further submit any documents and declarations on request, if such documents or declarations are required by any Creditor Party to comply with its domestic money laundering and/or legal identification requirements; and

 

(b)

confirms that it is the beneficiary within the meaning of the German Anti Money Laundering Act (Gesetz über das Aufspüren von Gewinnen aus schweren Straftaten (Geldwäschegesetz)), acting for its own account and not for or on behalf of any other person for each part of the Loan made or to be made available to it under this Agreement. That is to say, it acts for its own account and not for or on behalf of anyone else.

The Borrower will promptly inform the Agent by written notice, if it is not or ceases to be the beneficiary and will provide in writing the name and address of the beneficiary.

The Agent shall promptly notify the Lenders of any written notice it receives under this Clause 10.17 (No Money laundering).

 

10.18

No immunity

Neither the Borrower, nor any Owner or any of their respective assets is entitled to immunity on grounds of sovereignty or otherwise from any legal action or proceeding (including, without limitation, suit, attachment prior to judgement, execution or other enforcement).

 

10.19

Choice of law

The choice of the laws of England to govern this Agreement and those other Finance Documents which are expressed to be governed by the laws of England, the laws of Germany to govern the Account Pledges and the laws of the applicable Approved Flag State to govern the Mortgages, constitutes a valid choice of law and the submission by the Borrower or, as the case may be, the relevant Security Parties thereunder to the non-exclusive jurisdiction of the Courts of England and, in the case of the Account Pledges, Germany or, in the case of the Mortgages, the applicable Approved Flag State is a valid submission and does not contravene the laws of England or, in the case of the Account Pledges, Germany or, in the case of the

 

39


Mortgages, the applicable Approved Flag State or the laws of any other Pertinent Jurisdiction, will be applied by the courts of any Pertinent Jurisdiction if this Agreement or those other Finance Documents or any claim thereunder comes under their jurisdiction upon proof of the relevant provisions of the laws of England or, in the case of the Account Pledges, Germany or, in the case of the Mortgages, the applicable Approved Flag State.

 

10.20

Pari passu ranking

The obligations of the Borrower and each Security Party under the Finance Documents to which it is a party are direct, general and unconditional obligations and rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except for obligations mandatorily preferred by law applying to companies generally.

 

10.21

Repetition

The representations and warranties in this Clause 10 (Representations and Warranties) shall be deemed to be repeated by the Borrower:

 

(a)

on the date of service of the Drawdown Notice;

 

(b)

on the Drawdown Date; and

 

(c)

with the exception of Clauses 10.9 (No withholding taxes) and 10.14 (Compliance with certain undertakings), on the first day of each Interest Period and on the date of any Compliance Certificate issued pursuant to Clause 11.22 (Compliance Certificate).

as if made with reference to the facts and circumstances existing on each such day.

 

11

GENERAL UNDERTAKINGS

 

11.1

General

The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 (General Undertakings) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing.

 

11.2

Title and negative pledge

The Borrower will:

 

(a)

procure that no Owner shall create or permit to arise any Security Interest in respect of any asset, property or revenue present or future, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents and except for Permitted Security Interests; and

 

(b)

not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future of each of the Owners, other than Security Interests arising in the normal course of the Borrower’s business of acquiring, operating and (re)financing vessels.

 

40


11.3

No disposal of assets

The Borrower will procure that no Owner will, transfer, lease or otherwise dispose of:

 

(a)

all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

 

(b)

any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation,

provided that:

 

  (i)

in the case of an Owner, paragraph (a) does not apply to any charter of a Ship or any sale of a Ship, subject to:

 

  (A)

the Owner making the mandatory prepayment of the Relevant Amount pursuant to Clause 8.8 (Mandatory prepayment); and

 

  (B)

no Event of Default having occurred, which is continuing at the relevant time; and

 

  (ii)

in the case of the Borrower, paragraphs (a) and (b) do not apply unless such transfer, lease or disposal constitutes or results in a Material Adverse Change.

 

11.4

No other liabilities or obligations to be incurred

The Borrower will procure that no Owner will enter into any other investments, any sale or leaseback agreements, any off-balance sheet transaction or incur any other liability or obligation (including, without limitation, any Financial Indebtedness or any obligations under a guarantee or speculative transactions) except:

 

(a)

liabilities and obligations under the Finance Documents and the Underlying Documents to which it is or, as the case may be, will be a party;

 

(b)

at any time prior to or on the Drawdown Date, the Existing Indebtedness;

 

(c)

liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining and repairing the Ship owned by it; and

 

(d)

liabilities or obligations reasonably incurred in the normal course of its business of acquiring, operating and financing or refinancing vessels (and issuing relevant guarantees), acquiring shares in vessel owning companies (or their holding companies) and Financial Indebtedness from any type of lender or lessor for such acquisitions and all other matters incidental thereto.

 

11.5

Information provided to be accurate

All financial and other information, including but not limited to factual information, exhibits and reports, which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true, correct and not misleading and will not omit any material fact or consideration.

 

41


11.6

Provision of financial statements

The Borrower will send or procure that there are sent to the Agent:

 

(a)

as soon as possible, but in no event later than 180 days after the end of each Financial Year of the Borrower, the consolidated audited annual financial statements of the Borrower for that Financial Year (commencing with the financial statements for the Financial Year which ended on 31 December 2020); and

 

(b)

as soon as possible, but in no event later than 90 days after the end of the 6-month period ending on 30 June in each Financial Year of the Borrower, the semi-annual consolidated unaudited financial statements of the Borrower, for that 6-month period (commencing with the financial statements for the 6-month period ended on 30 June 2021), duly certified as to their correctness by the Chief Financial Officer or other officer of the Borrower; and

 

(c)

promptly after each request by the Agent, such further financial or other information in respect of the Borrower, a Ship, the other Security Parties and the Group (including, without limitation, any information regarding any sale and purchase agreements, investment brochures, shipbuilding contracts, charter agreements and other contracts of employment having a duration of 12 months or longer and operational expenditures for the Ships) as may be requested by the Agent.

 

11.7

Form of financial statements

All financial statements delivered under Clause 11.6 (Provision of financial statements) will:

 

(a)

be prepared in accordance with all applicable laws and US GAAP and, in the case of any audited financial statements, be certified by an independent and reputable auditor having requisite experience selected and appointed by the Borrower;

 

(b)

fairly represent the financial condition of the Borrower and the Group at the date of those accounts and of their profit for the period to which those accounts relate; and

 

(c)

fully disclose or provide for all significant liabilities of the Borrower and the Group and each of its/their subsidiaries.

 

11.8

Shareholder and creditor notices

The Borrower will send the Agent copies of any relevant press releases in respect of an Owner and, promptly upon its request, copies of all communications which are received by it in its capacity as indirect shareholder of each Owner or dispatched to the Owners’ creditors or any class of them.

 

11.9

Consents

The Borrower will and shall procure, where applicable, that each Owner shall maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

 

(a)

for the Borrower and that Owner to perform their respective obligations under any Finance Document and/or any Underlying Document to which each is, or as the case may be, will be a party;

 

(b)

for the validity or enforceability of any Finance Document and/or any Underlying Document to which each is, or as the case may be, will be a party; and

 

(c)

for that Owner to continue to own and operate the Ship owned by it,

and the Borrower will and shall procure that each Owner will comply (or procure compliance as the case may be) with the terms of all such consents.

 

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11.10

Maintenance of Security Interests

The Borrower will:

 

(a)

at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

 

(b)

without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

 

11.11

Notification of litigation

The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, each Owner and the Ship owned by it, the Earnings or the Insurances in respect of that Ship, any other Security Party or the Approved Manager, as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document, and the Borrower shall procure that all reasonable measures are taken to defend any such legal or administrative action.

 

11.12

No amendment to Underlying Documents

The Borrower shall not, and shall procure that no Owner shall, waive or fail to enforce, the Underlying Documents to which it is a party or any of its provisions and shall promptly notify the Agent of any amendment or supplement to any Underlying Document.

 

11.13

Principal place of business

The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 28.2(b) (Addresses for communications); and the Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States.

 

11.14

Confirmation of no default

The Borrower will, within two Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an authorised representative of the Borrower and which:

 

(a)

states that no Event of Default or Potential Event of Default has occurred; or

 

(b)

states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

 

43


The Agent may serve requests under this Clause 11.14 (Confirmation of no default) from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if no Advances have been made) Commitments exceeding 10 per cent. of the Total Commitments; and this Clause 11.14 (Confirmation of no default )does not affect the Borrower’s obligations under Clause 11.15 (Notification of default).

 

11.15

Notification of default

The Borrower will notify the Agent as soon as the Borrower becomes aware of:

 

(a)

the occurrence of an Event of Default or a Potential Event of Default; or

 

(b)

any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will keep the Agent fully up-to-date with all developments.

 

11.16

Provision of further information

The Borrower shall, and shall procure that each Owner will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:

 

(a)

to the Borrower, that Owner and the Ship owned by it, the Earnings or the Insurances or any Ship; or

 

(b)

to any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by the Agent, the Security Trustee or any Lender at any time.

 

11.17

Provision of copies and translation of documents

The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide one copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Borrower will provide a certified English translation prepared by a translator approved by the Agent.

 

11.18

General and administrative costs

The Borrower shall ensure that the payment of all the general and administrative costs of the Borrower and any Owner in connection with the ownership and operation of the Ship owned by it (including, without limitation, the payment of the fees payable to an Approved Manager for the services provided pursuant to any management agreement) shall be fully subordinated to the payment obligations of the Borrower and that Owner under this Agreement or the Collateral Guarantee to which it is a party (as the case may be) and the other Finance Documents to which it is a party throughout the Security Period.

 

11.19

“Know your customer” checks

If:

 

(a)

the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

 

44


(b)

any change in the composition of the shareholders of the Borrower or any Security Party after the date of this Agreement; or

 

(c)

a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

11.20

Minimum Liquidity

The Borrower shall maintain in the Minimum Liquidity Account:

 

(a)

credit balances in an amount equal to the aggregate of not less than the applicable Mandatory Minimum Liquidity Amount commencing from the Drawdown Date and at all times thereafter throughout the remainder of the Security Period; and

 

(b)

credit balances in an amount equal to the aggregate of not less than the applicable Additional Minimum Liquidity Amount commencing from the Drawdown Date and at all times thereafter until 29 April 2022.

 

11.21

Reserve Amounts

 

(a)

The Borrower shall accumulate and maintain the applicable Reserve Amounts into the Reserve Account, starting from the first Senior Repayment Date and thereafter on a quarterly basis until the Final Repayment Date in respect of the Senior Advance.

 

(b)

Any part of the Reserve Amounts may only be withdrawn from the Reserve Account with the prior written consent of the Agent for the purpose of covering the incurred and documented (by providing evidence satisfactory to the Agent) costs and expenses for the next special survey, dry-docking and installation of the Ballast Water Treatment System of each Ship, Provided that no Event of Default or Potential Event of Default has occurred or is continuing at that time or will occur as a result of any such withdrawal.

 

11.22

Compliance Certificate

 

(a)

The Borrower shall supply to the Agent, a Compliance Certificate together with each set of financial statements delivered pursuant to paragraphs (a) and (b) of Clause 11.6 (Provision of financial statements) (commencing with the financial statements of the Borrower to be provided after the 6-month period ending after the Drawdown Date).

 

(b)

Each Compliance Certificate shall be duly signed by the chief financial officer of the Borrower, evidencing (inter alia) the Borrower’s compliance (or not, as the case may be) with the provisions of Clause 12.5 (Financial Covenants), Clause 11.20 (Minimum Liquidity), Clause 11.21 (Reserve Amounts) and Clause 15.1 (Minimum required security cover).

 

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12

CORPORATE UNDERTAKINGS

The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 (Corporate Undertakings) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing.

 

12.1

Maintenance of status

The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands.

 

12.2

Negative undertakings

The Borrower will not:

 

(a)

change the nature of its business or allow any Owner to change the nature of its business;

 

(b)

pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of its issued shares if an Event of Default has occurred and is continuing at the relevant time or an Event of Default will result from the payment of a dividend or the making of any other form of distribution, Provided that no dividends or any other form of distribution may be paid or made until the Junior Advance has been repaid in full;

 

(c)

allow the Owners to provide any form of credit or financial assistance to:

 

  (i)

a person who is directly or indirectly interested in that Owner’s share or loan capital; or

 

  (ii)

any company in or with which such a person is directly or indirectly interested or connected,

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to that Owner than those which it could obtain in a bargain made at arms’ length;

 

(d)

allow the Owners to open or maintain any account with any bank or financial institution except accounts with the Agent, the Account Bank and the Security Trustee for the purposes of the Finance Documents;

 

(e)

change, or allow an Owner to change, its Financial Year;

 

(f)

allow the Owners to issue, allot or grant any person a right to any shares or repurchase or reduce its issued shares;

 

(g)

allow the Owners to acquire any shares or other securities other than short term debt obligations or Treasury bills issued by the US, the UK or a Participating Member State and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or

 

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(h)

and procure that the Owners will not enter into any form of amalgamation, merger or de-merger, acquisition, divesture, split-up or any form of reconstruction or reorganisation, which in respect of the Borrower would result in the occurrence of an Event of Default as a result of such amalgamation, merger or de-merger, acquisition, divesture, split-up or any form of reconstruction or reorganisation.

 

12.3

Subordination

All rights which the Borrower at any time has against an Owner or its assets shall be fully subordinated to the rights of the Lenders under the Finance Documents; and in particular, the Borrower shall not during the Security Period:

 

(a)

claim, or in a bankruptcy of an Owner prove for, any amount payable to the Borrower by that Owner, whether in respect of this or any other transaction;

 

(b)

take or enforce any Security Interest for any such amount; or

 

(c)

claim to set-off any such amount against any amount payable by the Borrower to that Owner.

 

12.4

Borrower’s Subsidiaries

The Borrower shall provide the Agent with a list of the Borrower’s (direct and indirect) subsidiaries at the date of this Agreement (together with information requested by the Agent pursuant to Clause 11.6(c) (Provision of financial statements) in respect of such subsidiaries) and shall promptly update this list from time to time to advise the Agent of any amendments to the information included in the original list delivered to the Agent, unless such information is included in the financial statement or periodic public filings of the Borrower.

 

12.5

Financial Covenants

The Borrower shall ensure that at all times:

 

(a)

the Market Value Adjusted Leverage shall be no greater than 80 per cent.;

 

(b)

the Net Worth of the Group shall not be less than $125,000,000; and

 

(c)

the members of the Group will maintain Liquid Funds in an amount, in aggregate, of not less than the product of $400,000 and the total number of the Fleet Vessels at that time.

 

13

INSURANCE

 

13.1

General

The Borrower also undertakes with each Creditor Party, on and from the Drawdown Date, to comply with the following provisions of this Clause 13 (Insurance), except as the Agent may, with the authority of the Majority Lenders, otherwise permit in writing (such permission not to be unreasonably withheld in respect of a change relating to the class or classification society under Clause 13.11(b) (Compliance with terms of insurances)).

 

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13.2

Maintenance of obligatory insurances

The Borrower shall procure that each Owner keeps the Ship owned by it insured at the expense of that Owner Borrower against:

 

(a)

fire and usual marine risks (including hull and machinery and excess risks);

 

(b)

war risks (including, without limitation, protection and indemnity war risks with a separate limit not less than hull value of the relevant Ship);

 

(c)

protection and indemnity risks (including, without limitation, protection and indemnity war risks in excess of the amount for war risks (hull) and oil pollution liability risks) in each case in the highest amount available in the international insurance market; and

 

(d)

any other risks the insurance of which the Security Trustee (acting on the instructions of the Majority Lenders), having regard to practices, recommendations and other circumstances prevailing at the relevant time, may from time to time require by notice to that Owner.

 

13.3

Terms of obligatory insurances

The Borrower shall procure that each Owner shall effect such insurances in such amounts in such currency and upon such terms and conditions (including, without limitation, any LSW 1189 or, in the opinion of the Security Trustee, comparable mortgage clause) as shall from time to time be approved in writing by the Security Trustee in its sole discretion, but in any event as follows:

 

(a)

in Dollars;

 

(b)

in the case of fire and usual marine risks and war risks, on an agreed value basis in an amount equal to at least the higher of (i) an amount which is equal to 120 per cent. of the aggregate of (A) the Loan multiplied by a fraction whose: (1) nominator is the Market Value of the Ship owned by that Owner; and (2) denominator is the Market Value of all Mortgaged Ships and (B) the principal amount secured by any equal or prior ranking Security Interest on that Ship and (ii) the Market Value of that Ship;

 

(c)

in the case of oil pollution liability risks, for an amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the International Group of Protection and Indemnity Clubs) and the international marine insurance market (currently $1,000,000,000 for any one accident or occurrence);

 

(d)

in relation to protection and indemnity risks in respect of the full value and tonnage of that Ship;

 

(e)

in relation to war risks insurance, extended to cover piracy and terrorism where excluded under the fire and usual marine risks insurance;

 

(f)

on approved terms and conditions;

 

(g)

such other risks of whatever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of a vessel similar to that Ship; and

 

(h)

through approved brokers and with approved insurance companies and/or underwriters which have a Standard & Poor’s rating of at least BBB- or a comparable rating by any other rating agency acceptable to the Security Trustee (acting on the instructions of the Majority Lenders) or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations which are members of the International Group of Protection and Indemnity Clubs.

 

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13.4

Further protections for the Creditor Parties

In addition to the terms set out in Clause 13.3 (Terms of obligatory insurances), the Borrower shall procure that each Owner ensures that:

 

(a)

it and any and all third parties who are named assured or co-assured under any obligatory insurance shall assign their interest in any and all obligatory insurances and other Insurances if so required by the Agent;

 

(b)

whenever the Security Trustee requires, the obligatory insurances name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation they may have under any applicable law against the Security Trustee but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

(c)

the interest of the Security Trustee as assignee and as loss payee shall be duly endorsed on all slips, cover notes, policies, certificates of entry or other instruments of insurance in respect of the obligatory insurances;

 

(d)

the obligatory insurances shall name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;

 

(e)

the obligatory insurances shall provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

 

(f)

the obligatory insurances shall provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (f) from making personal claims against persons (other than the Owners or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

 

(g)

the obligatory insurances shall provide that the obligatory insurances shall be primary without right of contribution from other insurances effected by the Security Trustee or any other Creditor Party;

 

(h)

the obligatory insurances shall provide that the Security Trustee may make proof of loss if that Owner fails to do so; and

 

(i)

the obligatory insurances shall provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall only be effective against the Security Trustee 14 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

 

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13.5

Renewal of obligatory insurances

The Borrower shall procure that each Owner:

 

(a)

at least 14 days before the expiry of any obligatory insurance effected by it:

 

  (i)

notifies the Security Trustee of the brokers, underwriters, insurance companies and any protection and indemnity or war risks association through or with whom that Owner proposes to renew that obligatory insurance and of the proposed terms and conditions of renewal; and

 

  (ii)

seeks the Security Trustee’s approval to the matters referred to in paragraph (i);

 

(b)

at least 7 days before the expiry of any obligatory insurance, renews that obligatory insurance in accordance with the Security Trustee’s approval pursuant to paragraph (a); and

 

(c)

procures that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

 

13.6

Copies of policies; letters of undertaking

The Borrower shall procure that each Owner ensures that that all approved brokers provide the Security Trustee with pro forma copies of all cover notes and policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters of undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

 

(a)

they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4 (Further protections for the Creditor Parties);

 

(b)

they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

 

(c)

they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

 

(d)

they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

 

(e)

they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee.

 

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13.7

Copies of certificates of entry; letters of undertaking

The Borrower shall procure that each Owner ensures that any protection and indemnity and/or war risks associations in which the Ship owned by that Owner is entered provides the Security Trustee with:

 

(a)

a certified copy of the certificate of entry for that Ship;

 

(b)

a letter or letters of undertaking in such form as may be required by the Security Trustee;

 

(c)

where required to be issued under the terms of insurance/indemnity provided by that Owner’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Owner in accordance with the requirements of such protection and indemnity association; and

 

(d)

a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority or, as the case may be, protection and indemnity associations in relation to that Ship (if applicable).

 

13.8

Deposit of original policies

The Borrower shall procure that each Owner ensures that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.

 

13.9

Payment of premiums

The Borrower shall procure that each Owner punctually pays all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Security Trustee.

 

13.10

Guarantees

The Borrower shall procure that each Owner ensures that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

 

13.11

Compliance with terms of insurances

The Borrower shall procure that no Owner does or omits to do (or permits to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular it shall procure that each Owner:

 

(a)

takes all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(c)) (Copies of policies; letters of undertaking) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

 

(b)

does not make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;

 

51


(c)

makes (and promptly supplies copies to the Agent) of all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which that Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) and, if applicable, shall procure that the Approved Manager complies with this requirement; and

 

(d)

does not employ that Ship, nor allows it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

 

13.12

Alteration to terms of insurances

The Borrower shall procure that no Owner either makes or agrees to any alteration to the terms of any obligatory insurance or waives any right relating to any obligatory insurance.

 

13.13

Settlement of claims

The Borrower shall procure that no Owner shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances and shall do all things necessary to ensure such collection or recovery is made.

 

13.14

Provision of copies of communications

The Borrower shall procure that each Owner provides the Security Trustee, when so requested, copies of all written communications between that Owner and:

 

(a)

the approved brokers;

 

(b)

the approved protection and indemnity and/or war risks associations; and

 

(c)

the approved insurance companies and/or underwriters, which relate directly or indirectly to:

 

  (i)

that Owner’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

 

  (ii)

any credit arrangements made between that Owner and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

 

13.15

Provision of information and further undertakings

In addition, the Borrower shall procure that each Owner shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

 

(a)

obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

 

52


(b)

effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 (Mortgagee’s interest and additional perils insurances) or dealing with or considering any matters relating to any such insurances,

and that Owner shall:

 

  (i)

do all things necessary and provide the Agent and the Security Trustee with all documents and information to enable the Security Trustee to collect or recover any moneys in respect of the Insurances which are payable to the Security Trustee pursuant to the Finance Documents; and

 

  (ii)

promptly provide the Agent with full information regarding any Major Casualty in consequence whereof the Ship owned by that Owner has become or may become a Total Loss and agree to any settlement of such casualty or other accident or damage to that Ship only with the Agent’s prior written consent,

and that Owner shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).

 

13.16

Mortgagee’s interest and additional perils insurances

The Security Trustee shall be entitled from time to time to effect, maintain and renew all or any of the following insurances in such amounts, on such terms, through such insurers and generally in such manner as the Majority Lenders may from time to time consider appropriate:

 

(a)

a mortgagee’s interest insurance providing for the indemnification of the Creditor Parties for any losses under or in connection with any Finance Document (in an amount which is equal to 120 per cent. of the aggregate of (A) the Loan multiplied by a fraction whose: (1) nominator is the Market Value of the Ship owned by that Owner; and (2) denominator is the Market Value of all Mortgaged Ships and (B) the principal amount secured by any equal or prior ranking Security Interest on that Ship) which directly or indirectly result from loss of or damage to a Ship or a liability of that Ship or of the Owner owning that Ship, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning:

 

  (i)

any act or omission on the part of that Owner, of any operator, charterer, manager or sub-manager of that Ship or of any officer, employee or agent of that Owner or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;

 

  (ii)

any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of that Owner, any other person referred to in paragraph (i) above, or of any officer, employee or agent of that Owner or of such a person, including the casting away or damaging of that Ship and/or that Ship being unseaworthy; and/or

 

  (iii)

any other matter capable of being insured against under a mortgagee’s interest marine insurance policy whether or not similar to the foregoing; and

 

53


(b)

a mortgagee’s interest additional perils insurance providing for the indemnification of the Creditor Parties against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of a Ship, the imposition of any Security Interest over that Ship and/or any other matter capable of being insured against under a mortgagee’s interest additional perils policy whether or not similar to the foregoing, and in an amount which is equal to 110 per cent. of the aggregate of (A) the Loan multiplied by a fraction whose: (1) nominator is the Market Value of the Ship owned by that Owner; and (2) denominator is the Market Value of all Mortgaged Ships and (B) the principal amount secured by any equal or prior ranking Security Interest on that Ship,

and the Borrower shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

 

13.17

Review of insurance requirements

The Security Trustee shall be entitled to review the requirements of this Clause 13 (Insurance) from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Agent (acting on the instructions of the Majority Lenders), significant and capable of affecting the Owners, each Ship and its Insurances (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Owner owning that Ship may be subject) and the Borrower shall upon demand fully indemnify the Agent in respect of all fees and other expenses incurred by or for the account of the Agent in appointing an independent marine insurance broker or adviser to conduct such review.

 

13.18

Modification of insurance requirements

The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.17 (Review of insurance requirements ) to the requirements of this Clause 13 (Insurance) which the Security Trustee reasonably considers appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 13 (Insurance) and shall bind the Borrower accordingly.

 

13.19

Compliance with mortgagee’s instructions

The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the Owner owning that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.18 (Modification of insurance requirements).

 

14

SHIP COVENANTS

 

14.1

General

The Borrower also undertakes with each Creditor Party on and from the Drawdown Date to comply or to procure that each Owner complies with the following provisions of this Clause 14 (Ship covenants) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing (such permission not to be unreasonably withheld in respect of a change of an Approved Flag under Clause 14.2) (Ship’s name and registration).

 

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14.2

Ship’s name and registration

The Borrower shall procure that each Owner shall keep the Ship owned by it registered in its name under an Approved Flag; shall not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of that Ship.

 

14.3

Repair and classification

The Borrower shall procure that each Owner ensures that the Approved Manager shall, keep the Ship owned by that Owner in a good and safe condition and state of repair, sea and cargo worthy in all respects:

 

(a)

consistent with first-class ship ownership and management practice;

 

(b)

so as to maintain the highest class free of overdue recommendations and conditions, with an Approved Classification Society; and

 

(c)

so as to comply with all laws and regulations applicable to vessels registered at ports in the applicable Approved Flag State or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code,

and the Agent shall be given power of attorney in the form attached as Schedule 6to act on behalf of the relevant Owner in order to, inspect the class records and any files held by the classification society and to require the classification society to provide the Agent or any of its nominees with any information, document or file, it might request and the classification society shall be fully entitled to rely hereon without any further inquiry.

 

14.4

Classification society undertaking

The Borrower shall procure that each Owner instructs the classification society referred to in Clause 14.3 (Repair and classification) (and procure that the classification society undertakes with the Security Trustee) in relation to its Ship:

 

(a)

to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records and any other related records held by the classification society in relation to the Ship owned by that Owner;

 

(b)

to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Ship at the offices of the classification society and to take copies of them;

 

(c)

to notify the Security Trustee immediately in writing if the classification society:

 

  (i)

receives notification from that Owner or any person that that Ship’s classification society is to be changed; or

 

  (ii)

becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship’s class under the rules or terms and conditions of that Owner’s or that Ship’s membership of the classification society;

 

55


(d)

following receipt of a written request from the Security Trustee:

 

  (i)

to confirm that that Owner is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or

 

  (ii)

if that Owner is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.

 

14.5

Hazardous materials and sustainable dismantling

 

(a)

The Borrower shall procure that each Owner carries on board of its Ship the inventory of hazardous materials required by the classification society of the Ship on board that Ship.

 

(b)

The Borrower shall procure that each Owner ensures that in the event its Ship is permanently put out of service, it is dismantled at, or sold for dismantling only to buyers that undertake to dismantle the Ship at, a ship yard complying with such standards as are required by the Hong Kong International Convention for the safe and environmentally sound recycling of ships of 15 May 2009 or by the regulation (EG) no 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste.

 

14.6

Sustainability reporting

 

(a)

The Borrower shall, at its own cost, starting with the calendar year ending 31 December 2021, supply or procure the supply by the Approved Classification Society to the Agent of all information regarding the annual emissions in respect of each Ship for the preceding calendar year as provided to the IMO and shall issue and publish a sustainability report necessary in order for any Lender to comply with its obligations regarding that Lender’s portfolio climate alignment.

 

14.7

Modification

The Borrower shall procure that no Owner shall make any modification or repairs to, or replacement of, its Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.

 

14.8

Removal of parts

The Borrower shall procure that no Owner shall remove any material part of its Ship, or any item of equipment installed on that Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on that Ship the property of that Owner and subject to the security constituted by the relevant Mortgage Provided that an Owner may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.

 

14.9

Surveys

The Borrower shall procure that each Owner submits the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports.

 

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14.10

Inspection

The Borrower shall procure that each Owner permits the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by that Owner at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections at the Borrower’s expense (which if no Event of Default has occurred and is continuing shall be limited to once in each calendar year).

 

14.11

Prevention of and release from arrest

The Borrower shall procure that each Owner promptly discharges:

 

(a)

all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;

 

(b)

all taxes, dues and other amounts charged in respect of that Ship, the Earnings or the Insurances; and

 

(c)

all other outgoings whatsoever in respect of that Ship, the Earnings or the Insurances,

and, forthwith upon receiving notice of the arrest of that Ship, or of its detention in exercise or purported exercise of any lien or claim, that Owner shall procure its release by providing bail or otherwise as the circumstances may require.

 

14.12

Compliance with laws etc.

The Borrower shall procure that each Owner shall:

 

(a)

comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Owner;

 

(b)

not employ the Ship owned by it nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

 

(c)

in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit that Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship’s war risks insurers unless the prior written consent of the Security Trustee has been given and that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.

 

14.13

Provision of information

The Borrower shall procure that each Owner shall promptly provide the Security Trustee with any information which it requests regarding:

 

(a)

the Ship owned by it, its employment, position and engagements;

 

(b)

the Earnings and payments and amounts due to the master and crew of that Ship;

 

57


(c)

any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made in respect of that Ship;

 

(d)

any towages and salvages; and

 

(e)

its compliance, the Approved Manager’s compliance and the compliance of that Ship with the ISM Code and the ISPS Code,

and, upon the Security Trustee’s request, provide copies of any current charter relating to that Ship, of any current charter guarantee and copies of that Owner’s or the Approved Manager’s Document of Compliance, Safety Management Certificate and the ISSC.

 

14.14

Notification of certain events

The Borrower shall procure each Owner:

 

(a)

before entering into:

 

  (i)

any demise charter for any period in respect of its Ship; or

 

  (ii)

any other Assignable Charter,

shall notify the Agent and provide copies of any draft charter relating to its Ship and, if applicable, any draft charter guarantee and that Owner shall be entitled to enter into such charter without the consent of the Creditor Parties Provided that:

 

  (A)

that Owner executes in favour of the Security Trustee a specific assignment of all its rights, title and interest in and to such charter and any charter guarantee in the form of a Charterparty Assignment;

 

  (B)

the charterer and any charter guarantor receive a notice (1) of the specific assignment of such charter and charter guarantee and (2) that the Mortgage over that Ship has been registered prior to the entry into such charter;

 

  (C)

in the case where such charter is a demise charter the charterer undertakes to the Security Trustee (1) to comply with all of that Owner’s undertakings with regard to the employment, insurances, operation, repairs and maintenance of its Ship contained in this Agreement, the Mortgage and the General Assignment in relation to that Ship and (2) to provide an assignment of its interest in the insurances of the Ship in the Agreed Form;

 

  (D)

the relevant Owner provides certified true and complete copies of the charter relating to its Ship and of any current charter guarantee, if any, promptly after its execution;

 

  (E)

the Agent’s receipt of a copy of the charter and its failure or neglect to act, delay or acquiescence in connection with the relevant Owner’s entering into such charter shall not in any way constitute an acceptance by the Agent of whether or not the Earnings under the charter are sufficient to meet the debt service requirements under this Agreement nor shall it in any way affect the Agent’s or the Security Trustee’s entitlement to exercise its rights under the Finance Documents pursuant to Clause 19 (Events of default) upon the occurrence of an Event of Default arising as a result of an act or omission of the charterer; and

 

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  (F)

the Borrower delivers to the Agent such other documents equivalent to those referred to at paragraphs 2, 3, 4, 5, 7, 8 and 9 of Schedule 3 (Condition Precedent Documents), Schedule 1Part A as the Agent may require; and

 

(b)

shall immediately notify the Security Trustee by letter, of:

 

  (i)

its entry into any agreement or arrangement for the postponement of any date on which any Earnings are due, the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of that Owner to any Earnings;

 

  (ii)

its entry into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

 

  (iii)

any casualty which is or is likely to be or to become a Major Casualty;

 

  (iv)

any material insurance claim in relation to a Ship;

 

  (v)

any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

 

  (vi)

any requirement, overdue condition or recommendation made by any insurer or classification society or by any competent authority which is not complied with in accordance with its terms;

 

  (vii)

any arrest or detention of that Ship, any exercise or purported exercise of any lien on that Ship or its Earnings or any requisition of that Ship for hire;

 

  (viii)

any unscheduled dry docking of that Ship;

 

  (ix)

any Environmental Claim made against that Owner or in connection with that Ship, or any Environmental Incident;

 

  (x)

any claim for breach of the ISM Code or the ISPS Code being made against that Owner, the Approved Manager or otherwise in connection with that Ship;

 

  (xi)

its intention to de-activate or lay up its Ship; or

 

  (xii)

any other matter, event or incident, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and that Owner shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Owner’s, the Approved Manager’s or any other person’s response to any of those events or matters.

 

14.15

Restrictions on chartering, appointment of managers etc.

The Borrower shall procure that no Owner shall, in relation to the Ship owned by it:

 

(a)

enter into any charter in relation to that Ship under which more than two months’ hire (or the equivalent) is payable in advance;

 

59


(b)

charter that Ship otherwise than on bona fide arm’s length terms at the time when that Ship is fixed;

 

(c)

appoint a manager of that Ship other than the Approved Manager; or

 

(d)

put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason.

 

14.16

Notice of Mortgage

The Borrower shall procure that each Owner shall keep the Mortgage relative to its Ship registered against that Ship as a valid first preferred or, as the case may be, priority mortgage, carry on board that Ship a certified copy of that Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Owner to the Security Trustee.

 

14.17

Sharing of Earnings

The Borrower shall procure that no Owner shall enter into any agreement or arrangement for the sharing of any Earnings (other than (i) any profit sharing agreement with a charterer which takes effect above an agreed minimum charter hire rate payable to the relevant Owner under a charter to which that Owner is a party and (ii) any pool agreement, in either case, on bona fide arm’s length terms).

 

14.18

ISPS Code

The Borrower shall procure that each Owner shall comply with the ISPS Code and in particular, without limitation, shall:

 

(a)

procure that the Ship owned by it and the company responsible for that Ship’s compliance with the ISPS Code comply with the ISPS Code; and

 

(b)

maintain for that Ship an ISSC; and

 

(c)

notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

 

15

SECURITY COVER

 

15.1

Minimum required security cover

 

(a)

Clause 15.2(a) (Prepayment; provision of additional security) applies if the Agent notifies the Borrower that the Senior Advance Security Cover Ratio is below 135 per cent at any time during the Security Period; and

 

(b)

Clause 15.2(b) (Prepayment; provision of additional security )applies if the Agent notifies the Borrower that the Security Cover Ratio is:

 

  (i)

for the period starting on the Drawdown Date and ending on 29 April 2022 inclusive, below 118%; or

 

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  (ii)

at all times thereafter, below 125%.

 

15.2

Prepayment; provision of additional security

 

(a)

If the Agent serves a notice on the Borrower under Clause 15.1(a) (Minimum required security cover) the Borrower shall prepay such part at least of the Senior Advance as will eliminate the shortfall on or before the date falling 14 Business Days after the date on which the Agent’s notice is served under Clause 15.1(a) (Minimum required security cover) (the “Senior Advance Shortfall Prepayment Date”) unless at least five calendar days before the Senior Advance Shortfall Prepayment Date the Borrower has provided, or ensured that a third party has provided, additional security which, in the reasonable opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require.

 

(b)

If the Agent serves a notice on the Borrower under Clause 15.1(b) (Minimum required security cover)15.1(a), the Borrower shall prepay such part at least of the Loan as will eliminate the shortfall on or before the date falling 14 Business Days after the date on which the Agent’s notice is served under Clause 15.1(a) (Minimum required security cover) (the “Loan Shortfall Prepayment Date”) unless at least five calendar days before the Loan Shortfall Prepayment Date the Borrower has provided, or ensured that a third party has provided, additional security which, in the reasonable opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require.

 

15.3

Valuation of Ships

The Market Value of a Ship:

 

(a)

for the purposes of the Initial Market Value, is that shown in one valuation addressed to the Agent issued by one Approved Broker to be nominated and appointed by the Agent. If the Borrower does not agree with such valuation, the Borrower can nominate another Approved Broker to provide a second valuation addressed to the Agent and appointed by the Agent, in which case the Initial Market Value is that shown by taking the arithmetic average of such two valuations. If the difference between these two valuations is greater than 15 per cent. paragraph (d) of this Clause 15.3 (Valuation of Ships) shall be applicable; and

 

(b)

at any other date, is that shown in one valuation addressed to the Agent to be issued by an Approved Broker, nominated and appointed by the Borrower and addressed to the Agent (the “First Valuation”) unless the Agent obtains a second valuation issued by an Approved Broker nominated and appointed by the Agent (the “Second Valuation”) in which case the Market Value of the relevant Ship at the relevant date is that shown:

 

  (i)

if the difference between the First Valuation and the Second Valuation is less than 10 per cent., by the First Valuation; and

 

  (ii)

if the difference between the First Valuation and the Second Valuation is greater than 10 per cent. but less than 15 per cent. or less, by taking the arithmetic average of such two valuations,

 

(c)

each valuation issued pursuant to paragraphs (a) and (b) of this Clause 15.3 (Valuation of Ships) to be prepared:

 

  (A)

as at a date not more than 30 days previously;

 

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  (B)

with or without physical inspection of that Ship (as the Agent may require); and

 

  (C)

on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment; and

 

(d)

if the difference between 2 valuations in respect of a Ship obtained at any one time, in each case, pursuant to this Clause 15.3 (Valuation of Ships) is greater than 15 per cent. a valuation shall be commissioned from a third Approved Broker selected and appointed by the Agent. Such valuation to be conducted in accordance with this Clause 15.3 (Valuation of Ships) and the Market Value of that Ship in such circumstances shall be the arithmetic average of all three valuations.

 

15.4

Value of additional vessel security

The net realisable value of any additional security which is provided under Clause 15.2 (Prepayment; provision of additional security) and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.3 (Valuation of Ships).

 

15.5

Valuations binding

Any valuation under Clause 15.2 (Prepayment; provision of additional security), 15.3 (Valuation of Ships ) or 15.4 (Value of additional vessel security) shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Security Interest.

 

15.6

Provision of information

The Borrower shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.3 (Valuation of Ships) or 15.4 (Value of additional vessel security) with any information which the Agent or that Approved Broker or expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which that Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

 

15.7

Payment of valuation expenses

Without prejudice to the generality of the Borrower’s obligations under Clauses 20.2 (Costs of negotiation, preparation etc.), 20.3 (Costs of variations, amendments enforcement etc.) and 21.3 (Other breakage), the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or expert instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.

 

15.8

Frequency of valuations

The Borrower shall provide the Agent with a valuation of each Ship, dated as of June or, as the case may be, December of each calendar year during the Security Period, within the month of July or January following thereafter respectively and the Agent may, otherwise, request valuations to determine the Borrower’s compliance under Clause 15.1 (Minimum required security cover) not less than twice during each 12-month period during the Security Period.

 

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16

PAYMENTS AND CALCULATIONS

 

16.1

Currency and method of payments

All payments to be made by the Lenders or by the Borrower or any Owner under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

 

(a)

by not later than 11.00 a.m. (New York City time) on the due date;

 

(b)

in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

 

(c)

in the case of an amount payable by a Lender to the Agent or by the Borrower or any Owner to the Agent or any Lender, to the account of the Agent at J.P. Morgan Chase Bank (SWIFT Code CHASUS33) (Account No. 001 1331 808 in favour of Hamburg Commercial Bank AG, SWIFT Code HSHNDEHH; Reference “Navios Maritime Acquisition Corporation”) or to such other account with such other bank as the Agent may from time to time notify to the Borrower and the other Creditor Parties; and

 

(d)

in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrower and the other Creditor Parties.

 

16.2

Payment on non-Business Day

If any payment by the Borrower or any Owner under a Finance Document would otherwise fall due on a day which is not a Business Day:

 

(a)

the due date shall be extended to the next succeeding Business Day; or

 

(b)

if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

 

16.3

Basis for calculation of periodic payments

All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

 

16.4

Distribution of payments to Creditor Parties

Subject to Clauses 16.5 (Permitted deductions by Agent), 16.6 (Agent only obliged to pay when monies received) and 16.7 (Refund to Agent of monies not received):

 

(a)

any amount received by the Agent under a Finance Document for distribution or remittance to a Lender or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender or the Security Trustee may have notified to the Agent not less than five Business Days previously; and

 

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(b)

amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

 

16.5

Permitted deductions by Agent

Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

 

16.6

Agent only obliged to pay when monies received

Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender until the Agent has satisfied itself that it has received that sum.

 

16.7

Refund to Agent of monies not received

If and to the extent that the Agent makes available a sum to the Borrower or a Lender, without first having received that sum, the Borrower or (as the case may be) the Lender concerned shall, on demand:

 

(a)

refund the sum in full to the Agent; and

 

(b)

pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

 

16.8

Agent may assume receipt

Clause 16.7 (Refund to Agent of monies not received) shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

 

16.9

Creditor Party accounts

Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

 

16.10

Agent’s memorandum account

The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

 

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16.11

Accounts prima facie evidence

If any accounts maintained under Clauses 16.9 (Creditor Party accounts) and 16.10 (Agent’s memorandum account) show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.

 

17

APPLICATION OF RECEIPTS

 

17.1

Normal order of application

Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

 

(a)

FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:

 

  (i)

firstly, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents (including, but without limitation, all amounts payable by any Borrower under Clauses 20 (Fees and Expenses), 21 (Indemnities) and 22 (No set-Off or Tax deduction)of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document) other than those amounts referred to at paragraphs (ii) and (iii);

 

  (ii)

secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents in respect of the Senior Advance;

 

  (iii)

thirdly, in or towards satisfaction of the Senior Advance;

 

  (iv)

fourthly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents in respect of the Junior Advance; and

 

  (v)

fifthly, in or towards satisfaction of the Junior Advance; and

SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrower, the Security Parties and the other Creditor Parties, states in its opinion will either or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a) (Normal order of application); and

 

(b)

THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

 

17.2

Application by any covered bond Lender

If and to the extent that any Lender includes the Loan and/or a Mortgage in its covered bond register, any enforcement proceeds recovered under the Finance Documents and attributable to it under the relevant Finance Document shall, notwithstanding the provisions of Clause 17.1(a) (Normal order of application), be applied by it first to the part of the Loan that corresponds to that Lender’s Contribution registered in its covered bond register and thereafter in the following order:

 

(a)

firstly, in or towards satisfaction of the amounts set out under Clause 17.1(a)(i);

 

65


(b)

secondly, in or towards satisfaction of the amounts set out under Clause 17.1(a)(ii); and

 

(c)

thirdly, in or towards satisfaction of any part of the Loan that corresponds to any unregistered part of that Lender’s contribution.

 

17.3

Variation of order of application

The Agent may, with the authorisation of the Majority Lenders, by notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 (Normal order of application) but not, for the avoidance of doubt, that set out in Clause 17.2 (Application by any covered bond Lender) either as regards a specified sum or sums or as regards sums in a specified category or categories.

 

17.4

Notice of variation of order of application

The Agent may give notices under Clause 17.3 (Variation of order of application)from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

 

17.5

Appropriation rights overridden

This Clause 17 (Application of Receipts) and any notice which the Agent gives under Clause 17.3 (Variation of order of application) shall override any right of appropriation possessed, and any appropriation made, by the Borrower or either Security Party.

 

18

APPLICATION OF EARNINGS

 

18.1

Payment of Earnings

The Borrower undertakes with each Creditor Party that, throughout the Security Period (and subject only to the provisions of the General Assignment to which it is a party):

 

(a)

the Accounts shall be maintained with the Account Bank; and

 

(b)

all Earnings of the Ship shall be paid to the Earnings Account for that Ship;

 

(c)

the applicable Mandatory Minimum Liquidity Amount and Additional Minimum Liquidity Amount required pursuant to Clause 11.20(Minimum Liquidity) shall be maintained in the Minimum Liquidity Account.

 

(d)

the applicable Reserve Amounts required pursuant to Clause 11.21(Reserve Amounts) shall be accumulated and maintained in the Reserve Account.

 

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18.2

Monthly retentions

The Borrower undertakes with each Creditor Party to ensure that, on and from the date falling one month after the Drawdown Date and at monthly intervals thereafter during the Security Period, there are transferred to the Retention Account out of the Earnings received in the relevant Earnings Account during the preceding month:

 

(a)

one-third of the amount of the relevant Instalment falling due under Clause 8.1 (Amount of Instalments) on the next Repayment Date; and

 

(b)

the relevant fraction of the aggregate amount of interest which is payable on the next due date for payment of interest under this Agreement,

and the Borrower irrevocably authorises the Agent to make those transfers on behalf of the Owners (in its sole discretion and without any obligation) if the Owners fail to do so.

The “relevant fraction”, in relation to paragraph (b), is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period (or if the current Interest Period ends after the next due date for payment of interest under this Agreement, the number of months from the later of the commencement of the current Interest Period or the last due date for payment of interest to the next due date for payment of interest under this Agreement).

 

18.3

Shortfall in Earnings

If the aggregate Earnings received in each Earnings Account are insufficient at any time for the required amount to be transferred to the Retention Account under Clause 18.2 (Monthly retentions), the Borrower shall procure that the Owners shall immediately pay the amount of the insufficiency into the Retention Account.

 

18.4

Application of retentions

Until an Event of Default or a Potential Event of Default occurs, the Agent shall, to the extent there are sufficient funds standing to the credit of the Retention Account, on each Repayment Date and on each due date for the payment of interest under this Agreement distribute to the Lenders in accordance with Clause 16.4 (Distribution of Payments to Creditor Parties)so much of the then balance on the Retention Account as equals:

 

(a)

the Instalment due on that Repayment Date pursuant to Clause 8.1 (Amount of Instalments); or

 

(b)

the amount of interest in respect of the Loan payable on that interest payment date,

in discharge of the Borrower’s liability for that Instalment or that interest.

 

18.5

Interest accrued on the Accounts

Any credit balance on each Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on that Account.

 

18.6

Release of accrued interest

Interest accruing under Clause 18.5 (Interest accrued on the Accounts) shall be credited to the relevant Account and may be released to the relevant Owner pursuant to Clause 18.10 (Restriction on withdrawal).

 

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18.7

Location of Accounts

The Borrower shall, and shall procure that each Owner will, promptly:

 

(a)

comply with any requirement of the Agent as to the location or re-location of the Accounts (or any of them); and

 

(b)

execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts.

 

18.8

Debits for fees, expenses etc.

The Agent shall be entitled (but not obliged) from time to time to debit any Earnings Account without prior notice in order to discharge any amount due and payable under Clauses 20 (Fees and Expenses) or 21 (Indemnities) to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clauses 20 (Fees and Expenses) or 21 (Indemnities).

 

18.9

Borrower’s obligations unaffected

The provisions of this Clause 18 (Application of Earnings) (as distinct from a distribution effected under Clause 18.4 (Application of retentions)) do not affect:

 

(a)

the liability of the Borrower to make payments of principal and interest on the due dates; or

 

(b)

any other liability or obligation of the Borrower or any Security Party under any Finance Document.

 

18.10

Restriction on withdrawal

During the Security Period no sum may be withdrawn by the Borrower or an Owner from the Retention Account (other than interest pursuant to Clause 18.6 (Release of accrued interest), provided that no Event of Default or Potential Event of Default has occurred which is continuing), without the prior written consent of the Agent.

The Borrower or the Owners may, in any calendar month, after having transferred and/or after having taken into account all amounts due or which will become due to be transferred to the Retention Account in such calendar month in accordance with Clause 18.2 (Monthly retentions), withdraw any surplus (a “Surplus”) from the Earnings Accounts (or any of them) as they may think fit for purposes permitted by this Agreement and the other Finance Documents Provided always no Event of Default or Potential Event of Default has occurred which is continuing in which case any Surplus shall remain on the relevant Earnings Account and the Borrower or Owners may only withdraw the Surplus (or any part thereof) with the prior written consent of the Agent (acting upon the instructions of the Majority Lenders) in order to satisfy the documented and properly incurred operating expenses of the Ships (or any of them).

 

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19

EVENTS OF DEFAULT

 

19.1

Events of Default

An Event of Default occurs if:

 

(a)

any Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document unless:

 

  (i)

its failure to pay is caused by administrative or technical error or a Disruption Event; and

 

  (ii)

payment is made within 3 Business Days; or

 

(b)

any breach by the Borrower, the Approved Manager or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a)) which, in the reasonable opinion of the Majority Lenders, is capable of remedy, and such default continues unremedied 30 Business Days (or any other grace period agreed by the Agent) after written notice from the Agent requesting action to remedy the same; or

 

(c)

(subject to any applicable grace period specified in the Finance Documents) any material breach by the Borrower, the Approved Manager or any Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a) or (b)); or

 

(d)

any representation, warranty or statement made or repeated by, or by an officer of, the Borrower, the Approved Manager or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading in any material respect when it is made or repeated; or

 

(e)

any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

 

  (i)

any Financial Indebtedness of a Relevant Person is not paid when due unless the Relevant Person is contesting its obligation to pay the relevant amount in good faith and on substantial grounds and by appropriate proceedings and adequate reserves have been set aside for its payment if such proceedings fail; or

 

  (ii)

any Financial Indebtedness of a Relevant Person which in the case of any Relevant Person other than any Owner exceeds $15,000,000 (or the equivalent in any other currency in aggregate), becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

 

  (iii)

any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person which in the case of any Relevant Person other than any Owner exceeds $15,000,000 (or the equivalent in any other currency in aggregate) ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

 

  (iv)

any Security Interest securing any Financial Indebtedness of a Relevant Person, which in the case of any Relevant Person other than any Owner exceeds an amount of $15,000,000 (or the equivalent in any other currency in aggregate), becomes enforceable; or

 

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(f)

any of the following occurs in relation to a Relevant Person:

 

  (i)

a Relevant Person becomes, in the reasonable opinion of the Majority Lenders, unable to pay its debts as they fall due; or

 

  (ii)

any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress or any form of freezing order which in the case of any Relevant Person other than any Owner exceeds $15,000,000 (or the equivalent in any other currency in aggregate), and such execution, attachment, arrest, sequestration, distress or freezing order is not withdrawn within thirty (30) Business Days; or

 

  (iii)

any administrative or other receiver is appointed over any asset of a Relevant Person; or

 

  (iv)

an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or

 

  (v)

any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors or officers of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or

 

  (vi)

a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or

 

  (vii)

a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the shareholders, directors or officers of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than three months after the commencement of the winding up; or

 

  (viii)

an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person in any Pertinent Jurisdiction, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 60 days of being made or presented, or (bb) within 60 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or

 

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  (ix)

a Relevant Person or its directors or officers take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or

 

  (x)

any meeting of the shareholders or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the shareholders, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or

 

  (xi)

in a Pertinent Jurisdiction other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the reasonable opinion of the Majority Lenders is similar to any of the foregoing; or

 

(g)

the Borrower or any Owner ceases or suspends carrying on its business or a part of its business which, in the reasonable opinion of the Majority Lenders, is material in the context of this Agreement; or

 

(h)

it becomes unlawful in any Pertinent Jurisdiction or impossible:

 

  (i)

for the Borrower, the Approved Manager or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

 

  (ii)

for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

 

(i)

any official consent necessary to enable any Owner to own, operate or charter the Ship owned by it or to enable any Owner, the Approved Manager or any Security Party to comply with any provision which the Majority Lenders reasonably consider material of a Finance Document or any Underlying Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled unless such revocation is validly contested in good faith by the Borrower, the Approved Manager or, as the case may be, that Security Party; or

 

(j)

it appears to the Majority Lenders that, without their prior consent, a Change of Control has occurred after the date of this Agreement; or

 

(k)

any provision which the Majority Lenders reasonably consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest (excluding any Permitted Security Interests); or

 

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(l)

the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

 

(m)

the Borrower, the Approved Manager or any Security Party or any other person (other than a Creditor Party) repudiates any of the Finance Documents to which the Borrower, the Approved Manager or that Security Party or person is a party or evidences an intention to do so; or

 

(n)

any other event occurs or any other circumstances arise or develop including, without limitation:

 

  (i)

a change in the financial position, state of affairs or prospects of the Borrower or any other Security Party; or

 

  (ii)

the commencement of legal or administrative action involving the Borrower, a Ship, either of the Approved Manager or any Security Party; or

 

  (iii)

the withdrawal of any material license or governmental or regulatory approval in respect of a Ship, an Owner, the Approved Manager or any Owner’s or Approved Manager’s business (unless such withdrawal can be contested with the effect of suspension and is in fact so contested in good faith by the Borrower or the Approved Manager),

which in the reasonable opinion of the Lenders constitutes a Material Adverse Change.

 

19.2

Actions following an Event of Default

On, or at any time after, the occurrence of an Event of Default:

 

(a)

the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

 

  (i)

serve on the Borrower a notice stating that all or part of the Commitments and of the other obligations of each Lender to the Borrower under this Agreement are cancelled; and/or

 

  (ii)

serve on the Borrower a notice stating that all or part of the Loan together with accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

 

  (iii)

take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

 

(b)

the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a)(i) or (a)(ii), the Security Trustee, the Agent, the Mandated Lead Arranger and/or the Lenders are entitled to take under any Finance Document or any applicable law.

 

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19.3

Termination of Commitments

On the service of a notice under Clause 19.2(a)(i) (Actions following an Event of Default), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall be cancelled.

 

19.4

Acceleration of Loan

On the service of a notice under Clause 19.2(a)(ii) (Actions following an Event of Default), all or, as the case may be, the part of the Loan specified in the notice together with accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

 

19.5

Multiple notices; action without notice

The Agent may serve notices under Clauses 19.2(a)(i) (Actions following an Event of Default) or 19.2(a)(ii) (Actions following an Event of Default )simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 (Actions following an Event of Default) if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

 

19.6

Notification of Creditor Parties and Security Parties

The Agent shall send to each Lender, the Security Trustee, the Approved Manager and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower, the Approved Manager or any Security Party with any form of claim or defence.

 

19.7

Creditor Party rights unimpaired

Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 (Interests several).

 

19.8

Exclusion of Creditor Party liability

No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to a Borrower or a Security Party:

 

(a)

for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

 

(b)

as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

 

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except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been directly and mainly caused by gross negligence, the dishonesty or the wilful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

 

19.9

Relevant Persons

In this Clause 19 (Events of default), a “Relevant Person” means a Borrower or any Security Party.

 

19.10

Interpretation

In Clause 19.1(e) (Events of default)references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(f) (Events of default)petition” includes an application.

 

20

FEES AND EXPENSES

 

20.1

Fees

The Borrower shall pay to the Agent a non-refundable commitment fee, at the rate of 1.00 per cent. per annum on the undrawn or uncancelled amount of the Total Commitments, payable quarterly in arrears for distribution among the Lenders pro rata to their Commitments (being from 7 May 2021 until 29 July 2021 US$152,875,000 in relation to Hamburg Commercial Bank AG and US$50,000,000 in relation to Alpha Bank A.E. and thereafter US$147,230,964.26 in relation to Hamburg Commercial Bank AG and US$48,154,035.74 in relation to Alpha Bank A.E.), during the period from 7 May 2021 to the earlier of (i) the Drawdown Date and (ii) the last day of the Availability Period.

 

20.2

Costs of negotiation, preparation etc.

The Borrower shall pay to the Agent on its demand the amount of all legal and other expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

 

20.3

Costs of variations, amendments, enforcement etc.

The Borrower shall pay to the Agent, on the Agent’s demand, for the account of the Creditor Party concerned, the amount of all legal and other expenses incurred by a Creditor Party in connection with:

 

(a)

any amendment or supplement (or any proposal for such an amendment or supplement) requested (or, in the case of a proposal, made) by or on behalf of the Borrower and relating to a Finance Document or any other Pertinent Document contemplated in Clause 27.5 (Replacement of Screen Rate);

 

(b)

any consent, waiver or suspension of rights by the Lenders, the Majority Lenders or the Creditor Party concerned or any proposal for any of the foregoing requested (or, in the case of a proposal, made) by or on behalf of the Borrower under or in connection with a Finance Document or any other Pertinent Document;

 

(c)

the valuation of any security provided or offered under and pursuant to Clause 15 (Security Cover) or any other matter relating to such security;

 

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(d)

any step taken by the Creditor Party concerned with a view to the preservation, protection, exercise or enforcement of any rights or Security Interest created by a Finance Document or for any similar purpose including, without limitation, any proceedings to recover or retain proceeds of enforcement or any other proceedings following enforcement proceedings until the date all outstanding indebtedness to the Creditor Parties under the Finance Documents and any other Pertinent Document is repaid in full; or

 

(e)

any amendment or supplement (or any proposal for such an amendment or supplement) in connection with a Finance Document or any other Pertinent Document required as contemplated in Clause 27.5 (Replacement of Screen Rate).

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

 

20.4

Documentary taxes

The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.

 

20.5

Certification of amounts

A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 (Fees and Expenses) and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

21

INDEMNITIES

 

21.1

Indemnities regarding borrowing and repayment of Loan

The Borrower shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

 

(a)

the relevant Advance not being borrowed on the date specified in the relevant Drawdown Notice for any reason other than a default by the Lender claiming the indemnity after the relevant Drawdown Notice has been served in accordance with the provisions of this Agreement;

 

(b)

the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

 

(c)

any failure (for whatever reason) by the Borrower (or any of them) to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7 (Default Interest) including but not limited to any costs and expenses of enforcing any Security Interests created by the Finance Documents and any claims, liabilities and losses which may be brought against, or incurred by, a Creditor Party when enforcing any Security Interests created by the Finance Documents; and

 

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(d)

the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19 (Event of default),

and in respect of any tax (other than tax on its overall net income and a FATCA Deduction) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

 

21.2

Break Costs

If a Lender (the “Notifying Lender”) notifies the Agent that as a consequence of receipt or recovery of all or any part of the Loan (a “Payment”) on a day other than the last day of an Interest Period applicable to the sum received or recovered the Notifying Lender has or will, with effect from a specified date, incur Break Costs:

 

(a)

the Agent shall promptly notify the Borrower of a notice it receives from a Notifying Lender under this Clause 21.2 (Break costs);

 

(b)

the Borrower shall, within five Business Days of the Agent’s demand, pay to the Agent for the account of the Notifying Lender the amount of such Break Costs; and

 

(c)

the Notifying Lender shall, as soon as reasonably practicable, following a request by the Borrower, provide a certificate confirming the amount of the Notifying Lender’s Break Costs for the Interest Period in which they accrue, such certificate to be, in the absence of manifest error, conclusive and binding on the Borrower.

In this Clause 21.2 (Break costs), “Break Costs” means, in relation to a Payment the amount (if any) by which:

 

  (i)

the interest which the Notifying Lender, should have received in accordance with Clause 5 (Interest) in respect of the sum received or recovered from the date of receipt or recovery of such Payment to the last day of the then current Interest Period applicable to the sum received or recovered had such Payment been made on the last day of such Interest Period;

exceeds

 

  (ii)

the amount which the Notifying Lender, would be able to obtain by placing an amount equal to such Payment on deposit with a leading bank in the Relevant Interbank Market for a period commencing on the Business Day following receipt or recovery of such Payment (as the case may be) and ending on the last day of the then current Interest Period applicable to the sum received or recovered.

 

21.3

Other breakage costs

Without limiting its generality, Clause 21.1 (Indemnities regarding borrowing and repayment of Loan) covers any claim, expense, liability or loss, including (without limitation) (i) a loss of a prospective profit, incurred by a Lender in borrowing, liquidating or re-employing deposits from third parties acquired, contracted for or arranged to fund, effect or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount) other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the gross negligence or wilful misconduct of the officers or employees of the Creditor Party concerned and (ii) any applicable legal fees.

 

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21.4

Miscellaneous indemnities

The Borrower shall fully indemnify each Creditor Party severally on their respective demands, without prejudice to any of their other rights under any of the Finance Documents, in respect of all claims, expenses, liabilities and losses which may be made or brought against or sustained or incurred by a Creditor Party, in any country, as a result of or in connection with:

 

(a)

any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

 

(b)

investigating any event which the Creditor Party concerned reasonably believes constitutes an Event of Default or Potential Event of Default; or

 

(c)

acting or relying on any notice, request or instruction which the Creditor Party concerned reasonably believes to be genuine, correct and appropriately authorised,

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty, gross negligence or wilful misconduct of the officers or employees of the Creditor Party concerned.

 

21.5

Environmental Indemnity

Without prejudice to the generality of Clause 21.4 (Miscellaneous indemnities), this Clause 21.5 (Environmental Indemnity) covers any claims, demands, proceedings, liabilities, taxes, losses, liabilities or expenses of every kind which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code or the ISPS Code, any Environmental Law.

 

21.6

Currency indemnity

If any sum due from the Borrower or any Security Party to a Creditor Party under a Finance Document or under any order, award or judgment relating to a Finance Document (a “Sum”) has to be converted from the currency in which the Finance Document provided for the Sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

 

(a)

making, filing or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

 

(b)

obtaining an order, judgment or award from any court or other tribunal in relation to any litigation or arbitration proceedings; or

 

(c)

enforcing any such order, judgment or award,

the Borrower shall as an independent obligation, within three Business Days of demand, indemnify the Creditor Party to whom that Sum is due against any cost, loss or liability arising when the payment actually received by that Creditor Party is converted at the available rate of exchange back into the Contractual Currency including any discrepancy between (A) the rate of exchange actually used to convert the Sum from the Payment Currency into the Contractual Currency and (B) the available rate of exchange.

 

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In this Clause 21.6 (Currency Indemnity), the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the Sum to purchase the Contractual Currency with the Payment Currency.

The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.

If any Creditor Party receives any Sum in a currency other than the Contractual Currency, the Borrower shall indemnify in full the Creditor Party concerned against any cost, loss or liability arising directly or indirectly from any conversion of such Sum to the Contractual Currency.

This Clause 21.6 (Currency Indemnity) creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

 

21.7

Certification of amounts

A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 (Indemnities) and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

21.8

Sums deemed due to a Lender

For the purposes of this Clause 21 (Indemnities), a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

 

22

NO SET-OFF OR TAX DEDUCTION

 

22.1

No deductions

All amounts due from the Borrower under a Finance Document shall be paid:

 

(a)

without any form of set-off, counter-claim, cross-claim or condition; and

 

(b)

free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

 

22.2

Grossing-up for taxes

If, at any time, the Borrower is required by law, regulation or regulatory requirement to make a tax deduction from any payment due under a Finance Document:

 

(a)

the Borrower shall notify the Agent as soon as it becomes aware of the requirement;

 

(b)

the amount due in respect of the payment shall be increased by the amount necessary to ensure that, after the making of such tax deduction, each Creditor Party receives on the due date for such payment (and retains free from any liability relating to the tax deduction) a net amount which is equal to the full amount which it would have received had no such tax deduction been required to be made; and

 

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(c)

the Borrower shall pay the full amount of the tax required to be deducted to the appropriate taxation authority promptly in accordance with the relevant law, regulation or regulatory requirement, and in any event before any fine or penalty arises.

 

22.3

Indemnity and evidence of payment of taxes

The Borrower shall fully indemnify each Creditor Party on the Agent’s demand in respect of all claims, expenses, liabilities and losses incurred by any Creditor Party by reason of any failure of the Borrower to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 22.2 (Grossing – up taxes). Within 30 days after making any tax deduction, the Borrower shall deliver to the Agent any receipts, certificates or other documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

 

22.4

Exclusion of tax on overall net income

In this Clause 22 (No set – Off or Tax deduction) “tax deduction” means any deduction or withholding from any payment due under a Finance Document for or on account of any present or future tax except:

 

(a)

tax on a Creditor Party’s overall net income; and

 

(b)

a FATCA Deduction.

 

22.5

FATCA Information

 

(a)

Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:

 

  (i)

confirm to that other Party whether it is:

 

  (A)

a FATCA Exempt Party; or

 

  (B)

not a FATCA Exempt Party; and

 

  (ii)

supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and

 

  (iii)

supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation or exchange of information regime.

 

(b)

If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

 

(c)

Paragraph (a) above shall not oblige any Creditor Party to do anything and sub-paragraph (iii) of paragraph (a) above shall not oblige any other Party to do anything which would or might in its reasonable opinion constitute a breach of:

 

  (i)

any law or regulation;

 

79


  (ii)

any fiduciary duty; or

 

  (iii)

any duty of confidentiality.

 

(d)

If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

 

(e)

If a Lender knows or has reason to know that the Borrower is a US Tax Obligor, or where the Agent reasonably believes that its obligations under FATCA require it, each Lender shall, within ten Business Days of:

 

  (i)

where the Lender knows or has reason to know that the Borrower is a US Tax Obligor and the relevant Lender is a Party as at the date of this Agreement, the date of this Agreement;

 

  (ii)

where the Lender knows or has reason to know that a Borrower is a US Tax Obligor and the relevant Lender became a Party after the date of this Agreement, the date on which the relevant Transfer Certificate became effective; or

 

  (iii)

the date of a request from the Agent,

supply to the Agent:

 

  (iv)

a withholding certificate on US Internal Revenue Service Form W-8 or Form W-9 (or any successor form) (as applicable); or

 

  (v)

any withholding statement and other documentation, authorisations and waivers as the Agent may require to certify or establish the status of such Lender under FATCA.

The Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Lender pursuant to this paragraph (e) to the Borrower, to the extent required for compliance with FATCA or any other law or regulation, and shall be entitled to rely on any such withholding certificate, withholding statement, documentation, authorisations and waivers provided without further verification. The Agent shall not be liable for any action taken by it under or in connection with this paragraph (e).

 

(f)

Each Lender agrees that if any withholding certificate, withholding statement, documentation, authorisations and waivers provided to the Agent pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, it shall promptly update such withholding certificate, withholding statement, documentation, authorisations and waivers or promptly notify the Agent in writing of its legal inability to do so. The Agent shall provide any such updated withholding certificate, withholding statement, documentation, authorisations and waivers to the Borrower, to the extent required for compliance with FATCA or any other law or regulation. The Agent shall not be liable for any action taken by it under or in connection with this paragraph (f).

 

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22.6

FATCA Deduction

 

(a)

Each Party may make any FATCA Deduction as it reasonably determines it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

 

(b)

Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify the Borrower and the Agent and the Agent shall notify the other Creditor Parties.

 

23

ILLEGALITY, ETC.

 

23.1

Illegality

This Clause 23 (Illegality, etc.) applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become:

 

(a)

unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

 

(b)

contrary to, or inconsistent with, any regulation,

for the Notifying Lender to perform, maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement or to fund or maintain the Loan.

 

23.2

Notification of illegality

The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 (Illegality) which the Agent receives from the Notifying Lender.

 

23.3

Prepayment; termination of Commitment

On the Agent notifying the Borrower under Clause 23.2 (Notification of Illegality), the Notifying Lender’s Commitment shall be immediately cancelled; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 23.1 (Illegality) as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender’s Contribution on the last day of the then current Interest Period in accordance with Clauses 8.10 (Amounts payable on prepayment) and 8.11 (Application of partial prepayment of cancellation).

 

24

INCREASED COSTS

 

24.1

Increased costs

This Clause 24 (Increased costs) applies if a Lender (the “Notifying Lender”) notifies the Agent that the Notifying Lender considers that as a result of:

 

(a)

the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender’s overall net income); or

 

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(b)

complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement; or

 

(c)

the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (the “Basel II Accord”) or any other law or regulation implementing the Basel II Accord or any of the approaches provided for and allowed to be used by banks under or in connection with the Basel II Accord, in each case when compared to the cost of complying with such regulations as determined by the Agent (or parent company of it) on the date of this Agreement (whether such implementation, application or compliance is by a government, regulator, supervisory authority, the Notifying Lender or its holding company); or

 

(d)

the implementation or application of or compliance with Basel III or any law or regulation which implements or applies Basel III (regardless of the date on which it is enacted, adopted or issued and regardless of whether any such implementation, application or compliance is by a government, regulator, the Notifying Lender or any of its affiliates),

the Notifying Lender (or a parent company of it) has incurred or will incur an “increased cost”.

24.2 Meaning of “increased cost”

In this Clause 24 (Increased costs), “increased cost” means, in relation to a Notifying Lender:

 

(a)

an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;

 

(b)

a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

 

(c)

an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender’s Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

 

(d)

a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement,

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 (Indemnities regarding borrowing and repayment of Loan)or by Clause 22 (No Set – Off or Tax Deduction) or a FATCA Deduction required to be made by a Party.

For the purposes of this Clause 24.2 (Meaning of “Increased cost”)the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

 

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24.3

Notification to Borrower of claim for increased costs

The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1 (Increased costs).

 

24.4

Payment of increased costs

The Borrower shall pay to the Agent within 5 Business Days after the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

 

24.5

Notice of prepayment

If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4 (Payment of increased costs), the Borrower may give the Agent not less than 14 days’ notice of their intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period.

 

24.6

Prepayment; termination of Commitment

A notice under Clause 24.5 (Notice of Prepayment) shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower’s notice of intended prepayment; and:

 

(a)

on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

 

(b)

on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

 

24.7

Application of prepayment

Clause 8 (Repayment and Prepayment) shall apply in relation to the prepayment.

 

25

SET-OFF

 

25.1

Application of credit balances

Each Creditor Party may without prior notice to the Borrower but with prior notice to the Agent:

 

(a)

apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and

 

(b)

for that purpose:

 

  (i)

break, or alter the maturity of, all or any part of a deposit of the Borrower;

 

  (ii)

convert or translate all or any part of a deposit or other credit balance into Dollars; and

 

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  (iii)

enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

 

25.2

Existing rights unaffected

No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1 (Application of credit balances); and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

 

25.3

Sums deemed due to a Lender

For the purposes of this Clause 25 (Set-Off), a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

 

25.4

No Security Interest

This Clause 25 (Set-Off), gives the Creditor Parties a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.

 

26

TRANSFERS AND CHANGES IN LENDING OFFICES

 

26.1

Transfer by Borrower

The Borrower may not assign or transfer any of its rights, liabilities or obligations under any Finance Document.

 

26.2

Transfer by a Lender

Subject to Clause 26.4 (Effective Date of Transfer certificate), a Lender (the “Transferor Lender”) may at any time, without the consent of the Borrower or any Security Party but after consultation with the Borrower, cause:

 

(a)

its rights in respect of all or part of its Contribution; or

 

(b)

its obligations in respect of all or part of its Commitment; or

 

(c)

a combination of (a) and (b); or

 

(d)

all or part of its credit risk under this Agreement and the other Finance Documents,

to be syndicated to or, (in the case of its rights) assigned, pledged or transferred to, or (in the case of its obligations) pledged or assumed by, any other bank or financial institution or to a trust, fund or other entity, provided such other entity is regularly engaged in, or established for the purpose of, making, purchasing or investing in loans, securities or other financial assets (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 5 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

 

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However, any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Agreement.

All costs and expenses relating to a transfer effected pursuant to this Clause 26.2 (Transfer by a Lender) shall be borne by the Transferee Lender.

 

26.3

Transfer Certificate, delivery and notification

As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

 

(a)

sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee and each of the other Lenders;

 

(b)

on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and

 

(c)

send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.

 

26.4

Effective Date of Transfer Certificate

A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 (Transfer certificate, delivery and notification) on or before that date.

 

26.5

No transfer without Transfer Certificate

Except as provided in Clause 26.18 (Security over Lender’s right) no assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

 

26.6

Lender re-organisation

However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender only upon receipt by the Agent of a notice to this effect and evidence that all rights and obligations have automatically and by operation of law vested in the successor by virtue of the merger, de-merger or other reorganisation, without the need for the execution and delivery of a Transfer Certificate; the Agent shall in that event inform the Borrower and the Security Trustee accordingly.

 

26.7

Effect of Transfer Certificate

A Transfer Certificate takes effect in accordance with English law as follows:

 

(a)

to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which any Borrower or any Security Party had against the Transferor Lender;

 

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(b)

the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

 

(c)

the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

 

(d)

the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

 

(e)

any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

 

(f)

the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 (Market Disruption) and Clause 20 (Fees and Expenses), and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

 

(g)

in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

 

26.8

Maintenance of register of Lenders

During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4(Effective Date of Transfer certificate)) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least three Business Days’ prior notice.

 

26.9

Reliance on register of Lenders

The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

 

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26.10

Authorisation of Agent to sign Transfer Certificates

The Borrower, the Security Trustee and each Lender irrevocably authorises the Agent to sign Transfer Certificates on its behalf. The Borrower and each Security Party irrevocably agree to the transfer procedures set out in this Clause 26 (Transfers and Changes in Lending Offices) and to the extent the cooperation of the Borrower and/or any Security Party shall be required to effect any such transfer, the Borrower and such Security Party shall take all necessary steps to afford such cooperation Provided that this shall not result in any additional costs to the Borrower or such Security Party.

 

26.11

Sub-participation; subrogation assignment

A Lender may sub-participate or include in a securitisation or similar transaction all or any part of its rights and/or obligations under or in connection with the Finance Documents without the Borrower’s prior consent and without serving a notice thereon; the Lenders may assign without the Borrower’s prior consent but after consultation with the Borrower, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.    

 

26.12

Registration fee

In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferee Lender.

 

26.13

Sub-division, split, modification or re-tranching

Any Lender may, in its sole discretion, sub-divide, split, sever, modify or re-tranche its Contribution into one or more parts subject to the overall cost of its Contribution to the Borrower remaining unchanged, if such changes are necessary in order to achieve a successful execution of a securitisation, syndication or any other capital market exit in respect of its Contribution (or any applicable part thereof).

 

26.14

Disclosure of information

A Lender may, without the prior consent of the Borrower, or any other Security Party, disclose to a potential Transferee Lender or sub participant as well as, where relevant, to rating agencies, trustees and accountants, any financial or other information which that Lender has received in relation to the Loan, the Borrower and any other Security Party or their affairs and collateral or security provided under or in connection with any Finance Document, their financial circumstances and any other information whatsoever, as that Lender may deem reasonably necessary or appropriate in connection with the potential syndication, the assessment of the credit risk and the ongoing monitoring of the Loan by any potential Transferee Lender and that Lender shall be released from its obligation of secrecy and from banking confidentiality.

This permission is given for the purposes of giving relief from banking secrecy and confidentiality requirements. It is not intended as and is no declaration of consent in accordance with the DS_GVO (DS-GVO refers to Datenschutz-Grundverordnung, the German term for General Data Protection Regulation) (EU Regulation 2016/679, General Data Protection Regulation).

 

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In the event any such potential Transferee Lender, sub-participant, rating agency, trustee or accountant is not already bound by any legal obligation of secrecy or banking confidentiality, the Lender concerned may only give, disclose or reveal such information as the Borrower is entitled to disclose by rules and regulations of the SEC and any US Stock Exchange applicable to the Borrower and shall require such other party to sign a confidentiality agreement. The Borrower shall, and shall procure that any other Security Party shall:

 

(a)

provide the Creditor Parties (or any of them) with all information deemed, reasonably, necessary by the Creditor Parties (or any of them) for the purposes of any transfer, syndication or sub-participation to be effected pursuant to this Clause 26 (Transfers and Changes in Lending Offices);

 

(b)

if requested to do so by a Lender, jointly with that Lender approach relationship banks of the Group for the purposes of a potential syndication and assisting the Mandated Lead Arranger in the preparation of an information memorandum for a potential syndication;

 

(c)

procure that the directors and officers of the Borrower or any other Security Party, are available to participate in any meeting with any Transferee Lender or any rating agency at such times and places as the Creditor Parties may reasonably request following prior notice (to be served on the Borrower reasonably in advance) to the Borrower or that Security Party; and

 

(d)

permit any Transferee Lender to board the Ship at all reasonable times and locations to inspect its condition in accordance with Clause 14.10 (Insperation).

 

26.15

Confidentiality

Any publicity regarding the Loan or any of the terms thereof shall be agreed in advance by the Agent (acting on the instructions of the Majority Lenders) unless otherwise required in connection with the Borrower’s reporting obligations under or in connection with the rules and regulations of the SEC and any US Stock Exchange applicable to the Borrower.

 

26.16

Change of lending office

A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

 

(a)

the date on which the Agent receives the notice; and

 

(b)

the date, if any, specified in the notice as the date on which the change will come into effect.

 

26.17

Notification

On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

 

26.18

Security over Lenders’ rights

In addition to the other rights provided to Lenders under this Clause 26 (Transfer and Changes in Lending Offices), each Lender may without consulting with or obtaining consent from, the Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

 

(a)

any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

 

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(b)

in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;

except that no such charge, assignment or Security Interest shall:

 

  (i)

release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or

 

  (ii)

require any payments to be made by the Borrower or any Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

 

26.19

Replacement of a Reference Bank

If any Reference Bank ceases to be a Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 (Interest) then, unless the Borrower, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting with the Borrower, shall appoint another bank (whether or not a Lender) to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank’s appointment shall cease to be effective.

 

26.20

Securitisation

The Borrower shall, and the Borrower shall procure that each Security Party will, assist the Agent and/or any Lender in achieving a successful securitisation (or similar transaction) in respect of the Loan and the Finance Documents and such Security Party’s reasonable costs for providing such assistance shall be met by the relevant Lender.

 

26.21

No additional costs

If a Transferor Lender assigns or transfers any of its rights or obligations under the Finance Documents and as a result of circumstances existing at the date the assignment or transfer occurs, the Borrower or a Security Party would be obliged to make a payment to the Transferee Lender under Clause 22.2 (Grossing -up for taxes) or under that clause as incorporated by reference or in full in any other Finance Document, then the Transferee Lender is only entitled to receive payment under that clause to the same extent as the Transferor Lender would have been if the assignment or transfer had not occurred.

 

27

VARIATIONS AND WAIVERS

 

27.1

Required consents

 

(a)

Subject to Clause 27.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Borrower and any such amendment or waiver will be binding on all Creditor Parties and the Borrower.

 

(b)

Any instructions given by the Majority Lenders will be binding on all the Creditor Parties.

 

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(c)

The Agent may effect, on behalf of any Creditor Party, any amendment or waiver permitted by this Clause.

 

27.2

Exceptions

 

(a)

An amendment or waiver that has the effect of changing or which relates to:

 

  (i)

the definition of “Change of Control”, “Majority Lenders” or “Finance Documents” in Clause 1.1 (Definition);

 

  (ii)

an extension to the date of payment of any amount under the Finance Documents;

 

  (iii)

a reduction in the Margin or a reduction in the amount of any payment of principal, interest fees, commission or other amount payable under any of the Finance Documents;

 

  (iv)

an increase in or an extension of any Lender’s Commitment;

 

  (v)

any provision which expressly requires the consent of all the Lenders;

 

  (vi)

Clause 3 (Position of the Lenders), Clause 11.5 (Information provided to be accurate), Clause 11.6 (Provision of financial statements), Clause 11.7 (Form of financial statements), Clause 11.16 (Provision of further information), Clause 26 (Transfers and Changes in Lending Offices) or this Clause 27.2 (Exceptions);

 

  (vii)

any release of any Security Interest, guarantee, indemnities or subordination arrangement created by any Finance Document;

 

  (viii)

any change of the currency in which the Loan is provided or any amount is payable under any of the Finance Documents;

 

  (ix)

an extension of the Availability Period; or

 

  (x)

a change in Clauses 16.4 (Distribution of payment to Creditor Parties) or 22 (Grossing-up),

may not be effected without the prior written consent of all Lenders.

 

(b)

An amendment or waiver which relates to the rights or obligations of the Agent, the Arranger or the Security Trustee may not be effected without the consent of the Agent, the Arranger or the Security Trustee, as the case may be.

 

27.3

Exclusion of other or implied variations

Except for a document which satisfies the requirements of Clauses 27.1 (Required consents) and 27.2 (Exceptions), no document, and, subject to Clause 27.4 (Deemed consent), no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

 

(a)

a provision of this Agreement or another Finance Document; or

 

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(b)

an Event of Default; or

 

(c)

a breach by the Borrower, the Approved Manager or a Security Party of an obligation under a Finance Document or the general law; or

 

(d)

any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

 

27.4

Deemed consent

With respect to any amendment, variation, waiver, suspension or limit requested by any Party and which requires the approval of all the Lenders or the Majority Lenders (as the case may be), other than an amendment or supplement (or any proposal for such an amendment or supplement) in connection with a Finance Document or any other Pertinent Document required as contemplated in Clause 27.5 (Replacement of screen rate), the Agent shall provide each Lender with written notice of such request accompanied by such detailed background information as may be reasonably necessary (in the opinion of the Agent) to determine whether to approve such action. A Lender shall be deemed to have approved such action if such Lender fails to object to such action by written notice to the Agent within 10 days of that Lender’s receipt of the Agent’s notice or such other time as the Agent may state in the relevant notice as being the time available for approval of such action.

 

27.5

Replacement of Screen Rate

 

(a)

Subject to paragraph (b) of Clause 27.2 (Exceptions), if a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:

 

  (i)

providing for the use of a Replacement Benchmark in relation to (or in addition to) that currency in place of that Screen Rate; and

 

  (ii)

 

  (A)

aligning any provision of any Finance Document to the use of that Replacement Benchmark;

 

  (B)

enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

 

  (C)

implementing market conventions applicable to that Replacement Benchmark;

 

  (D)

providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

 

  (E)

adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

 

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may be made with the consent of the Agent (acting on the instructions of the Majority Lenders) and in consultation with the Borrower.

 

(b)

If, as at 1 January 2023 this Agreement provides that the rate of interest for the Loan in dollars is to be determined by reference to the Screen Rate for LIBOR:

 

  (i)

a Screen Rate Replacement Event shall be deemed to have occurred on that date in relation to the Screen Rate for dollars; and

 

  (ii)

the Agent, (acting on the instructions of the Majority Lenders) and the Borrower shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in relation to dollars in place of that Screen Rate from and including a date no later than 31 May 2023.

 

(c)

If any Lender fails to respond to a request for an amendment or waiver described in, or for any other vote of Lenders in relation to, paragraphs (a) or (b) above within 5 Business Days (or such longer time period in relation to any request which the Borrower and the Agent may agree) of that request being made:

 

  (i)

its Commitment shall not be included for the purpose of calculating the Total Commitments when ascertaining whether any relevant percentage of Total Commitments has been obtained to approve that request; and

 

  (ii)

its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.

 

28

NOTICES

 

28.1

General

Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

 

28.2

Addresses for communications

A notice by letter, fax or e-mail shall be sent:

 

(a)    to the Borrower:    Strathvale House, 90 N Church Street
      P.O. Box 309, Grand Cayman
      KY1-1104 Cayman Islands
      Email: tbush@navios.com

 

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   for the attention of:    Theresa Bush
(b)    to a Lender:    At the address below its name in Schedule 1 (Lenders and Commitments) or (as the case may require) in the relevant Transfer Certificate.
(c)    to the Agent and Security Trustee:   
   for general matters:    Hamburg Commercial Bank AG
      BU Asset Based Finance / Shipping
      Gerhart-Hauptmann-Platz 50
      20095 Hamburg 
      Germany
      Fax No: +302104295323
      Attn: Mr Loukas Lagaras / Mr Solon Merikas
   for credit administrative matters:    Hamburg Commercial Bank AG
      BU Business Operations
      Loan & Collateral Operations
      Gerhart-Hauptmann-Platz 50
      20095 Hamburg 
      Germany
      Fax No: +49 40 3333 34167

or to such other address as the relevant Party may notify the Agent or, if the relevant Party is the Agent or the Security Trustee, the Borrower, the Lenders and the Security Parties.

 

28.3

Effective date of notices

Subject to Clauses 28.4 (Service outside business hours) and 28.5 (Illegible notices):

 

(a)

a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

 

(b)

a notice which is sent by fax shall be deemed to be served, and shall take effect, two hours after its transmission is completed.

 

28.4

Service outside business hours

However, if under Clause 28.3 (Effective date of notices) a notice would be deemed to be served:

 

(a)

on a day which is not a business day in the place of receipt; or

 

(b)

on such a business day, but after 5 p.m. local time,

the notice shall subject to Clause 28.5 (Illegible Notices) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

 

93


28.5

Illegible notices

Clauses 28.3 (Effective date of notices) and 28.4( Service outside business hours) do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

 

28.6

Valid notices

A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

 

(a)

the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

 

(b)

in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

 

28.7

Electronic communication

Any communication from the Agent or the other Creditor Parties made by electronic means will be sent unsecured and without electronic signature, however, the Borrower may request the Agent and the other Creditor Parties at any time in writing to change the method of electronic communication from unsecured to secured electronic mail communication.

The Borrower hereby acknowledges and accepts the risks associated with the use of unsecured electronic mail communication including, without limitation, risk of delay, loss of data, confidentiality breach, forgery, falsification and malicious software. The Agent and the other Creditor Parties shall not be liable in any way for any loss or damage or any other disadvantage suffered by the Borrower resulting from such unsecured electronic mail communication.

If the Borrower or any other Security Party wishes to cease all electronic communication, it shall give written notice to the Agent and the other Creditor Parties accordingly after receipt of which notice the Parties shall cease all electronic communication.

For as long as electronic communication is an accepted form of communication, the Parties shall:

 

(a)

notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

 

(b)

notify each other of any change to their respective addresses or any other such information supplied to them; and

in case electronic communication is sent to recipients with the domain <domain with ending>, the parties shall without undue delay inform each other if there are changes to the said domain or if electronic communication shall thereafter be sent to individual e-mail addresses.

 

94


28.8

English language

Any notice under or in connection with a Finance Document shall be in English.

28.9 Meaning of “notice”

In this Clause 28 (Notices), “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

 

29

SUPPLEMENTAL

 

29.1

Rights cumulative, non-exclusive

The rights and remedies which the Finance Documents give to each Creditor Party are:

 

(a)

cumulative;

 

(b)

may be exercised as often as appears expedient; and

 

(c)

shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

 

29.2

Severability of provisions

If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

 

29.3

Counterparts

A Finance Document may be executed in any number of counterparts.

 

29.4

Third party rights

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

29.5

Benefit and binding effect

The terms of this Agreement shall be binding upon, and shall enure to the benefit of, the Parties and their respective (including subsequent) successors and permitted assigns and transferees.

 

29.6

Electronic disclosure

 

(a)

The Borrower hereby recognises as binding any relevant documents (whether signed or not) to fulfil the disclosure of the financial circumstances in accordance with Sec. 18 of the German Banking Act (KWG) that were or are, after the date of this Agreement, submitted to Hamburg Commercial Bank AG electronically or on data carriers through the Borrower, any Security Party or any third party and declares such documents as complete and correct.

 

(b)

Any documents submitted to Hamburg Commercial Bank AG electronically or on data carriers in accordance with Sec. 18 of the German Banking Act (KWG) have the same legal significance as any signed documents in paper form.

 

95


30

LAW AND JURISDICTION

 

30.1

English law

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

 

30.2

Exclusive English jurisdiction

Subject to Clause 30.3 (Choice of forum of the exclusive benefit of the creditor parties), the courts of England shall have exclusive jurisdiction to settle any Dispute.

 

30.3

Choice of forum for the exclusive benefit of the Creditor Parties

Clause 30.2 (Exclusive English Jurisdiction) is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

 

(a)

to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; and

 

(b)

to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

The Borrower shall not commence any proceedings in any country other than England in relation to a Dispute.

 

30.4

Process agent

The Borrower irrevocably appoints Hill Dickinson LLP at their office for the time being, presently at The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with a Dispute.

 

30.5

Creditor Party rights unaffected

Nothing in this Clause 30 (Law and Jurisdiction) shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

 

30.6

Meaning of “proceedings” and “Dispute”

In this Clause 30 (Law and Jurisdiction), “proceedings” means proceedings of any kind, including an application for a provisional or protective measure and a “Dispute” means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

 

96


EXECUTION PAGES

 

BORROWER

 

SIGNED by Georgios Pannagakis    )   
as attorney-in-fact    )   
for and on behalf of    )    /s/ Georgios Pannagakis
NAVIOS MARITIME ACQUISITION    )   
CORPORATION    )   
in the presence of: Maria Trivela    )    /s/ Maria Trivela
LENDERS      
SIGNED by Eleni Antonakou    )    /s/ Eleni Antonakou
for and on behalf of    )   
HAMBURG COMMERCIAL BANK AG    )   
in the presence of: Charalampos Kazantzis    )    /s/ Charalampos Kazantzis
SIGNED by Aikaterini Daivianida and    )    /s/ Aikaterini Daivianida
Chrysanthi Papathanasopoulou    )    /s/ Chrysanthi Papathanasopoulou
for and on behalf of    )   
ALPHA BANK A.E.    )   
in the presence of: Charalampos Kazantzis    )    /s/ Charalampos Kazantzis
AGENT      
SIGNED by Eleni Antonokou    )    /s/ Eleni Antonakou
for and on behalf of    )   
HAMBURG COMMERCIAL BANK AG    )   
in the presence of: Charalampos Kazantzis    )    /s/ Charalampos Kazantzis

 

97


EXECUTION PAGES

 

MANDATED

LEAD ARRANGER

 

SIGNED by Eleni Antonakou    )   
for and on behalf of    )    /s/ Eleni Antonakou
HAMBURG COMMERCIAL BANK AG    )   
in the presence of: Charalampos Kazantzis    )    /s/ Charalampos Kazantzis
SECURITY TRUSTEE      
SIGNED by Eleni Antonakou    )   
for and on behalf of    )    /s/ Eleni Antonakou
HAMBURG COMMERCIAL BANK AG    )   
in the presence of: Charalampos Kazantzis    )    /s/ Charalampos Kazantzis

 

98

Exhibit 4.5

Dated 25 August 2021

ZAKYNTHOS SHIPPING CORPORATION

DELOS SHIPPING CORPORATION

KERKYRA SHIPPING CORPORATION

ALKMENE SHIPPING CORPORATION

PERSEPHONE SHIPPING CORPORATION

as joint and several Borrowers

and

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

and

BNP PARIBAS

as Bookrunner and Arranger

and

BNP PARIBAS

CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK

as Mandated Lead Arrangers

and

BNP PARIBAS

as Agent and Security Trustee

LOAN AGREEMENT

relating to a loan facility of up to $96,000,000

secured on m.vs. “NAVE QUASAR”, “NAVE PHOTON”, “NAVE GALACTIC”, “STAR N” and “HECTOR N”

 

LOGO


Index

 

Clause        Page  

1

  Interpretation      1  

2

  Loan Facility      24  

3

  Position of the Lenders      24  

4

  Drawdown      25  

5

  Interest      26  

6

  Interest Periods      29  

7

  Default Interest      29  

8

  Repayment and Prepayment      31  

9

  Conditions Precedent      33  

10

  Representations and Warranties      34  

11

  General Undertakings      37  

12

  Corporate Undertakings      43  

13

  Insurance      44  

14

  Ship covenants      51  

15

  Security Cover      56  

16

  Payments and Calculations      57  

17

  Application of Receipts      60  

18

  Application of Earnings      61  

19

  Events of Default      63  

20

  Fees and Expenses      69  

21

  Indemnities      71  

22

  No Set-off or Tax Deduction      73  

23

  Illegality, etc      76  

24

  Increased Costs      76  

25

  Set-off      78  

26

  Transfers and Changes in Lending Offices      78  

27

  Variations and Waivers by majority lenders      83  

28

  Notices      85  

29

  Supplemental      87  

30

  Confidentiality      89  

31

  Law and Jurisdiction      93  

32

  Bail-In      94  
Schedules           

Schedule 1 Lenders and Commitments

     95  

Schedule 2 Drawdown Notice

     96  

Schedule 3 Condition Precedent Documents

     98  

Part A

     98  

Part B

     99  

Schedule 4 Transfer Certificate

     101  

Schedule 5 Vessel Details

     105  
Execution       

Execution Pages

     107  


THIS LOAN AGREEMENT is made on 25 August 2021

PARTIES

 

(1)

ZAKYNTHOS SHIPPING CORPORATION, DELOS SHIPPING CORPORATION, KERKYRA SHIPPING CORPORATION, ALKMENE SHIPPING CORPORATION and PERSEPHONE SHIPPING CORPORATION, each a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several Borrowers.

 

(2)

THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders.

 

(3)

BNP PARIBAS whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France as Bookrunner and Arranger.

 

(4)

BNP PARIBAS whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France and CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK a French sociéte anonyme, acting through its office at 12, place des Etats-Unis, CS 70052, 92547 Montrouge Cedex, France, registered under the SIREN No. 304 187 701 of the Registre du Commerce et des Sociétés of Nanterre as Mandated Lead Arrangers.

 

(5)

BNP PARIBAS whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France as Agent and Security Trustee.

 

BACKGROUND

The Lenders have agreed to make available to the Borrowers a senior secured term loan facility, in an aggregate amount equal to the lesser of (i) $96,000,000 and (ii) 67 per cent. of the aggregate Initial Market Value of the Ships, in one advance, for the purpose of partially refinancing the Existing Indebtedness of the Corporate Guarantor under the Indenture and the Ships.

IT IS AGREED as follows:

 

1

INTERPRETATION

 

1.1

Definitions

Subject to Clause 1.5, in this Agreement:

Account” means each of the Earnings Accounts and the Retention Account and, in the plural, means all of them;

Account Bank” means BNP Paribas (Suisse) SA, acting through its office at Place de Hollande 2, CP CH-1211, Geneva 11, Switzerland or any other bank or other financial institution acceptable to the Agent and the Borrowers;

Account Pledge” means, in relation to each Account, a deed of pledge of that Account in such form as the Lenders may approve or require, and in the plural means all of them;


“Advance” means the borrowing of all or part of the Loan under this Agreement;

Additional Charter” shall have the meaning given to that term in Schedule 5;

Additional Charterer” shall have the meaning given to that term in Schedule 5;

Additional Provider” shall have the meaning given to that term in Schedule 5;

Additional Ship” shall have the meaning given to that term in Schedule 5;

Affected Lender” has the meaning given in Clause 5.7;

Agency and Trust Deed” means the agency and trust deed executed or to be executed between the Borrowers, the Lenders, the Agent and the Security Trustee in such form as the Lenders may approve or require;

Agent” means BNP Paribas acting through its office at Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France or any successor of it appointed under clause 5 of the Agency and Trust Deed;

Applicable Person” has the meaning given in Clause 29.4;

Approved Broker” means any of Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Ltd, Clarkson Valuations Limited, E.A. Gibsons Shipbrokers, Fearnleys AS, Galbraith, Simpson Spence & Young, Howe Robinson Partners, Maersk Broker A/S and Affinity (Shipping) LLP (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Borrowers and the Agent (acting on the instructions of the Majority Lenders) may agree in writing from time to time;

“Approved Flag” means, in relation to a Ship, the flag of Marshall Islands, the flag of Liberia, the flag of Panama, the flag of Hong Kong or such other flag as the Agent (acting on the instructions of the Majority Lenders) may approve as the flag on which that Ship is or, as the case may be, shall be registered;

“Approved Flag State” means, in relation to a Ship, the Republic of the Marshall Islands, the Republic of Liberia, the Republic of Panama, the Hong Kong Special Administrative Region of the People’s Republic of China or any other country in which the Agent (acting on the instructions of the Majority Lenders) may approve that that Ship is or, as the case may be, shall be registered;

Approved Manager” means, in respect of the commercial and technical management of each Ship, Navios Tankers Management or any other company (for the avoidance of doubt, other than an affiliate or subsidiary of Navios Tankers Management), which the Agent (acting on the instructions of the Majority Lenders) may approve from time to time as the commercial and technical manager of any Ship (such approval not required in respect of an affiliate or subsidiary of Navios Tankers Management);

Approved Manager’s Undertaking” means, in relation to a Ship, a letter of undertaking including, without limitation, an assignment of the Approved Manager’s rights, title and interest in the Insurances of the relevant Ship executed or to be executed by the Approved Manager in favour of the Security Trustee agreeing certain matters in relation to the Approved Manager serving as the manager of that Ship and subordinating the rights of the Approved

 

2


Manager against that Ship and that Borrower to the rights of the Creditor Parties under the Finance Documents, in such form as the Security Trustee, with the authorisation of the Lenders, may approve or require and, in the plural, means all of them;

Arranger” means BNP Paribas acting through its office at Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France;

“Article 55 BRRD” means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms;

Availability Period” means the period commencing on the date of this Agreement and ending on:

 

  (a)

30 December 2021 (or such later date as the Agent acting on the instructions of the Lenders may, in its sole discretion, agree with the Borrowers); or

 

  (b)

if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

Bail-In Action” means the exercise of any Write-down and Conversion Powers;

Bail-In Legislation” means:

 

  (a)

in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

 

  (b)

in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and

 

  (c)

in relation to the United Kingdom, the UK Bail-In Legislation;

Balloon Instalment” has the meaning given to it in Clause 8.1;

Basel III” means:

 

  (a)

the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

 

  (b)

the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement—Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

 

  (c)

any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”;

 

3


Bookrunner” means BNP Paribas acting through its office at Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France;

Borrower” means each of Borrower A, Borrower B, Borrower C, Borrower D and Borrower E and, in the plural, means all of them;

Borrower A” means Zakynthos Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

Borrower B” means Delos Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

Borrower C” means Kerkyra Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

Borrower D” means Alkmene Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

Borrower E” means Persephone Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;

Business Day” means a day on which banks are open in London, Athens, Paris and Geneva and in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

Charterparty” means:

 

  (a)

in relation to a Ship, any charterparty in respect of that Ship (including, without limitation, an Existing Charter) of a duration exceeding or capable of exceeding 12 months, made on terms and with a charterer acceptable in all respects to the Lenders;

 

  (b)

in relation to the Collateral Ship, the Collateral Charter; and

 

  (c)

in relation to an Additional Ship, any Additional Charter.

Charterparty Assignment” means:

 

  (a)

in relation to a Ship, the deed of assignment of any Charterparty in favour of the Security Trustee, in such form as the Lenders may approve or require;

 

  (b)

in relation to the Collateral Ship, the deed of assignment of the Collateral Charter in favour of the Security Trustee, in such form as the Lenders may approve or require; and

 

  (c)

in relation to an Additional Ship, the deed of assignment of any Additional Charter, in favour of the Security Trustee, in such form as the Lenders may approve or require.

 

4


Classification Society” means a member of the IACS or any other classification society approved in writing by the Agent acting with the authorisation of the Majority Lenders;

Code” means the United States Internal Revenue Code of 1986;

Collateral Charter” shall have the meaning given to that term in Schedule 5;

Collateral Charterer” shall have the meaning given to that term in Schedule 5;

Collateral Provider” shall have the meaning given to that term in Schedule 5;

Collateral Ship” shall have the meaning given to that term in Schedule 5;

Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1 or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);

Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the Loan Market Association (LMA) or in any other form agreed between the Borrowers and the Agent;

Confidential Information” means all information relating to the Borrowers, any Security Party, the Group, the Finance Documents or the Loan of which a Creditor Party becomes aware in its capacity as, or for the purpose of becoming, a Creditor Party or which is received by a Creditor Party in relation to, or for the purpose of becoming a Creditor Party under, the Finance Documents or the Loan from either:

 

  (a)

any member of the Group or any of its advisers; or

 

  (b)

another Creditor Party, if the information was obtained by that Creditor Party directly or indirectly from any member of the Group or any of its advisers,

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information, but excludes:

 

  (i)

information that:

 

  (A)

is or becomes public information other than as a direct or indirect result of any breach by that Creditor Party of Clause 30; or

 

  (B)

is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or

 

  (C)

is known by that Creditor Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Creditor Party after that date, from a source which is, as far as that Creditor Party is aware, unconnected with the Group and which, in either case, as far as that Creditor Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and

 

5


  (ii)

any Funding Rate or any quotation supplied to the Agent by a Reference Bank;

Contractual Currency” has the meaning given in Clause 21.5;

Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;

Corporate Guarantee” means the guarantee given or to be given by the Corporate Guarantor in favour of the Security Trustee, guaranteeing the obligations of the Borrowers under this Agreement and the other Finance Documents, in such form as the Lenders may approve or require;

Corporate Guarantor” means Navios Maritime Acquisition Corporation, a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, listed on the New York Stock Exchange;

CRD IV” means Directive 2013/36/EU of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2003/87/EC and repealing Directive 2006/48/EC and 2006/29/EC;

Creditor Party” means the Agent, the Security Trustee or any Lender, whether as at the date of this Agreement or at any later time;

CRR” means Regulation (EU) No. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012;

Designated Shareholder” means Mrs Angeliki Frangou either directly or indirectly (through entities owned and controlled by her or trusts or foundations of which she is the beneficiary) and/or Navios Maritime Holdings Inc. or any of its affiliates being, either individually or together, the ultimate beneficial owner(s) of, or having ultimate control of the voting rights attaching to, at least 10 per cent. of all the issued shares in the Corporate Guarantor and in the plural means all of them;

Dollars” and “$” means the lawful currency for the time being of the United States of America;

Drawdown Date” means, in relation to the Advance, the date requested by the Borrowers for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;

Drawdown Notice” means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

Earnings” means, in relation to a Ship and the Collateral Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower owning that Ship, the Collateral Provider or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

 

  (a)

all freight, hire and passage moneys, compensation payable to that Borrower, the Collateral Provider or the Security Trustee in the event of requisition of the Ship or the Collateral Ship owned by it for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship or the Collateral Ship;

 

6


  (b)

all moneys which are at any time payable under Insurances, if any, in respect of loss of earnings; and

 

  (c)

if and whenever that Ship or the Collateral Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship or the Collateral Ship;

Earnings Account” means:

 

  (a)

in relation to a Ship, an account in the name of the Borrower owning that Ship with the Account Bank which is designated by the Agent in writing as the Earnings Account in respect of that Ship for the purposes of this Agreement, and, in the plural, means all of them; and

 

  (b)

in relation to the Collateral Ship, an account in the name of the Collateral Provider with the Account Bank which is designated by the Agent in writing as the Earnings Account in respect of the Collateral Ship for the purposes of this Agreement;

EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway;

Environmental Claim” means:

 

  (a)

any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

 

  (b)

any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

Environmental Incident” means in relation to a Ship:

 

  (a)

any release of Environmentally Sensitive Material from that Ship; or

 

  (b)

any incident in which Environmentally Sensitive Material is released from a vessel other than that Ship and which involves a collision between that Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which that Ship is actually or potentially liable to be arrested, attached, detained and/or injuncted and/or that Ship and/or the Borrower which is the owner thereof and/or any operator or manager of that Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

 

7


  (c)

any other incident in which Environmentally Sensitive Material is released otherwise than from that Ship and in connection with which that Ship is actually or potentially liable to be arrested and/or where the Borrower which is the owner thereof and/or any operator or manager of that Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

Environmentally Sensitive Material” means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

Event of Default” means any of the events or circumstances described in Clause 19.1;

Existing Charter” shall have the meaning given to that term in Schedule 5;

Existing Charterer” shall have the meaning given to that term in Schedule 5;

Existing Indebtedness” means, at any date, any outstanding Financial Indebtedness (or part thereof) on that date under the Indenture;

Existing Security Interest” means any Existing Security Interests created under the Indenture;

FATCA” means:

 

  (a)

sections 1471 to 1474 of the Code or any associated regulations;

 

  (b)

any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or

 

  (c)

any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

FATCA Deduction” means a deduction or withholding from a payment under any Finance Document required by or under FATCA;

FATCA Exempt Party” means a party to a Finance Document that is entitled to receive payments free from any FATCA Deduction;

FATCA FFI” means a foreign financial institution as defined in section 1471 (d)(4) of the Code which, if any Creditor Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

“Final Maturity Date” means the earlier of:

 

  (a)

the date falling on the second anniversary of the Drawdown Date; and

 

  (b)

30 December 2023.

 

8


Finance Documents” means:

 

  (a)

this Agreement;

 

  (b)

the Agency and Trust Deed;

 

  (c)

the Corporate Guarantee;

 

  (d)

the General Assignments;

 

  (e)

the Mortgages;

 

  (f)

the Account Pledges;

 

  (g)

the Charterparty Assignments;

 

  (h)

the Approved Manager’s Undertakings;

 

  (i)

the Shares Security Deeds;

 

  (j)

the Subordination Agreement; and

 

  (k)

any other document (whether creating a Security Interest or not) which is executed at any time by a Borrower, the Corporate Guarantor, the Shareholder, the Approved Manager, the Collateral Provider or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition;

Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:

 

  (a)

for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

 

  (b)

under any loan stock, bond, note or other security issued by the debtor;

 

  (c)

under any acceptance credit, guarantee or letter of credit facility or dematerialised equivalent made available to the debtor;

 

  (d)

under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

 

  (e)

under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

 

  (f)

under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

Funding Rate means any rate notified to the Agent by a Lender pursuant to Clause 5.12;

 

9


General Assignment” means, in relation to a Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation, in such form as the Lenders may approve or require and in the plural means all of them;

Group” means together, the Corporate Guarantor and its wholly-owned subsidiaries (direct or indirect) including, but not limited to, the Borrowers, an Additional Provider and the Collateral Provider from time to time during the Security Period and “member of the Group” shall be construed accordingly;

IACS” means the International Association of Classification Societies;

Indenture” means the first priority ship mortgage notes of $610 million issued on 13 November 2013 by the Corporate Guarantor and further increased by $60 million on 31 March 2014 with a scheduled maturity of 15 November 2021 at a fixed rate of 8.125%;

Initial Market Value” means, in relation to a Ship, the Market Value thereof determined by taking the valuation of that Ship referred to in paragraph 5 of Schedule 3, Part B;

Insurances” means, in relation to a Ship:

 

  (a)

all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, which are effected in respect of that Ship, the Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and

 

  (b)

all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement;

Interest Period” means a period determined in accordance with Clause 6;

Interpolated Screen Rate” means, in relation to LIBOR for an Interest Period, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:

 

  (a)

the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than that Interest Period; and

 

  (b)

the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds that Interest Period,

each as of 11.00 a.m. (London time) on the Quotation Day for the currency of the Loan;

ISM Code” means, in relation to its application to the Borrowers, the Ships and their operation:

 

  (a)

‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

 

10


  (b)

all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisations pursuant to Resolution A.788(19) adopted on 25 November 1995,

as the same may be amended, supplemented or replaced from time to time;

ISM Code Documentation” includes, in relation to a Ship:

 

  (a)

the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code within the periods specified by the ISM Code; and

 

  (b)

all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Agent may require; and

 

  (c)

any other documents which are prepared or which are otherwise relevant to establish and maintain that Ship’s or that Borrower’s compliance with the ISM Code which the Agent may require;

ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;

ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924 (22) of the International Maritime Organisation (“IMO”) adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to take effect on 1 July 2004;

ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;

Lender” means, subject to Clause 26.6:

 

  (a)

a bank or financial institution listed in Schedule 1 and acting through its branch or office indicated in Schedule 1 (or through another branch notified to the Borrowers under Clause 26.14) unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and

 

  (b)

the holder for the time being of a Transfer Certificate;

LIBOR” means, for an Interest Period:

 

  (a)

the applicable Screen Rate;

 

  (b)

(if no Screen Rate is available for that Interest Period) the Interpolated Screen Rate; or

 

  (c)

if:

 

  (i)

no Screen Rate is available for the currency of the Loan; or

 

11


  (ii)

no Screen Rate is available for that Interest Period and it is not possible to calculate an Interpolated Screen Rate,

the Reference Bank Rate,

as of, in the case of paragraphs (a) to (c) above, 11.00 a.m. (London time) on the Quotation Day for the currency of the Loan and for a period equal in length to that Interest Period and, if any such rate is below zero, LIBOR will be deemed to be zero;

Loan” means the principal amount for the time being outstanding under this Agreement;

Major Casualty” means, in relation to a Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;

Majority Lenders” means:

 

  (a)

before the Advance has been made, Lenders whose Commitments total 66.67 per cent. of the Total Commitments; and

 

  (b)

after the Advance has been made, Lenders whose Contributions total 66.67 per cent. of the Loan,

and in any event in respect of (a) and (b) above shall not consist of less than two Lenders.

Mandated Lead Arrangers” means BNP Paribas whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France and Crédit Agricole Corporate and Investment Bank a French société anonyme, acting through its office at 12, place des Etats-Unis, CS 70052, 92547 Montrouge Cedex, France, registered under the SIREN No. 304 187 701 of the Registre du Commerce et des Sociétés of Nanterre;

Margin” means 3.55 per cent. per annum;

“Market Value” means the market value of the Ship determined from time to time in accordance with Clause 15.4;

Minimum Liquidity” has the meaning given in Clause 11.20;

Mortgage” means, in relation to a Ship, the first preferred or, as the case may be, priority ship mortgage and, if applicable, deed of covenant collateral thereto on that Ship, executed by the Borrower which is the owner thereof in favour of the Security Trustee or (as the case may be) the Lenders, in such form as the Lenders may approve or require and in the plural means all of them;

Navios Tankers Management” means Navios Tankers Management Inc., a corporation incorporated in the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, Marshall Islands;

Negotiation Period” has the meaning given in Clause 5.10;

Notifying Lender” has the meaning given in Clause 23.1 or Clause 24.2 as the context requires;

 

12


Payment Currency” has the meaning given in Clause 21.5;

Permitted Security Interests” means:

 

  (a)

Security Interests created by the Finance Documents;

 

  (b)

at any time prior to the Drawdown Date, any Existing Security Interest;

 

  (c)

liens for unpaid crew’s wages in accordance with usual maritime practice;

 

  (d)

liens for salvage;

 

  (e)

liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;

 

  (f)

liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 45 days overdue (unless the overdue amount is being contested by the relevant Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(g);

 

  (g)

any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the relevant Borrower is prosecuting or defending such action in good faith by appropriate steps; and

 

  (h)

Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

Person” has the meaning given to it in Clause 10.18;

Pertinent Jurisdiction”, in relation to a company, means:

 

  (a)

England and Wales;

 

  (b)

the country under the laws of which the company is incorporated or formed;

 

  (c)

a country in which the company’s central management and control is or has recently been exercised;

 

  (d)

a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

 

  (e)

a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

 

  (f)

a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above;

 

13


Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time;

Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

Quotation Date” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is 2 Business Days in London before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days);

Reference Bank” means, in relation to the determination of LIBOR and any mandatory costs, the London office of such bank as may be appointed by the Agent after consultation with (but without the approval of) the Borrowers;

Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks:

 

  (a)

if:

 

  (i)

the Reference Bank is a contributor to the Screen Rate; and

 

  (ii)

it consists of a single figure,

as the rate (applied to the relevant Reference Bank and the relevant currency and period) which contributes to the Screen Rate and asked to submit to the relevant administrator; or

 

  (b)

in any other case, as the rate at which the Reference Bank could fund itself in dollars for the relevant period with reference to the unsecured whole sale funding market;

Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an affiliate of the investment manager or investment adviser of the first fund.

“Relevant Person” has the meaning given in Clause 19.9;

Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;

 

14


Repayment Date” means a date on which a repayment is required to be made under Clause 8;

Repayment Instalment” has the meaning given to it in Clause 8.1;

Replacement Benchmark” means a benchmark rate which is:

 

  (a)

formally designated, nominated or recommended as the replacement for a Screen Rate by:

 

  (i)

the administrator of that Screen Rate; or

 

  (ii)

any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;

 

  (b)

in the opinion of the Lenders and the Borrowers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to a Screen Rate; or

 

  (c)

in the opinion of the Lenders and the Borrowers, an appropriate successor to a Screen Rate;

Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian;

Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;

Retention Account” means an account in the joint names of the Borrowers with the Account Bank designated “Zakynthos Shipping Corporation / Delos Shipping Corporation / Kerkyra Shipping Corporation / Alkmene Shipping Corporation / Persephone Shipping Corporation – Retention Account”, or any other account (with that or another office of the Account Bank) which replaces this account and is designated by the Agent as the Retention Account for the purposes of this Agreement;

Sanctioned Person” has the meaning given to it in Clause 10.18;

Sanctioned Country has the meaning given to it in Clause 10.18;

Sanctions” means any economic or trade sanctions or restrictive measures enacted, administered, imposed or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the United Nations Security Council and/or the European Union and/or any of its member states and/or Her Majesty’s Treasury and/or the State Secretariat for Economic Affairs of Switzerland (SECO) and/or the French Republic or other relevant sanctions authority;

Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 of the Thomson Reuters screen (or any

 

15


replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.

Screen Rate Replacement Event” means, in relation to a Screen Rate:

 

  (a)

the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lenders, and the Borrowers materially changed;

 

  (b)

  (i)

  (A)

the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

 

  (B)

information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;

 

  (ii)

the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

 

  (iii)

the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

 

  (iv)

the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or

 

  (v)

the supervisor of the administrator of that Screen Rate makes a public announcement or publishes information:

 

  (A)

stating that that Screen Rate is no longer or, as of a specified future date will no longer be, representative of the underlying market or economic reality that it is intended to measure and that representativeness will not be restored (as determined by such supervisor); and

 

  (B)

with awareness that any such announcement or publication will engage certain triggers for fallback provisions in contracts which may be activated by any such pre-cessation announcement or publication; or

 

  (c)

the administrator of that Screen Rate determines that that Screen Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either:

 

16


  (i)

the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Lenders and the Borrowers) temporary; or

 

  (ii)

that Screen Rate is calculated in accordance with any such policy or arrangement for a period no less than the Screen Rate Contingency Period; or

 

  (d)

in the opinion of the Lenders and the Borrowers, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement;

Secured Liabilities” means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or any judgment relating to the Finance Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

“Security Cover Ratio” means, at any relevant time, the aggregate of:

 

  (a)

the aggregate of the Market Value of the Ships; plus

 

  (b)

the net realisable value of any additional security provided at that time under Clause 15,

expressed as a percentage of the Loan;

Security Interest” means:

 

  (a)

a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; and

 

  (b)

the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken.

Security Party” means the Corporate Guarantor, the Approved Manager, the Shareholder and any other person (except a Creditor Party, an Existing Charterer, an Additional Charterer and the Collateral Charterer) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of “Finance Documents”;

Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrowers, the Security Parties and the other Creditor Parties that:

 

  (a)

all amounts which have become due for payment by a Borrower or any Security Party under the Finance Documents have been paid;

 

  (b)

no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

 

  (c)

no Borrower nor any Security Party has any future or contingent liability under Clause 20, 21 or 22 below or any other provision of this Agreement or another Finance Document; and

 

17


  (d)

the Agent, the Security Trustee and the Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of a Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

Security Trustee” means BNP Paribas acting through its office Grand Moulins Paris, 9 rue du Débarcadère, 93500 Pantin, France, or any successor of it appointed under clause 5 of the Agency and Trust Deed;

Shareholder” means in relation to each of the Borrowers, Aegean Sea Maritime Holdings Inc., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

Shares Security Deed” means, in respect of all the issued shares in each Borrower, a pledge of such shares executed or to be executed by the Shareholder in favour of the Security Trustee, in such form as the Lenders may approve or require;

Ship” means each of Ship A, Ship B, Ship C, Ship D and Ship E and, in the plural, means all of them;

Ship A” has the meaning given to that term in Schedule 5;

Ship B” has the meaning given to that term in Schedule 5;

Ship C” has the meaning given to that term in Schedule 5;

Ship D” has the meaning given to that term in Schedule 5;

Ship E” has the meaning given to that term in Schedule 5;

Subordinated Creditor” means:

 

  (a)

Navios Shipmanagement Holdings Corporation, a corporation incorporated under the laws of the Marshall Islands whose registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; or

 

  (b)

any other person who becomes a Subordinated Creditor in accordance with this Agreement.

Subordinated Finance Document” means:

 

  (a)

the Subordinated Loan Agreement; and

 

  (b)

any other document relating to or evidencing Subordinated Liabilities.

Subordinated Liabilities” means all indebtedness owed or expressed to be owed by the Borrowers to the Subordinated Creditor(s) whether under the Subordinated Finance Documents or otherwise.

Subordinated Loan Agreement” means:

 

18


  (a)

the Subordinated Loan Agreement;

 

  (b)

a supplemental agreement entered or to be entered into between (i) the Guarantor as borrower and (ii) the Subordinated Creditor as lender amending the Subordinated Loan Agreement; and

 

  (c)

any other amendment and/or supplement related to the Subordinated Liabilities.

Subordination Agreement” means a subordination agreement entered into or to be entered into by the Subordinated Creditor and the Agent in such form as the Lenders may approve or require.

Total Loss” means in relation to a Ship:

 

  (a)

actual, constructive, compromised, agreed or arranged total loss of that Ship;

 

  (b)

any expropriation, confiscation, requisition or acquisition of a Ship whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension unless a Ship is within 30 days redelivered to the full control of the Borrower owning that Ship;

 

  (c)

any condemnation of that Ship by any tribunal or by any person or person claiming to be a tribunal; and

 

  (d)

any arrest, capture, seizure, confiscation or detention of that Ship (including any hijacking or theft) unless it is within the Relevant Period redelivered to the full control of the Borrower owning that Ship.

In this definition “Relevant Period” means:

 

  (a)

in the case of any arrest of a Ship, within 1 month; and

 

  (b)

in the case of piracy or capture, seizure, confiscation or detention of a Ship (including any hijacking or theft) 90 days Provided that if the relevant underwriters confirm to the Agent in writing prior to the end of the 90-day period referred to in (i) above that the relevant Ship is subject to an approved piracy insurance cover, the earlier of 12 months after the date on which that Ship is captured by pirates and the date on which the piracy insurance cover expires;

Total Loss Date” means in relation to a Ship:

 

  (a)

in the case of an actual loss, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;

 

  (b)

in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earlier of:

 

  (i)

the date on which a notice of abandonment is given to the insurers; and

 

19


  (ii)

the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning that Ship, with that Ship’s insurers in which the insurers agree to treat that Ship as a total loss; and

 

  (c)

in the case of any other type of total loss, on the earlier of:

 

  (i)

the date at which a total loss is subsequently admitted by such insurers;

 

  (ii)

the date at which a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred, if such insurers do not immediately admit such claim; or

 

  (iii)

the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

Transfer Certificate” has the meaning given in Clause 26.2;

Trust Property” has the meaning given in clause 3.1 of the Agency and Trust Deed;

UK Bail-In Legislation” means Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutes or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings);

US” means the United States of America;

US GAAP” means generally accepted international accounting principles as from time to time in effect in the United States of America;

US Tax Obligor” means:

 

  (a)

a person which is resident for tax purposes in the United States of America; or

 

  (b)

a person some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes; and

Write-down and Conversion Powers” means:

 

  (a)

in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;

 

  (b)

in relation to any other applicable Bail-In Legislation other than the UK Bail-In Legislation:

 

  (i)

any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

 

20


  (ii)

any similar or analogous powers under that Bail-In Legislation; and

 

  (c)

in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers.

 

1.2

Construction of certain terms

In this Agreement:

approved” means, for the purposes of Clause 13, approved in writing by the Agent;

asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

company” includes any partnership, joint venture and unincorporated association;

consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;

document” includes a deed; also a letter or fax;

excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

law” includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

 

21


months” shall be construed in accordance with Clause 1.3;

obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning that Ship, is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

parent company” has the meaning given in Clause 1.4;

person” includes any individual, any entity, any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

protection and indemnity risks” means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

regulation” includes any regulation, rule, official directive, request or guideline (either having the force of law or compliance with which is reasonable in the ordinary course of business of the party concerned) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

subsidiary” has the meaning given in Clause 1.4;

successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine;

war risks” includes the risk of mines and all risks excluded by clauses 29, 30 or 31 of the International Hull Clauses (1/11/02), clauses 29 or 30 of the International Hull Clauses (1/11/03), clauses 24, 25 or 26 of the Institute Time Clauses (Hulls) (1/11/95) or clauses 23, 24 or 25 of the Institute Time Clauses (Hulls) (1/10/83) or any equivalent provision; and

which is continuing” or “is continuing”, a Potential Event of Default is continuing if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived.

 

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1.3

Meaning of “month”

A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:

 

(a)

on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

 

(b)

on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and “month” and “monthly” shall be construed accordingly.

 

1.4

Meaning of “subsidiary”

A company (S) is a subsidiary of another company (P) if:

 

(a)

a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

 

(b)

P has direct or indirect control over a majority of the voting rights attached to the issued shares of S;

and any company of which S is a subsidiary is a parent company of S Provided that there shall be excluded from this definition any subsidiaries which are listed on a public stock exchange.

 

1.5

General Interpretation

 

(a)

In this Agreement:

 

  (i)

references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

 

  (ii)

references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and

 

  (iii)

words denoting the singular number shall include the plural and vice versa.

 

(b)

Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears.

 

(c)

References in Clause 1.1 to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Agent (with the authorisation of the Lenders in the case of substantial modifications) approves or requires.

 

(d)

The clause headings shall not affect the interpretation of this Agreement.

 

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2

LOAN FACILITY

 

2.1

Amount of loan facility

Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrowers a senior secured term loan facility, in one Advance, in an aggregate amount not exceeding the Total Commitments.

 

2.2

Lenders’ participations in the Advance

Subject to the other provisions of this Agreement, each Lender shall participate in the Advance in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.

 

2.3

Purpose of Advance

The Borrowers undertake with each Creditor Party to use the Advance only for the purpose stated in the preamble to this Agreement.

 

3

POSITION OF THE LENDERS

 

3.1

Interests of Lenders several

The rights of the Creditor Parties under this Agreement are several; accordingly each Lender shall be entitled to sue for any amount which has become due and payable by the Borrowers to it under this Agreement without joining the Security Trustee or any other Creditor Party as additional parties in the proceedings, save that the Security Interests created by any of the Finance Documents may only be enforced in accordance with Clause 19.2.

 

3.2

Proceedings by individual Creditor Party

However, without the prior consent of the Lenders, no Creditor Party may bring proceedings in respect of:

 

(a)

any other liability or obligation of any Borrower or a Security Party under or connected with a Finance Document; or

 

(b)

any misrepresentation or breach of warranty by any Borrower or a Security Party in or connected with a Finance Document.

 

3.3

Obligations of Creditor Parties several

The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement shall not result in:

 

(a)

the obligations of the other Lenders being increased; nor

 

(b)

a Borrower, any Security Party or any other Lender being discharged (in whole or in part) from its obligations under any Finance Documents,

and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.

 

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3.4

Parties bound by certain actions of Lenders

Every Lender, each Borrower and each Security Party shall be bound by:

 

(a)

any determination made, or action taken, by the Lenders under any provision of a Finance Document;

 

(b)

any instruction or authorisation given by the Lenders to the Agent or the Security Trustee under or in connection with any Finance Document; and

 

(c)

any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation.

 

3.5

Reliance on action of Agent

However, each Borrower and each Security Party:

 

(a)

shall be entitled to assume that the Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take; and

 

(b)

shall not be entitled to require any evidence that such an instruction or authorisation has been given.

 

3.6

Construction

In Clauses 3.4 and 3.5 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.

 

4

DRAWDOWN

 

4.1

Request for Advance

 

(a)

Subject to the following conditions, the Borrowers may request the Advance to be advanced by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Paris time) 2 Business Days prior to the intended Drawdown Date (or such other shorter period as the Lenders may agree).

 

(b)

The Borrowers may not deliver more than one Drawdown Notice.

 

4.2

Availability

The conditions referred to in Clause 4.1 are that:

 

(a)

the Drawdown Date has to be a Business Day during the Availability Period;

 

(b)

the amount of the Advance shall not exceed the lesser of (i) $96,000,000 and (ii) 67 per cent. of the aggregate Initial Market Value of the Ships;

 

(c)

the Advance shall be made available in a single amount; and

 

(d)

the amount of the Advance shall not exceed the Total Commitments.

 

25


4.3

Notification to Lenders of receipt of a Drawdown Notice

The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

 

(a)

the amount of the Advance and the Drawdown Date;

 

(b)

the amount of that Lender’s participation in the Advance; and

 

(c)

the duration of the first Interest Period.

 

4.4

Drawdown Notice irrevocable

A Drawdown Notice must be signed by an officer or other authorised person of each Borrower; and once served a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

 

4.5

Lenders to make available Contributions

Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrowers the amount due from that Lender under Clause 2.2.

 

4.6

Disbursement of Advance

Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrowers shall be made:

 

(a)

to the account which the Borrowers specify in the Drawdown Notice; and

 

(b)

in the like funds as the Agent received the payments from the Lenders.

 

4.7

Disbursement of Loan to third party

The payment by the Agent under Clause 4.6 to any third party specified by the Borrowers in the Drawdown Notice shall constitute the making of the Advance and the Borrowers shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender’s Contribution.

 

5

INTEREST

 

5.1

Payment of normal interest

Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.

 

5.2

Normal rate of interest

Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of (i) the Margin and (ii) LIBOR for that Interest Period subject to Clauses 5.6 and 5.7.

 

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5.3

Payment of accrued interest

In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

 

5.4

Notification of Interest Periods and rates of normal interest

The Agent shall notify the Borrowers and each Lender of:

 

(a)

each rate of interest; and

 

(b)

the duration of each Interest Period,

as soon as reasonably practicable after each is determined.

 

5.5

Obligation of Reference Bank to quote

Each of the Reference Banks which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement unless that Reference Bank ceases to be a Lender pursuant to Clause 26.16.

 

5.6

Absence of quotations by Reference Bank

If any Reference Bank fails to supply a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5.

 

5.7

Market disruption

The following provisions of this Clause 5 apply if:

 

(a)

LIBOR is to be determined by reference to the Reference Banks and no Reference Bank does, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or

 

(b)

at least 1 Business Day before the start of an Interest Period, a Lender may notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to that Lender of funding its respective Contribution (or any part of it) during the Interest Period in the London interbank market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or

 

(c)

at least 1 Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period.

 

5.8

Notification of market disruption

The Agent shall promptly notify the Borrowers and each of the Lenders stating the circumstances falling within Clause 5.7 which have caused its notice to be given.

 

5.9

Suspension of drawdown

If the Agent’s notice under Clause 5.8 is served before the Advance is made:

 

(a)

in a case falling within paragraphs (a) or (b) of Clause 5.7, the Lenders’ obligations to make such Advance;

 

27


(b)

in a case falling within Clause 5.7(c), the Affected Lender’s obligation to participate in such Advance,

shall be suspended while the circumstances referred to in the Agent’s notice continue.

 

5.10

Negotiation of alternative rate of interest

Subject to Clause 27.4 (Replacement of Screen Rate), if the Agent’s notice under Clause 5.8 is served after the Advance is made, the Borrowers, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.8 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

 

5.11

Application of agreed alternative rate of interest

Subject to Clause 27.4 (Replacement of Screen Rate), any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

 

5.12

Alternative rate of interest in absence of agreement

Subject to Clause 27.4 (Replacement of Screen Rate), if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders concerned or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin; and the procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

 

5.13

Notice of prepayment

If the Borrowers do not agree with an interest rate set by the Agent under Clause 5.12, the Borrowers may give the Agent not less than 15 Business Days’ notice of their intention to prepay at the end of the interest period set by the Agent.

 

5.14

Prepayment; termination of Commitments

A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrowers’ notice of intended prepayment; and:

 

(a)

on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

 

(b)

on the last Business Day of the interest period set by the Agent, the Borrowers shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

 

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5.15

Application of prepayment

The provisions of Clause 8 shall apply in relation to the prepayment.

 

6

INTEREST PERIODS

 

6.1

Commencement of Interest Periods

The first Interest Period shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

 

6.2

Duration of normal Interest Periods

Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

 

(a)

3 or 6 months as notified by the Borrowers to the Agent not later than 11.00 a.m. (Paris time) 3 Business Days before the commencement of the Interest Period; or

 

(b)

3 months, if the Borrowers fail to notify the Agent by the time specified in paragraph (a) above; or

 

(c)

such other period as the Agent may agree with the Borrowers, subject to additional funding costs (if any) for periods shorter than 3 months.

 

6.3

Duration of Interest Periods for Repayment Instalments

 

(a)

In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

 

(b)

An Interest Period in respect of the Loan shall not extend beyond the Final Maturity Date.

 

6.4

Non-availability of matching deposits for Interest Period selected

If, after the Borrowers have selected an Interest Period longer than 3 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be 3 months.

 

7

DEFAULT INTEREST

 

7.1

Payment of default interest on overdue amounts

The Borrowers shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by any Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

 

(a)

the date on which the Finance Documents provide that such amount is due for payment; or

 

(b)

if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

 

29


(c)

if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

 

7.2

Default rate of interest

Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent. above:

 

(a)

in the case of an overdue amount of principal, the higher of the rates set out at paragraphs (a) and (b) of Clause 7.3; or

 

(b)

in the case of any other overdue amount, the rate set out at paragraph (b) of Clause 7.3.

 

7.3

Calculation of default rate of interest

The rates referred to in Clause 7.2 are:

 

(a)

the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

 

(b)

the aggregate of the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

 

  (i)

LIBOR; or

 

  (ii)

if the Agent (after consultation with the Reference Bank) determines that Dollar deposits for any such period are not being made available to the Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Bank from such other sources as the Agent (after consultation with the Reference Bank) may from time to time determine.

 

7.4

Notification of interest periods and default rates

The Agent shall promptly notify the Lenders and the Borrowers of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Agent’s notification.

 

7.5

Payment of accrued default interest

Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

 

7.6

Compounding of default interest

Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

 

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8

REPAYMENT AND PREPAYMENT

 

8.1

Amount of repayment instalments

The Borrowers shall repay the Loan by:

 

(a)

8 equal consecutive quarterly instalments (each a “Repayment Instalment” and together, the “Repayment Instalments”) each in the amount of $4,625,000 each; and

 

(b)

a balloon instalment in the amount of up to $59,000,000 (the “Balloon Instalment”).

Provided that if the amount of the Loan actually drawn down is less than $96,000,000 each Repayment Instalment and the Balloon Instalment shall be reduced pro rata by an amount in aggregate equal to the undrawn amount.

 

8.2

Repayment Dates

The first Repayment Instalment shall be repaid on the date falling 3 months after the Drawdown Date with the remaining Repayment Instalments to be repaid at 3-months intervals thereafter and the last Repayment Instalment together with the Balloon Instalment shall be repaid on the Final Maturity Date.

 

8.3

Final Repayment Date

On the final Repayment Date, the Borrowers shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.

 

8.4

Voluntary prepayment

Subject to the following conditions, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period in respect thereof.

 

8.5

Conditions for voluntary prepayment

The conditions referred to in Clause 8.4 are that:

 

(a)

a partial prepayment shall be $1,000,000 or an integral multiple of $1,000,000;

 

(b)

the Agent has received from the Borrowers at least 10 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and

 

(c)

the Borrowers have provided evidence satisfactory to the Agent that any consent required by the Borrowers or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrowers or any Security Party has been complied with.

 

8.6

Effect of notice of prepayment

A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authority of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

 

31


8.7

Notification of notice of prepayment

The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 8.5(c).

 

8.8

Mandatory prepayment

The Borrowers shall be obliged to prepay the Relevant Amount:

 

(a)

if a Ship is sold, on or before the date on which the sale is completed by delivery of that Ship to the buyer; or

 

(b)

if a Ship becomes a Total Loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

In this Clause 8.8:

Relevant Amount” means:

 

  (i)

an amount equal to the higher of:

 

  (A)

the Relevant Fraction of the Loan on the date on which the relevant Ship is sold or becomes a Total Loss; and

 

  (B)

an amount which after the application of the prepayment to be made pursuant to Clause 8.10(b) results in the Security Cover Ratio being at last equal to the greater of (A) the Security Cover Ratio required to be maintained under Clause 15.1. and (B) the percentage which applied immediately prior to the applicable event described in paragraph (a) or (b) of this Clause 8.8; or

 

  (ii)

if the relevant Ship is the last Ship subject to a Mortgage, the whole of the Loan.

Relevant Fraction” means a fraction of which the numerator is the Market Value of the Ship which is sold or becomes a Total Loss and the denominator is the aggregate of (A) the Market Value of the other Ships then subject to a Mortgage and (B) the Market Value of that Ship.

 

8.9

Amounts payable on prepayment

A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 below or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.1(b) but (subject to Clause 8.11) without premium or penalty.

 

8.10

Application of partial prepayment

Any partial prepayment shall be applied:

 

(a)

if made pursuant to Clause 8.4, in order of maturity against the then outstanding Repayment Instalments and the Balloon Instalment or in such other manner as the Agent (acting on the instructions of the Lenders) may agree with the Borrowers;

 

(b)

if made pursuant to Clause 8.8:

 

32


  (i)

FIRSTLY: pro rata against the Repayment Instalments and the Balloon Instalment; and

 

  (ii)

SECONDLY: pro rata towards repayment of any overdue interest, any breakage costs, any accrued interest relating to the Loan, any other costs, fees, expenses, commissions due under this Agreement; and

 

  (iii)

THIRDLY: any surplus shall be released to the Borrowers Provided that no Event of Default or Potential Event of Default has occurred or is continuing.

 

8.11

No reborrowing

No amount repaid or prepaid may be reborrowed.

 

9

CONDITIONS PRECEDENT

 

9.1

Documents, fees and no default

Each Lender’s obligation to contribute to the Advance is subject to the following conditions precedent:

 

(a)

that on or before the date of this Agreement, the Agent receives:

 

  (i)

the documents described in Part A of Schedule 3 in a form and substance satisfactory to the Agent and its lawyers;

 

  (ii)

the up-front fee referred to in Clause 20.1;

 

  (iii)

the commitment fee referred to in Clause 20.2;

 

  (iv)

the agency fee referred to in Clause 20.4; and

 

  (v)

payment in full of any expenses payable pursuant to Clause 20.2 which are due and payable on the date of this Agreement;

 

(b)

that, before or on the Drawdown Date, the Agent receives:

 

  (i)

the documents described in Part B of Schedule 3 in form and substance satisfactory to the Agent and its lawyers; and

 

  (ii)

payment in full of any expenses payable pursuant to Clause 20.2 which are due and payable on the date of this Agreement;

 

(c)

that at the date of the Drawdown Notice and at the Drawdown Date:

 

  (i)

no Event of Default or Potential Event of Default has occurred or is continuing or would result from the borrowing of the relevant Advance; and

 

  (ii)

the representations and warranties in Clause 10 and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing;

 

  (iii)

none of the circumstances contemplated by Clause 5.7 has occurred and is continuing; and

 

33


  (iv)

there has been no material adverse change in the business, management, condition (financial or otherwise), results of operations, operation, performance, prospects or properties of the Borrowers or any of them and/or the Corporate Guarantor applying as at 31 December 2020;

 

(d)

that, if the ratio set out in Clause 15.1 were applied immediately following the making of the Advance, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

 

(e)

that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrowers prior to the Drawdown Date.

 

9.2

Waiver of conditions precedent

If the Majority Lenders, at their discretion, permit the Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Agent may, with the authority of the Majority Lenders, specify).

 

9.3

Condition subsequent

The Borrowers undertake to deliver or cause to be delivered to the Agent within 20 Business Days after delivery of the Collateral Ship, a duly executed original of a Charterparty Assignment in relation to the Collateral Charter.

 

10

REPRESENTATIONS AND WARRANTIES

 

10.1

General

Each Borrower represents and warrants (which representations and warranties (other than the ones in Clauses 10.11 and 10.12) shall survive the execution of this Agreement and shall be deemed to be repeated throughout the Security Period on the first day of each Interest Period with respect to the facts and circumstances then existing) to each Creditor Party as follows.

 

10.2

Status

Each Borrower is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands.

 

10.3

Share capital and ownership

Each Borrower is authorised to issue and has issued 500 registered shares of par value $1.00 each, and the ownership of all those shares is held in registered form by the Shareholder, free of any Security Interest or other claim, by the persons disclosed in writing to the Agent prior to the date of this Agreement.

 

10.4

Corporate power

Each Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it to:

 

34


(a)

continue to own the Ship owned by it under the relevant Approved Flag;

 

(b)

execute the Finance Documents to which that Borrower is a party; and

 

(c)

borrow under this Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which that Borrower is a party.

 

10.5

Consents in force

All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

 

10.6

Legal validity; effective Security Interests

The Finance Documents to which that Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

 

(a)

constitute that Borrower’s legal, valid and binding obligations enforceable against that Borrower in accordance with their respective terms; and

 

(b)

create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

subject to any relevant insolvency laws affecting creditors’ rights generally.

 

10.7

No third party Security Interests

Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document to which a Borrower is a party:

 

(a)

each Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

 

(b)

no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

 

10.8

No conflicts

The execution by a Borrower of each Finance Document to which it is a party, and the borrowing by that Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

 

(a)

any law or regulation; or

 

(b)

the constitutional documents of that Borrower; or

 

(c)

any contractual or other obligation or restriction which is binding on that Borrower or any of its assets.

 

35


10.9

No withholding taxes

All payments which each Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

 

10.10

No default

No Event of Default or Potential Event of Default has occurred and is continuing or would result from the entry into, the performance of, or any transaction contemplated by, any Finance Document.

 

10.11

Information

All information which has been provided in writing by or on behalf of the Borrowers or any member of the Group to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7; and there has been no material adverse change in the financial position or state of affairs, operation, performance or prospects of the Borrowers or any of them or any Security Party (excluding the Approved Manager) as at 30 June 2021 from that disclosed to the Agent.

 

10.12

No litigation

No material, legal or administrative action involving any Borrower or any Security Party (excluding the Approved Manager) has been commenced or taken or, to a Borrower’s knowledge, is likely to be commenced or taken.

 

10.13

Compliance with certain undertakings

At the date of this Agreement, each Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and 11.13.

 

10.14

Taxes paid

Each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or the Ship owned by it.

 

10.15

No money laundering; anti-bribery

None of the Borrowers, the Security Parties and the Designated Shareholder nor any of their subsidiaries, directors or officers, or, to their best knowledge, any affiliate, agent or employee of them, have engaged in any activity or conduct which would violate any applicable anti-bribery, anti-corruption or anti-money laundering laws, regulations or rules in any applicable jurisdiction and each of the Borrowers, the Security Parties and the Designated Shareholder has instituted and maintains policies and procedures designed to prevent violation of such laws, regulations and rules.

 

10.16

ISM Code, ISPS Code Compliance and Environmental Laws

All requirements of the ISM Code, ISPS Code and Environmental Laws as they relate to the Borrowers, the Approved Manager and the Ships have been complied with.

 

36


10.17

No immunity

No Borrower, nor any of its 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).

 

10.18

Sanctions

None of the Borrowers, the Security Parties, the Designated Shareholder or any charterer in respect of a Ship nor any of their subsidiaries, directors or officers, or, to their best knowledge, any affiliate, agent or employee of them, is an individual or entity (a “Person”), that is, or is owned or controlled by Persons that are: (i) the target of any Sanctions (a “Sanctioned Person”) or (ii) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions broadly prohibiting dealings with such government, country or territory (a “Sanctioned Country”) or (iii) in violation of any Sanctions.

 

10.19

Validity and completeness of the Existing Charters and the Collateral Charter

 

(a)

Each Existing Charter and the Collateral Charter constitute legal, valid, binding and enforceable obligations of the Borrower which is a party thereto.

 

(b)

The copies of the Existing Charters and the Collateral Charter delivered to the Agent before the date of this Agreement are true and complete copies.

 

(c)

No amendments or additions to the Existing Charters and the Collateral Charter have been agreed nor has any Borrower waived any of its respective rights under the relevant Existing Charter.

 

10.20

Insolvency

In relation to each Borrower, no corporate action, legal proceeding or other procedure or step described in Clause 19.1(g) or creditors’ process described in that clause has been taken or, to its knowledge, threatened in relation to it, and none of the circumstances described in Clause 19.1(g) applies to it.

 

11

GENERAL UNDERTAKINGS

 

11.1

General

Each Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit in writing.

 

11.2

Title and negative pledge

Each Borrower will:

 

(a)

hold the legal title to, and own the entire beneficial interest in the Ship owned by it, the Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents;

 

37


(b)

not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and

 

(c)

procure that its liabilities under the Finance Documents to which it is party do and will rank at least pari passu with all other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law.

 

11.3

No disposal of assets

No Borrower will transfer, lease or otherwise dispose of:

 

(a)

all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

 

(b)

any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation,

but paragraph (a) does not apply to any charter of a Ship as to which Clause 14.13 applies.

 

11.4

No other liabilities or obligations to be incurred

No Borrower will incur any liability or obligation except:

 

(a)

liabilities and obligations under the Finance Documents to which it is a party;

 

(b)

subject to other provisions of this Agreement, liabilities or obligations reasonably incurred in the ordinary course of trading, maintaining, repairing, operating and chartering the Ship owned by it;

 

(c)

at any time prior to the Drawdown Date, the Existing Indebtedness; and

 

(d)

Financial Indebtedness to any other corporation which is a member of the Group or individual who is a shareholder or majority shareholder in a member of the Group Provided that such Financial Indebtedness shall be fully subordinated to the Loan and the relevant Borrower shall, promptly following the Agent’s demand, execute or procure the execution of any documents which the Agent specifies to create or maintain the subordination of the rights of the relevant member of the Group against the relevant Borrower to those of the Creditor Parties under the Finance Documents.

 

11.5

Information provided to be accurate

All financial and other information which is provided in writing by or on behalf of a Borrower under or in connection with any Finance Document will be true, correct, accurate and not misleading and will not omit any material fact or consideration.

 

11.6

Provision of financial statements

Each Borrower will send or procure that they are sent to the Agent:

 

(a)

as soon as possible, but in no event later than 180 days after the end of each financial year of the Corporate Guarantor (commencing with the financial year ending on 31 December 2021), the audited annual consolidated accounts of the Group; and

 

38


(b)

as soon as possible, but in no event later than 90 days after the end of the 6-month period ending on 30 June in each financial year of the Corporate Guarantor (commencing with the 6-month period ending on 30 June 2021), the unaudited semi-annual consolidated management accounts in respect of the Group, duly certified as to their correctness by an officer of the Corporate Guarantor; and

 

(c)

promptly after each request by the Agent, such further financial information about that Borrower, the Ship owned by it and the Corporate Guarantor or any other member of the Group (including, but not limited to, information regarding the charter arrangements, Financial Indebtedness and operating expenses) as the Agent may require.

 

11.7

Form of financial statements

All accounts (audited and unaudited) delivered under Clause 11.6 will:

 

(a)

be prepared in accordance with all applicable laws and US GAAP;

 

(b)

give a true and fair view of the state of affairs of the relevant person at the date of those accounts and of its profit for the period to which those accounts relate; and

 

(c)

fully disclose or provide for all significant liabilities of the Group.

 

11.8

Shareholder notices

Each Borrower will send to the Agent following a request by the Agent, and at the same time as they are despatched, copies of all communications which are despatched to that Borrower’s shareholders or any class of them.

 

11.9

Consents

Each Borrower will, and will procure that each Security Party will, maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

 

(a)

for that Borrower and that Security Party to perform its obligations under any Finance Document or any Charterparty to which it is party;

 

(b)

for the validity or enforceability of any Finance Document and any Charterparty to which it is party; and

 

(c)

for that Borrower to continue to own and operate the Ship owned by it,

and that Borrower will, and will procure that each Security Party will, comply with the terms of all such consents.

 

11.10

Maintenance of Security Interests

Each Borrower will:

 

(a)

at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

 

39


(b)

without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

 

11.11

Notification of litigation

Each Borrower will provide the Agent with details of any legal or administrative action involving that Borrower, any Security Party, the Approved Manager, the Ship owned by it, the Earnings or the Insurances in respect of that Ship as soon as such action is instituted or it becomes apparent to that Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

 

11.12

Principal place of business

Each Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in Clause 28.2(a); and no Borrower will establish, or do anything as a result of which it would be deemed to have, a place of business in the United States or the United Kingdom or any country other than Greece.

 

11.13

Confirmation of no default

Each Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an officer of each Borrower and which:

 

(a)

states that no Event of Default or Potential Event of Default has occurred; or

 

(b)

states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

The Agent may serve requests under this Clause 11.13 from time to time; this Clause 11.13 does not affect the Borrowers’ obligations under Clause 11.14.

 

11.14

Notification of default

Each Borrower will notify the Agent as soon as that Borrower becomes aware of the occurrence of an Event of Default or a Potential Event of Default and will thereafter keep the Agent fully up-to-date with all developments.

 

11.15

Provision of further information

Each Borrower will, as soon as practicable after receiving a request, provide the Agent with any additional financial or other information relating:

 

(a)

to that Borrower, the Ship owned by it, the Insurances, the Earnings or the Corporate Guarantor;

 

(b)

to any other matter relevant to, or to any provision of, a Finance Document; or

 

40


(c)

any information requested in respect of that Borrower, the Corporate Guarantor, the Shareholder and the Designated Shareholder in connection with the Creditor Parties’ and/or the Account Bank’s “Know your customer” regulations, including, but not limited to information required pursuant to all applicable laws and regulations, including, without limitation, the laws of the European Union, Switzerland and the United States of America in connection with that Borrower, the Corporate Guarantor and any other Security Party and their respective beneficial owners,

which may be requested by the Agent, the Security Trustee or any Lender at any time.

 

11.16

Provision of copies and translation of documents

Each Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; if the Agent so requires in respect of any of those documents, that Borrower will provide a certified English translation prepared by a translator approved by the Agent.

 

11.17

“Know your customer” checks. If:

 

(a)

the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

 

(b)

any change in the status of any Borrower or any Security Party after the date of this Agreement; or

 

(c)

a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrowers shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

11.18

Sanctions

 

(a)

None of the Borrowers and the Security Parties will, directly or indirectly, use the proceeds of the loan hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, affiliate, joint venture partner or any other Person, (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, a Sanctioned Person or Sanctioned Country or (ii) use in repayment of any moneys due to the Finance Parties any earnings of the Ship paid directly or indirectly from any activities or business of or with any Person, or in any country, territory or port, that, at the time of such payment, is, a Sanctioned Person or Sanctioned Country, or (iii) in any other manner that would result in a violation of Sanctions by any Person (including the Borrower, the Guarantor, the Approved Manager, the Additional Charterer, the Collateral Charterer, the Existing Charterer and any Person participating in the loan hereunder, whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise);

 

(b)

Without limiting paragraphs (a) and (b) of Clause 14.10, the Borrowers shall procure:

 

41


  (i)

that the Ships shall not be used directly or indirectly by or for the benefit of a Sanctioned Person;

 

  (ii)

that the Ships shall not be used directly or indirectly in calling, trading or otherwise going to a Sanctioned Country;

 

  (iii)

that the Ships shall not be used directly or indirectly in any transport of any goods prohibited by Sanctions;

 

  (iv)

that the Ships shall not be used directly or indirectly in any manner which would expose the Ships, any Security Party, any Existing Charterer, crew or the insurers to enforcement proceedings or any other consequences whatsoever arising from Sanctions;

 

  (v)

that the Ships shall not be used or traded directly or indirectly in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances and/or re-insurance of the Ships; and

 

  (vi)

that each Charterparty and each sub-charterparty in respect of a Ship shall contain, for the benefit of the relevant Borrower, language which broadly gives effect to the provisions of paragraph (b) of Clause 14.10 as regards Sanctions and of this sub-paragraph (b)(vi) of this Clause 11.18 and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions.

 

11.19

Hedging of interest rate risks – Right of first refusal

The Borrowers hereby grant to the Lenders a right of first refusal for the purpose of hedging any part of the interest rate risk under this Agreement throughout the Security Period. In the event that the Borrowers decide to hedge their exposure under this Agreement, they shall enter into such documentation as may be required by the relevant Lender (in such capacity the “Swap Bank”) and the provisions of this Agreement will be amended to incorporate the amendments required, including, but not limited to, Clause 17 reflecting pari passu sharing in the security and receipts between the Lenders and the Swap Bank.

 

11.20

Minimum Liquidity

Each Borrower shall maintain in its Earnings Account credit balances (“Minimum Liquidity”) in an aggregate amount of not less than $500,000, commencing from the Drawdown Date and at all times thereafter throughout the Security Period.

 

11.21

No amendment to the Existing Charters, the Additional Charters and the Collateral Charter

 

(a)

No Borrower will agree to any material amendment (and for, the avoidance of doubt, “material” to mean any amendment which may detrimentally affect the interests of any Creditor Party) or supplement to, or waive or fail to enforce, any Existing Charter or any of its provisions.

 

(b)

No Additional Provider will agree to any material amendment (and for, the avoidance of doubt, “material” to mean any amendment which may detrimentally affect the interests of any Creditor Party) or supplement to, or waive or fail to enforce, any Additional Charter or any of its provisions.

 

42


(c)

The Collateral Provider will not agree to any material amendment (and for, the avoidance of doubt, “material” to mean any amendment which may detrimentally affect the interests of any Creditor Party) or supplement to, or waive or fail to enforce, the Collateral Charter or any of its provisions.

 

11.22

Use of websites

 

(a)

Each Borrower acknowledges an agrees that ay information under this Agreement may be delivered to a Lender (through the Agent) on to an electronic website (a “Website Lender”) if:

 

  (i)

the Agent and the Lender agree;

 

  (ii)

the Agent appoints a website provider and designates an electronic website for this purpose (the “Designated Website”);

 

  (iii)

the Designated Website is used for communication between the Agent and the Lenders;

 

  (iv)

the Agent notifies the Lenders of the address for the website;

 

  (v)

the information can only be posted on the website by the Agent; and

 

  (vi)

the information posted is in a format agreed between each Borrower and the Agent.

 

(b)

The cost of the website shall be borne by each Borrower, subject to such cost being agreed by each Borrower beforehand.

 

(c)

Any Website Lender may request from any Borrower, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website and each Borrower shall at its own cost comply with any such request within ten Business Days.

 

12

CORPORATE UNDERTAKINGS

 

12.1

General

Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

 

12.2

Maintenance of status

Each Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands.

 

12.3

Negative undertakings

No Borrower will:

 

(a)

carry on any business other than the ownership, chartering and operation of the Ship owned by it; or

 

(b)

pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital if:

 

43


  (i)

an Event of Default has occurred at such time; or

 

  (ii)

an Event of Default would occur as a direct result of such distribution, redemption, purchase or return; or

 

(c)

provide any form of credit or financial assistance or issue guarantees in favour of any other corporation or individual other than in the normal course of its business Provided that that corporation or individual to whom any form of credit or financial assistance has been granted or in favour of whom the guarantee has been issued fully subordinates its rights to the rights of the Creditor Parties under the Finance Documents on terms acceptable to the Agent;

 

(d)

provide any form of credit or financial assistance to:

 

  (i)

a person who is directly or indirectly interested in that Borrower’s share or loan capital; or

 

  (ii)

any company in or with which such a person is directly or indirectly interested or connected,

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to that Borrower than those which it could obtain in a bargain made at arms’ length; or

 

(e)

open or maintain any account with any bank or financial institution except accounts with the Account Bank for the purposes of the Finance Documents and any accounts disclosed to the Agent on or prior to the date of this Agreement; or

 

(f)

issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital; or

 

(g)

acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than for hedging of the Loan; or

 

(h)

enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

 

13

INSURANCE

 

13.1

General

Each Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 13, from the Drawdown Date and throughout the term of the Security Period, except as the Agent may, with the authority of the Majority Lenders, otherwise permit in writing.

 

13.2

Maintenance of obligatory insurances

Each Borrower shall keep the Ship owned by it, at all times during the Security Period, insured at the expense of that Borrower against:

 

(a)

fire and usual marine risks (including hull and machinery and excess risks); and

 

44


(b)

war risks; and

 

(c)

protection and indemnity, meaning the usual risks including liability for oil pollution and excess war risk P&I cover; and

 

(d)

any other risks against which the Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lenders be reasonable for that Borrower to insure and which are specified by the Security Trustee by notice to that Borrower.

 

13.3

Terms of obligatory insurances

Each Borrower shall effect such insurances:

 

(a)

in Dollars;

 

(b)

in the case of fire and usual marine risks and war risks, in such amounts as shall from time to time be approved by the Agent but in any event in an amount not less than the greater of (i) the Market Value of the Ship owned by it and (ii) an amount which, when aggregated with the amount for which the other Ships then subject to a Mortgage is insured, is equal to 120 per cent. of the Loan; and

 

(c)

in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

 

(d)

in relation to protection and indemnity risks in respect of the relevant Ship’s full value and tonnage;

 

(e)

on such terms as shall from time to time be approved in writing by the Agent (including, without limitation, a blocking and trapping clause); and

 

(f)

through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations which are members of the International Group of Protection and Indemnity Associations.

 

13.4

Further protections for the Creditor Parties

In addition to the terms set out in Clause 13.3, each Borrower shall procure that the obligatory insurances shall:

 

(a)

subject always to paragraph (b), name that Borrower as the sole named assured unless the interest of every other named assured is limited:

 

  (i)

in respect of any obligatory insurances for hull and machinery and war risks;

 

  (A)

to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and

 

45


  (B)

to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and

 

  (ii)

in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;

 

(b)

name (or be amended to name) the Security Trustee as mortgagee for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

(c)

name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;

 

(d)

provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

 

(e)

provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than any Borrower or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

 

(f)

provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee;

 

(g)

provide that the Security Trustee may make proof of loss if that Borrower fails to do so; and

 

(h)

provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Security Trustee for 30 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

 

13.5

Renewal of obligatory insurances

Each Borrower shall:

 

(a)

at least 14 days before the expiry of any obligatory insurance:

 

  (i)

notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Borrower proposes to renew that insurance and of the proposed terms of renewal; and

 

  (ii)

in case of any substantial change in insurance cover, obtain the Lenders’ approval to the matters referred to in paragraph (i) above;

 

46


(b)

at least 7 days before the expiry of any obligatory insurance, renew the insurance; and

 

(c)

procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

 

13.6

Copies of policies; letters of undertaking

Each Borrower shall ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters or undertaking in a form required by the Lenders and including undertakings by the approved brokers that:

 

(a)

they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

 

(b)

they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

 

(c)

they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

 

(d)

they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

 

(e)

they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by it under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee.

 

13.7

Copies of certificates of entry

Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provides the Security Trustee with:

 

(a)

a certified copy of the certificate of entry for that Ship; and

 

(b)

a letter or letters of undertaking in such form as may be required by the Lenders; and

 

(c)

where required to be issued under the terms of insurance/indemnity provided by that Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Borrower in relation to that Ship in accordance with the requirements of such protection and indemnity association; and

 

(d)

a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship.

 

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13.8

Deposit of original policies

Each Borrower shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

 

13.9

Payment of premiums

Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.

 

13.10

Guarantees

Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

 

13.11

Restrictions on employment

No Borrower shall employ the Ship owned by it, nor permit her to be employed, outside the cover provided by any obligatory insurances.

 

13.12

Compliance with terms of insurances

No Borrower shall either do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and in particular:

 

(a)

each Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

 

(b)

no Borrower shall make any changes relating to the classification or the Classification Society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;

 

(c)

each Borrower shall make all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

 

(d)

no Borrower shall employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances (including but not limited to any applicable laws and Sanctions), without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

 

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13.13

Alteration to terms of insurances

No Borrower shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee.

 

13.14

Settlement of claims

No Borrower shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

 

13.15

Provision of copies of communications

Each Borrower shall provide the Security Trustee, at the time of each such communication, copies of all written communications in case of, but not limited to, an Event of Default, Total Loss or Major Casualty between that Borrower and:

 

(a)

the approved brokers; and

 

(b)

the approved protection and indemnity and/or war risks associations; and

 

(c)

the approved insurance companies and/or underwriters, which relate directly or indirectly to:

 

  (i)

that Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

 

  (ii)

any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

 

13.16

Provision of information

In addition, each Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

 

(a)

obtaining or preparing any report from an independent marine insurance broker appointed by the Agent as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

 

(b)

effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 below or dealing with or considering any matters relating to any such insurances,

and that Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above.

 

49


13.17

Mortgagee’s interest and additional perils insurances

The Security Trustee shall effect, maintain and renew all or any of the following insurances in such amounts, on such terms, through such insurers and generally in such manner as the Lenders may from time to time consider appropriate:

 

(a)

a mortgagee’s interest marine insurance in relation to the Ships in an amount equal to 110 per cent. of the Loan, providing for the indemnification of the Creditor Parties for any losses under or in connection with any Finance Document which directly or indirectly result from loss of or damage to a Ship or a liability of that Ship or of the Borrower owning that Ship, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning:

 

  (i)

any act or omission on the part of that Borrower, of any operator, charterer, manager or sub-manager of that Ship or of any officer, employee or agent of that Borrower or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;

 

  (ii)

any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of that Borrower, any other person referred to in paragraph (i) above, or of any officer, employee or agent of that Borrower or of such a person, including the casting away or damaging of that Ship and/or that Ship being unseaworthy; and/or

 

  (iii)

any other matter capable of being insured against under a mortgagee’s interest marine insurance policy whether or not similar to the foregoing;

 

(b)

a mortgagee’s interest additional perils policy in relation to the Ships in an amount equal to 110 per cent. of the Loan, providing for the indemnification of the Security Trustee against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of a Ship, the imposition of any Security Interest over that Ship and/or any other matter capable of being insured against under a mortgagee’s interest additional perils policy whether or not similar to the foregoing,

and the Borrowers shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

 

13.18

Review of insurance requirements

The Lenders shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lenders, significant and capable of affecting any Borrower or any Ship and its or their Insurances (including, without limitation, changes in the availability or the cost of Insurances or the risks to which the Borrower owning that Ship may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrowers, such review to be carried out at the Agent’s request, at any time during the Security Period if the Agent (acting on the instructions of the Lenders) considers necessary (the reasonable fees of the insurance consultants to conduct such review shall be deducted from the Earnings Accounts (or any of them) and each Borrower hereby agrees to arrange the transfer of monies from its Earnings Account in order to pay such fees) Provided that the Borrowers shall not be required to pay the fees of the insurance consultants to conduct such review more often than once a year unless an Event of Default has occurred and is continuing, or unless a change in the terms of the cover of any Ship has occurred.

 

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13.19

Modification of insurance requirements

The Security Trustee shall notify the Borrowers of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Lenders consider appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 13 and shall bind the Borrowers accordingly.

 

13.20

Compliance with mortgagee’s instructions

The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the Borrower owning that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.19.

 

14

SHIP COVENANTS

 

14.1

General

Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14, at all times during the Security Period, except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit in writing.

 

14.2

Ship’s name and registration

Each Borrower shall keep the Ship owned by it registered in its name under an Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of that Ship, without the prior written consent of the Agent (acting with the authorisation of the Lenders), which shall not be unreasonably withheld or delayed, and shall remain acceptable to the Agent (acting with the authorisation of the Lenders) at all times.

 

14.3

Repair and classification

Each Borrower shall keep the Ship owned by it in a good, safe and seaworthy condition and state of repair:

 

(a)

consistent with first-class ship ownership and management practice;

 

(b)

so as to maintain the highest class with a Classification Society which is a member of IACS acceptable to the Agent (acting with the authorisation of the Lenders) free of overdue recommendations and conditions of such Classification Society;

 

(c)

so as to comply with all laws and regulations applicable to vessels registered at ports of the Approved Flag State or to vessels trading to any jurisdiction to which such Ship may trade from time to time, including but not limited to the ISM Code and the ISM Code Documentation and the ISPS Code; and

 

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(d)

each Borrower shall use its best efforts to allow the Agent (or its agents), at any time, to inspect the original class and related records of that Borrower and the Ship owned by it electronically (through the Classification Society directly) and to take copies of such records.

 

14.4

Modification

No Borrower shall make any modification or repairs to, or replacement of, the Ship or equipment installed on the Ship owned by it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.

 

14.5

Removal of parts

No Borrower shall remove any material part of the Ship owned by it, or any item of equipment installed on, that Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the relevant Ship the property of that Borrower and subject to the security constituted by the relevant Mortgage Provided that each Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to its Ship.

 

14.6

Surveys

Each Borrower shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lenders provide the Security Trustee, with copies of all survey reports.

 

14.7

Technical Survey

Without prejudice to each Borrower’s obligations pursuant to Clause 14.6, each Borrower promptly following the request of the Agent will, submit the Ship for a technical survey by an independent surveyor or surveyors appointed by the Agent (provided such technical survey does not interfere with the ordinary trading of the Ship owned by it). All fees and expenses incurred in relation to the appointment of the surveyor or surveyors and the preparation and issue of all technical reports pursuant to this Clause 14.7 shall be for the account of the Borrowers.

 

14.8

Inspection

Each Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all times (but in any event without interfering with the ordinary trading of the Ship owned by it) to inspect its condition or to satisfy themselves about proposed or executed repairs, shall afford all proper facilities for such inspections and pay to the Agent the amount of all fees, costs and expenses incurred in respect of such inspections Provided that so long as no Event of Default shall have occurred that Borrower shall not be obliged to pay any fees and expenses in respect of more than one inspection of its Ship in any calendar year.

 

14.9

Prevention of and release from arrest

Each Borrower shall promptly discharge:

 

52


(a)

all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;

 

(b)

all taxes, dues and other amounts charged in respect of the Ship owned by it, the Earnings or the Insurances; and

 

(c)

all other outgoings whatsoever in respect of the Ship owned by it, the Earnings or the Insurances,

and, forthwith upon receiving notice of the arrest of that Ship, or of her detention in exercise or purported exercise of any lien or claim, that Borrower shall procure her release by providing bail or otherwise as the circumstances may require.

 

14.10

Compliance with laws etc.

Each Borrower shall:

 

(a)

comply, or procure compliance with the ISM Code (including, for the avoidance of doubt, by the Approved Manager), all Environmental Laws, the ISPS Code, Sanctions and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Borrower;

 

(b)

not employ the Ship owned by it, nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code and Sanctions; and

 

(c)

in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit it to enter or trade to any zone which is declared a war zone by any government or by that Ship’s war risks insurers unless the prior written consent of the Lenders has been given and that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lenders may require.

 

14.11

Provision of information

Each Borrower shall promptly provide the Security Trustee with any information which the Lenders request regarding:

 

(a)

the Ship owned by it, its employment, position and engagements;

 

(b)

the Earnings and payments and amounts due to that Ship’s master and crew of that Ship;

 

(c)

any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made in respect of that Ship;

 

(d)

any towages and salvages;

 

(e)

any intended dry-docking of that Ship;

 

(f)

that Borrower’s, the Approved Manager’s compliance or the compliance of that Ship with the ISM Code and the ISPS Code; and

 

(g)

any other information which the Creditor Parties (or any of them) may reasonably request,

 

53


and, upon the Security Trustee’s request, provide copies of any current charter relating to that Ship, and copies of that Borrower’s or the Approved Manager’s Document of Compliance or any other document issued under ISM Code Documentation.

 

14.12

Notification of certain events

Each Borrower shall immediately notify the Security Trustee by letter of:

 

(a)

any casualty which is or is likely to be or to become a Major Casualty;

 

(b)

any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

 

(c)

any requirement or recommendation made by any insurer or Classification Society or by any competent authority which is not complied with in accordance with its terms;

 

(d)

any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of such Ship for hire;

 

(e)

any dry docking of the Ship owned by it;

 

(f)

any Environmental Claim made against that Borrower or in connection with the Ship owned by it, or any Environmental Incident;

 

(g)

any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, the Approved Manager or otherwise in connection with the Ship owned by it; or

 

(h)

any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and that Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.

 

14.13

Restrictions on chartering, appointment of managers etc.

No Borrower shall, in relation to the Ship owned by it:

 

(a)

let that Ship on demise charter for any period;

 

(b)

enter into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months except as the Agent may consent, such consent not to be unreasonably withheld;

 

(c)

enter into any charter in relation to that Ship under which more than 2 months’ hire (or the equivalent) is payable in advance;

 

(d)

charter that Ship otherwise than on bona fide arm’s length terms at the time when that Ship is fixed;

 

(e)

appoint a manager of that Ship other than the Approved Manager or agree to any material alteration to the terms of the Approved Manager’s appointment which could lead to an Event of Default (“material alterations” to include, without limitation, alterations concerning fees, duration and parties);

 

54


(f)

de-activate or lay up that Ship; or

 

(g)

put that Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or her Earnings for the cost of such work or otherwise.

 

14.14

Notice of Mortgage

Each Borrower shall keep the Mortgage relative to its Ship registered against its Ship as a valid first priority or as the case may be preferred mortgage, carry on board that Ship a certified copy of that Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the Security Trustee.

 

14.15

Sharing of Earnings

No Borrower shall:

 

(a)

enter into any agreement or arrangement for the sharing of any Earnings;

 

(b)

enter into any agreement or arrangement for the postponement of any date on which any Earnings are due; or for the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of that Borrower to any Earnings; or

 

(c)

enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings other than customary profit sharing arrangements in time charter contracts.

 

14.16

Time Charter Assignment

If a Borrower enters into any Charterparty of a duration exceeding or capable of exceeding 12 months, that Borrower shall, at the request of the Agent, execute in favour of the Security Trustee a Charterparty Assignment, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Part A and 6 of Part B of Schedule 3 hereof as the Agent may require.

 

14.17

ISM Code, ISPS Code compliance and Environmental Laws

All requirements of the ISM Code, ISPS Code and Environmental Laws as they relate to each Borrower, the Approved Manager, the Ship owned by the relevant Borrower shall be complied with at all times.

 

14.18

Poseidon Principles

Each Borrower shall, upon the request of any Lender and at the cost of the Borrowers, on or before 31st July in each calendar year, supply or procure the supply by the relevant Approved Classification Society (as specified by the relevant Lender) to the Agent of all information necessary in order for any Lender to comply with its obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance, in each case relating to the Ship owned by it for the preceding

 

55


calendar year provided always that, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 30.1 (Confidential Information) but the Borrowers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the relevant Lender’s portfolio climate alignment.

 

15

SECURITY COVER

 

15.1

Minimum required security cover

Clause 15.2 applies if the Agent notifies the Borrowers that the Security Cover Ratio is below 125 per cent, and Security Cover Ratio shall be tested as at 30 June and 31 December each year.

 

15.2

Provision of additional security; prepayment

If the Agent serves a notice on the Borrowers under Clause 15.1, the Borrowers shall prepay such part (at least) of the Loan as will eliminate the shortfall on or before the date falling 1 month after the date on which the Agent’s notice is served under Clause 15.1 (the “Prepayment Date”) unless at least 1 Business Day before the Prepayment Date it has provided, or ensured that a third party has provided, additional security which, in the reasonable opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall.

In this Clause 15.2 “security” means a Security Interest over an asset or assets (whether securing a Borrower’s liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security (including any cash pledged to the Security Trustee) in respect of that Borrower’s liabilities under the Finance Documents.

 

15.3

Requirement for additional documents

The Borrowers shall not be deemed to have complied with Clause 15.2 above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 3, Part A and such legal opinions in terms acceptable to the Majority Lenders from such lawyers as they may select.

 

15.4

Valuation of Ship

For the purpose of the Security Cover Ratio determination under Clause 15.1, the market value of a Ship shall be provided:

 

(a)

as at a date not more than 30 days previously;

 

(b)

by an Approved Broker selected by the Borrowers and appointed by the Agent (unless the Borrowers have not nominated an Approved Broker within 14 Business Days of the Agent’s request in which case the Agent will be entitled to select and appoint an Approved Broker);

 

(c)

with or without physical inspection of that Ship (as the Agent may require); and

 

(d)

on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment (as the Agent may require).

 

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15.5

Value of additional security

The net realisable value of any additional security which is provided under Clause 15.1 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.4.

 

15.6

Valuations binding

Any valuation under Clause 15.2, 15.4 or 15.5 shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Majority Lenders make of a security which does not consist of or include a Security Interest.

 

15.7

Provision of information

The Borrowers shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.4 or 15.5 with any information which the Agent or the Approved Broker or expert may request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

 

15.8

Payment of valuation expenses

Without prejudice to the generality of the Borrowers’ obligations under Clauses 20.3, 20.5 and 20.6, the Borrowers shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or expert instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause Provided that so long as no Event of Default shall have occurred and is continuing and so long as all valuations of each Ship commissioned by the Agent for the purposes of this Clause 15 confirm that the Borrowers have satisfied the test in Clause 15.1, no Borrower shall be obliged to pay the fees and expenses in respect of more than two valuations (excluding valuations provided to determine the Initial Market Value).

 

15.9

Frequency of valuations

The Borrowers acknowledge and agree that the Agent may commission valuation(s) of any Ship at such times as the Agent may reasonably request (including, without limitation, on the occurrence of any breach of obligation under this Agreement, any Finance Document or any other relevant documentation in connection therewith) and, in any event not less than twice in any calendar year.

 

16

PAYMENTS AND CALCULATIONS

 

16.1

Currency and method of payments

All payments to be made:

 

(a)

by the Lenders to the Agent; or

 

(b)

by any Borrower to the Arranger, the Bookrunner, the Mandated Lead Arrangers, the Agent, the Security Trustee or any Lender,

 

57


under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

 

  (i)

by not later than 11.00 a.m. (New York City time) on the due date;

 

  (ii)

in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

 

  (iii)

to the account of the Agent, as the Agent may from time to time notify to the Borrowers and the other Creditor Parties; and

 

  (iv)

in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrowers and the other Creditor Parties.

 

16.2

Payment on non-Business Day

If any payment by any Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

 

(a)

the due date shall be extended to the next succeeding Business Day; or

 

(b)

if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

 

16.3

Basis for calculation of periodic payments

All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

 

16.4

Distribution of payments to Creditor Parties

Subject to Clauses 16.5, 16.6 and 16.7:

 

(a)

any amount received by the Agent under a Finance Document for distribution or remittance to a Lender or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

 

(b)

amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

 

16.5

Permitted deductions by Agent

Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

 

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16.6

Agent only obliged to pay when monies received

Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrowers or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrowers or that Lender until the Agent has satisfied itself that it has received that sum.

 

16.7

Refund to Agent of monies not received

If and to the extent that the Agent makes available a sum to the Borrowers or a Lender, without first having received that sum, the Borrowers or (as the case may be) the Lender concerned shall, on demand:

 

(a)

refund the sum in full to the Agent; and

 

(b)

pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

 

16.8

Agent may assume receipt

Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

 

16.9

Creditor Party accounts

Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

 

16.10

Agent’s memorandum account

The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

 

16.11

Accounts prima facie evidence

If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by a Borrower or a Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.

 

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17

APPLICATION OF RECEIPTS

 

17.1

Normal order of application

Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

 

(a)

FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following proportions:

 

  (i)

first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by any Borrower under Clauses 20, 21 and 22 of this Agreement or by any Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);

 

  (ii)

secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents; and

 

  (iii)

thirdly, in or towards satisfaction of the Loan;

 

(b)

SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrowers (or any of them), the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of this Clause 17.1(a);

 

(c)

THIRDLY: in or towards satisfaction of any amounts representing insurance costs or premiums then due and payable by the Borrowers (or any of them) in connection with the Ships and/or the Lenders;

 

(d)

FOURTHLY: in or towards satisfaction of any amounts representing management fees then due and payable by the Borrowers (or any of them) to the Approved Manager in connection with the Ships; and

 

(e)

FIFTHLY: any surplus shall be paid to the Borrowers (or any of them) or to any other person appearing to be entitled to it.

 

17.2

Variation of order of application

The Agent may, with the authorisation of the Majority Lenders by notice to the Borrowers, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

 

17.3

Notice of variation of order of application

The Agent may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

 

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17.4

Appropriation rights overridden

This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by any Borrower or any Security Party.

 

18

APPLICATION OF EARNINGS

 

18.1

Payment of Earnings

The Borrowers and the Collateral Provider undertake with each Creditor Party that, throughout the Security Period (subject only to the provisions of the General Assignment to which it is party):

 

(a)

it shall maintain the Accounts opened in its name (whether individually or jointly) with the Account Bank;

 

(b)

it shall ensure that all Earnings of the Ship and the Collateral Ship owned by it are paid to the Earnings Account for that Ship or the Collateral Ship, as the case may be; and

 

(c)

the Minimum Liquidity amounts required to be maintained pursuant to Clause 11.20 shall be maintained in the relevant Earnings Account of the Ships.

 

18.2

Monthly retentions

The Borrowers undertake with each Creditor Party to ensure that, on and from the date falling one month after the Drawdown Date and at monthly intervals thereafter during the Security Period, there are transferred to the Retention Account out of the Earnings received in the Earnings Accounts during the preceding month:

 

(a)

one-third of the amount of the relevant Repayment Instalment falling due under Clause 8.1 on the next Repayment Date; and

 

(b)

the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest under this Agreement,

and the Borrowers irrevocably authorise the Agent to make those transfers if the Borrowers fail to do so.

The “relevant fraction”, in relation to paragraph (b), is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period (or if the current Interest Period in respect of the Loan ends after the next due date for payment of interest under this Agreement, the number of months from the later of the commencement of the current Interest Period in respect of the Loan or the last due date for payment of interest to the next due date for payment of interest in respect of the Loan under this Agreement).

 

18.3

Shortfall in Earnings

If the aggregate Earnings received in the Earnings Account are insufficient at any time for the required amount to be transferred to the Retention Account under Clause 18.2, the Borrowers shall immediately pay the amount of the insufficiency into the Retention Account.

 

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18.4

Application of retentions

Until an Event of Default or a Potential Event of Default occurs, the Agent shall, to the extent there are sufficient funds standing to the credit of the Retention Account, on each Repayment Date and on each due date for the payment of interest under this Agreement distribute to the Lenders in accordance with Clause 16.4 so much of the then balance on the Retention Account as equals:

 

(a)

the Repayment Instalment due on that Repayment Date pursuant to Clause 8.1; or

 

(b)

the amount of interest in respect of the Loan payable on that interest payment date,

in discharge of the Borrowers’ liability for that Repayment Instalment or that interest.

 

18.5

Application of Earnings

Each Borrower and the Collateral Provider undertakes with the Lenders that money from time to time credited to, or for the time being standing to the credit of, the Earnings Accounts shall (i) unless and until an Event of Default shall have occurred (whereupon the provisions of Clause 17.1 shall be and become applicable) or (ii) unless otherwise agreed in writing between the Borrowers and the Agent, be available for application in the following manner:

 

(a)

in or towards making payments of all amounts due and payable by the Borrowers under this Agreement (other than payments of principal and interest);

 

(b)

in or towards satisfaction of all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents;

 

(c)

in or towards satisfaction of the Loan;

 

(d)

in or towards making payments of all fees due to the Approved Manager and thereafter meeting the costs and expenses from time to time incurred by or on behalf of a Borrower in connection with the operation of the Ship owned by it; and

 

(e)

as to any surplus from time to time arising on an Earnings Account following application as aforesaid, to be paid to the Borrower owning that Ship or to whomsoever it may direct.

 

18.6

Location of account

Each Borrower shall promptly:

 

(a)

comply with any requirement of the Agent as to the location or re-location of its Earnings Account; and

 

(b)

execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts.

 

18.7

Debits for expenses etc.

The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Accounts without prior notice in order to discharge any amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 or 21.

 

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18.8

Borrowers’ obligations unaffected

The provisions of this Clause 18 (as distinct from a distribution effected under Clause 18.4) do not affect:

 

(a)

the liability of the Borrowers to make payments of principal and interest on the due dates; or

 

(b)

any other liability or obligation of the Borrowers or any Security Party under any Finance Document.

 

18.9

Restriction on withdrawal

During the Security Period no sum may be withdrawn by a Borrower from the Retention Account.

 

19

EVENTS OF DEFAULT

 

19.1

Events of Default

An Event of Default occurs if:

 

(a)

the Borrowers or any of them or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

 

(b)

any breach occurs of Clause 9.2, 10.15, 10.18, 11.2, 11.3, 11.18, 11.20, 12.2, 12.3, 13.2, 13.3, 14.2 or 15.2 or clause 12.3 of the Corporate Guarantee; or

 

(c)

any breach by the Borrowers or any of them or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b) above) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 14 days after the earlier of (i) written notice from the Agent requesting action to remedy the same and (ii) any Borrower becoming aware of such breach; or

 

(d)

(subject to any applicable grace period specified in the Finance Document) any breach by the Borrowers or any of them or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c) above); or

 

(e)

any representation, warranty or statement made or repeated by, or by an officer of, any Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated; or

 

(f)

any of the following occurs in relation to any Financial Indebtedness of a Relevant Person (for an amount exceeding, in the case of any Relevant Person other than a Borrower $10,000,000 (or the equivalent in any other currency) in aggregate):

 

  (i)

any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

 

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  (ii)

any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default unless the Relevant Person is contesting the declaration of an event of default or of the Financial Indebtedness becoming due and payable in good faith and on substantial grounds by appropriate proceedings and adequate reserves have been set aside for its payment if such proceedings fail; or

 

  (iii)

a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

 

  (iv)

any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

 

  (v)

any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

 

(g)

any of the following occurs in relation to a Relevant Person:

 

  (i)

a Relevant Person becomes, in the reasonable opinion of the Lenders, unable to pay its debts as they fall due; or

 

  (ii)

any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $10,000,000 or more or the equivalent in another currency and such execution, attachment, arrest, sequestration or distress is not withdrawn or discharged within thirty (30) days; or

 

  (iii)

any administrative or other receiver is appointed over any asset of a Relevant Person; or

 

  (iv)

an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or

 

  (v)

any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors or officers of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or

 

  (vi)

a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or

 

  (vii)

a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members, shareholders, officers or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction for or with a view to the winding up of that or

 

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  another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than a Borrower or the Corporate Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

 

  (viii)

an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person in any Pertinent Jurisdiction, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 60 days of being made or presented, or (bb) within 60 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or

 

  (ix)

a Relevant Person or its directors or officers take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or

 

  (x)

any meeting of the members, shareholders or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, shareholders, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or

 

  (xi)

in a country other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the reasonable opinion of the Majority Lenders is similar to any of the foregoing; or

 

(h)

any Borrower or any Security Party ceases or suspends carrying on its business or a part of its business which, in the reasonable opinion of the Majority Lenders, is material in the context of this Agreement Provided that no Event of Default will occur under this paragraph (h) if the Security Party is an Approved Manager and the Borrowers replace such Approved Manager by another Approved Manager within 30 days from the date of such event; or

 

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(i)

it becomes unlawful in any Pertinent Jurisdiction or impossible:

 

  (i)

for any Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

 

  (ii)

for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

 

(j)

any official consent necessary to enable any Borrower to own, operate or charter the Ship owned by it or to enable any Borrower or any Security Party to comply with any provision which the Majority Lenders reasonably consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled, unless the relevant Borrower contests any denial, expiration or revocation (other than with respect to a Finance Documents) and on the condition that, in the reasonable opinion of the Majority Lenders (i) there are real prospects of such contest being successfully granted/upheld by the relevant Borrower (ii) such contest being made in good faith; or

 

(k)

it appears to the Majority Lenders that, without their prior written consent:

 

  (i)

a change has occurred or probably has occurred after the date of this Agreement in the legal or direct beneficial ownership of any of the shares in any Borrower or the Shareholder in the voting rights attaching to any of those shares; or

 

  (ii)

any Borrower ceases to be a wholly owned indirect subsidiary of the Corporate Guarantor; or

 

  (iii)

the Designated Shareholders own, in aggregate, less than 10 per cent. of the issued and outstanding voting shares in the Corporate Guarantor; or

 

  (iv)

the shares of the Corporate Guarantor cease to be listed on the New York Stock Exchange (NYSE) or any other US or European stock exchange acceptable to the Agent; or

 

(l)

any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

 

(m)

the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

 

(n)

any other event occurs or any other circumstances arise or develop including, without limitation:

 

  (i)

a material adverse change in the business, condition (financial or otherwise), operation, state of affairs or prospects of any Borrower, the Corporate Guarantor or the Group; or

 

  (ii)

any accident or other event involving any Ship or another vessel owned, chartered or operated by a Relevant Person,

 

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in the light of which the Majority Lenders reasonably consider that there is a significant risk that any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due or the enforceability of any Finance Document may be adversely affected.

 

(o)

Existing Charters, Collateral Charters and Additional Charter

 

  (i)

Any Existing Charter, Collateral Charter or any of the Additional Charters is frustrated (except as a result of a Total Loss of the relevant Ship, the Collateral Ship or the relevant Additional Ship), terminated (except by mere effluxion of time), cancelled or rescinded or purported to be cancelled or rescinded or the relevant Ship, or the Collateral Ship or the relevant Additional Ship is withdrawn from service under that Existing Charter, the Collateral Charter or the Additional Charter, respectively prior to its termination by effluxion of time.

 

  (ii)

No Event of Default will occur under paragraph (i) of this Clause 19.1(o) (Existing Charters) if, as soon as possible, but in any event not later than 60 days after such frustration, termination, cancellation or rescission the Borrower owning the relevant Ship, the Collateral Provider owning the relevant Collateral Ship and the Additional Provider owning the Additional Ship:

 

  (A)

has entered into a new charter (a “Replacement Charter”) in respect of that ship with a duration which is approximately the same as the remaining duration of such Existing Charter, such Additional Charters or the Collateral Charter on terms otherwise acceptable to the Agent (acting on the instructions of the Majority Lenders at their sole discretion), which shall not be unreasonably withheld or delayed;

 

  (B)

has delivered to the Agent copies of such Replacement Charter or sufficient evidence that such Replacement Charter has been agreed and, if applicable, any related charter guarantee duly executed by the parties thereto and of each document to be delivered pursuant to each of them; and

 

  (C)

has complied with its obligations pursuant to Clause 14.16 (Time Charter Assignment) in relation to such Replacement Charter (as if same was by definition a Charterparty) and, if applicable, any related charter guarantee.

 

(p)

Repayment of Subordinated Loan Agreement

Any payment of principal or interest under the Subordinated Loan Agreement prior to the Final Maturity Date (other than repayment taking place by way of equity raising).

 

19.2

Actions following an Event of Default

On, or at any time after, the occurrence of an Event of Default, which is continuing:

 

(a)

the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

 

  (i)

serve on the Borrowers a notice stating that all or part of the Commitments and all other obligations of each Lender to the Borrowers under this Agreement are terminated; and/or

 

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  (ii)

serve on the Borrowers a notice stating that all or part of the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

 

  (iii)

take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

 

(b)

the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent and/or the Majority Lenders are entitled to take under any Finance Document or any applicable law.

 

19.3

Termination of Commitments

On the service of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all other obligations of each Lender to the Borrowers under this Agreement shall terminate.

 

19.4

Acceleration of Loan

On the service of a notice under paragraph (a)(ii) of Clause 19.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

 

19.5

Multiple notices; action without notice

The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

 

19.6

Notification of Creditor Parties and Security Parties

The Agent shall send to each Lender, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrowers under Clause 19.2; but the notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrowers or any Security Party with any form of claim or defence.

 

19.7

Creditor Party’s rights unimpaired

Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

 

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19.8

Exclusion of Creditor Party Liability

No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrowers or a Security Party:

 

(a)

for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

 

(b)

as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the wilful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.

 

19.9

Relevant Persons

In this Clause 19, a “Relevant Person” means a Borrower, a Security Party (excluding the Approved Manager), and any company which is a subsidiary of any Borrower or of a Security Party (excluding the Approved Manager) or of which any Borrower is a subsidiary.

 

19.10

Interpretation

In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) “petition” includes an application.

 

20

FEES AND EXPENSES

 

20.1

Up-front fee

The Borrowers shall pay to the Agent on or prior to the date of this Agreement a non-refundable up-front fee in the amount of $1,152,000 (representing 1.20 per cent. of the Total Commitments) for distribution among the Lenders pro rata to their Commitments.

 

20.2

Commitment fee

The Borrowers shall pay to the Agent (for the account of each Lender) a non-refundable commitment fee, at the rate of 1.00 per cent. per annum on the undrawn or uncancelled amount of the Total Commitments, payable quarterly in arrears for distribution among the Lenders pro rata to their Commitments, during the period from (and including) the date of this Agreement to the earlier of (i) the Drawdown Date to occur under this Agreement and (ii) the last day of the Availability Period (and on the last day of such period).

 

20.3

Account Bank fee

The Borrowers and the Collateral Provider shall pay to the Account Bank on or prior to the date of this Agreement and on each anniversary thereof a non-refundable annual fee in the amount of $1,000 in respect of each Earnings Account.

 

20.4

Agency fee

The Borrowers shall pay to the Agent (for its own account) an agency fee in the amount of $30,000 per annum. The first such fee shall be due and payable to the Agent on or prior to the Drawdown Date and each subsequent such fee shall be payable on each anniversary of the date of this Agreement.

 

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20.5

Costs of negotiation, preparation etc.

The Borrowers shall pay to the Agent, within ten Business Days’ from its demand, the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document (including, without limitation, out of pocket expenses, legal fees and any related VAT).

 

20.6

Costs of variations, amendments, enforcement etc.

The Borrowers shall pay to the Agent, within ten Business Days’ from its demand, the amount of all documented expenses incurred by a Creditor Party in connection with:

 

(a)

any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made, including, but not limited to, any amendment or supplement (or any proposal for such an amendment or supplement) contemplated in Clause 27.4 (Replacement of Screen Rate);

 

(b)

any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

 

(c)

the valuation of any security provided or offered under Clause 15 or any other matter relating to such security;

 

(d)

where the Agent, in its absolute opinion, considers that there has been a material change to the insurances in respect of a Ship, the review of the insurances of a Ship pursuant to Clause 13.18;

 

(e)

the opinions of the independent insurance consultant referred to in paragraph 6 of Part B, Schedule 3; and

 

(f)

any step taken by any Lender concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

 

20.7

Documentary taxes

The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any liabilities, claims losses and expenses resulting from any failure or delay by the Borrowers to pay such a tax.

 

20.8

Certification of amounts

A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

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21

INDEMNITIES

 

21.1

Indemnities regarding borrowing and repayment of Loan

The Borrowers shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

 

(a)

the Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity;

 

(b)

the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period including, without limitation, where such receipt or recovery is made as a result of the voluntary or mandatory repayment or prepayment of the Loan, or any part thereof;

 

(c)

any failure (for whatever reason) by the Borrowers to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 7); and

 

(d)

the occurrence and/or continuance of an Event of Default and/or the acceleration of repayment of the Loan under Clause 19,

and in respect of any tax (other than tax on its overall net income or a FATCA Deduction) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

 

21.2

Breakage costs

Without limiting its generality, Clause 21.1 covers any liability, expense or loss, including a loss of a prospective profit, incurred by a Lender:

 

(a)

in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and

 

(b)

in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one.

 

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21.3

Miscellaneous indemnities

The Borrowers shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, a Creditor Party, in any country, in relation to:

 

(a)

any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; and

 

(b)

any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document,

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty or wilful misconduct of the officers or employees of the Creditor Party concerned.

 

21.4

Extension of indemnities; environmental indemnity

Without prejudice to its generality, Clause 21.3 covers:

 

(a)

any matter which would be covered by Clause 21.3 if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and

 

(b)

any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution or the protection of the environment, the ISM Code, the ISPS Code or any Environmental Law.

 

21.5

Currency indemnity

If any sum due from a Borrower or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:

 

(a)

making or lodging any claim or proof against a Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

 

(b)

obtaining an order or judgment from any court or other tribunal; or

 

(c)

enforcing any such order or judgment,

the Borrowers shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

In this Clause 21.5, the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

 

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This Clause 21.5 creates a separate liability of each Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

 

21.6

Certification of amounts

A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown of the amounts due) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

 

21.7

Sums deemed due to a Lender

For the purposes of this Clause 21, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

 

21.8

Sanctions

 

(a)

The Borrowers shall, within three (3) Business Days of demand by a Creditor Party, indemnify each Creditor Party against any cost, loss or liability incurred by it as a result of any civil penalty or fine against, and all reasonable costs and expenses (including reasonable counsel fees and disbursements) incurred in connection with the defence thereof by, the Agent or any Lender as a result of conduct of the Borrowers or any Security Party or any of their partners, directors, officers, employees, agents or advisors, that violates any Sanctions.

 

(b)

The indemnity in Clause 21.8(a) above shall cover any losses incurred by each Creditor Party in any jurisdiction arising or asserted under or in connection with any law relating to any Sanctions.

 

22

NO SET-OFF OR TAX DEDUCTION

 

22.1

No deductions

All amounts due from the Borrowers under a Finance Document shall be paid:

 

(a)

without any form of set-off, cross-claim or condition; and

 

(b)

free and clear of any tax deduction except a tax deduction which a Borrower is required by law to make.

 

22.2

Grossing-up for taxes

If a Borrower is required by law to make a tax deduction from any payment:

 

(a)

that Borrower shall notify the Agent as soon as it becomes aware of the requirement;

 

(b)

that Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and

 

(c)

the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

 

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22.3

Evidence of payment of taxes

Within 1 month after making any tax deduction, the Borrower concerned shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

 

22.4

Exclusion of tax on overall net income

In this Clause 22 “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party’s overall net income or a FATCA Deduction.

 

22.5

FATCA information

 

(a)

Subject to paragraph (c) below, each party to the Finance Documents shall, within 5 Business Days of a reasonable request by another party to the Finance Documents:

 

  (i)

confirm to that other party whether it is:

 

  (A)

a FATCA Exempt Party; or

 

  (B)

not a FATCA Exempt Party; and

 

  (ii)

supply to that other party such forms, documentation and other information relating to its status under FATCA as that other party reasonably requests for the purposes of that other party’s compliance with FATCA; and

 

  (iii)

supply to that other party such forms, documentation and other information relating to its status as that other party reasonably requests for the purposes of that other party’s compliance with any other law, regulation or exchange of information regime;

 

(b)

if a party to any Finance Document confirms to another party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify that other party reasonably promptly;

 

(c)

paragraph (a) above shall not oblige any Creditor Party, and paragraph (a)(iii) above shall not oblige any other party to a Finance Document, to do anything which would or might in its reasonable opinion constitute a breach of:

 

  (i)

any law or regulation;

 

  (ii)

any fiduciary duty; or

 

  (iii)

any duty of confidentiality;

 

(d)

if a party to any Finance Document fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party until such time as the party in question provides the requested confirmation, forms, documentation or other information.

 

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(e)

If a Borrower is or becomes a US Tax Obligor or a FATCA FFI, it shall as soon as reasonably practicable inform the Agent of the same;

 

(f)

Where the Agent reasonably believes that its obligations under FATCA require it, the relevant Borrower or the relevant Security Party shall provide the Agent, upon request, with a W-8 BEN-E form (or any successor form) or any other forms or documentation the Agent may reasonably require, as soon as reasonably practicable. The Agent shall not be liable for any action which it takes or refrains from taking under or in connection with this paragraph (f);

 

(g)

If a Borrower is or becomes a US Tax Obligor or a FATCA FFI, or where the Agent reasonably believes that its obligations under FATCA require it, each Creditor Party shall, within 10 Business Days of the date of a request from the Agent supply to the Agent:

 

  (i)

a withholding certificate on Form W-8 or Form W-9 (or any successor form) (as applicable); and/or

 

  (ii)

any withholding statement and other documentation, authorisations and waivers as the Agent may require to certify or establish the status of such Creditor Party under FATCA,

the Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Creditor Party pursuant to this paragraph (g) to that Borrower or the relevant Security Party and shall be entitled to rely on any such withholding certificate, withholding statement, documentation, authorisations and waivers provided without further verification. The Agent shall not be liable for any action which it takes or refrains from taking under or in connection with this paragraph (g); and

 

(h)

The Borrowers, each Security Party and each Creditor Party agrees that if any withholding certificate, withholding statement, documentation, authorisations and waivers provided to the Agent pursuant to paragraphs (f) to (g) above is or becomes materially inaccurate or incomplete, it shall promptly update such withholding certificate, withholding statement, documentation, authorisations and waivers or promptly notify the Agent in writing of its legal inability to do so. The Agent shall, if applicable, provide any such updated withholding certificate, withholding statement, documentation, authorisations and waivers to the Borrowers or the relevant Security Party. The Agent shall not be liable for any action which it takes or refrains from taking under or in connection with this paragraph (h).

 

22.6

FATCA Deduction

 

(a)

Each party to a Finance Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and shall not be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

 

(b)

Each party to a Finance Document shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the party to a Finance Document to whom it is making the payment and, in addition, shall notify the Borrowers and the Agent and the Agent shall notify the other Creditor Parties.

 

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23

ILLEGALITY, ETC

 

23.1

Illegality

This Clause 23 applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become for that Lender or any affiliate of that Lender:

 

(a)

unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

 

(b)

contrary to, or inconsistent with, any regulation,

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

 

23.2

Notification of illegality

The Agent shall promptly notify the Borrowers, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

 

23.3

Prepayment; termination of Commitment

On the Agent notifying the Borrowers under Clause 23.2, the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 23.1 as the date on which the notified event would become effective the Borrowers shall prepay the Notifying Lender’s Contribution in accordance with Clause 8.

 

24

INCREASED COSTS

 

24.1

Increased costs

 

(a)

Each Borrower shall, within 3 Business Days of a demand by the Agent, pay for the account of a Creditor Party the amount of any Increased Costs incurred by that Creditor Party or any of its affiliates as a result of:

 

  (i)

the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or

 

  (ii)

compliance with any law or regulation made,

after the date of this Agreement.

 

(b)

In this Agreement, “Increased Costs” means:

 

  (i)

a reduction in the rate of return from the Loan or on a Creditor Party’s (or its affiliate’s) overall capital;

 

  (ii)

an additional or increased cost; or

 

  (iii)

a reduction of any amount due and payable under any Finance Document,

 

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which is incurred or suffered by a Creditor Party or any of its affiliates to the extent that it is attributable to that Creditor Party having entered into its Commitment or funding or performing its obligations under any Finance Document and, for the avoidance of doubt, includes any Increased Costs incurred or suffered by a Creditor Party or any of its affiliates as a result of or with connection to Basel III, CRD IV or CRR,

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (aa) (or a parent company of it) or (bb) an item covered by the indemnity for tax in Clause 21.1 or by Clause 22 or (cc) a FATCA Deduction.

 

24.2

Increased cost claims

 

(a)

A Creditor Party (the “Notifying Lender”) intending to make a claim pursuant to Clause 24.1 shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower.

 

(b)

Each Creditor Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

 

24.3

Notification to Borrowers of claim for increased costs

The Agent shall promptly notify the Borrowers and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.2.

 

24.4

Payment of increased costs

The Borrowers shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

 

24.5

Notice of prepayment

If the Borrowers are not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4, the Borrowers may give the Agent not less than 15 days’ notice of their intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period and/or to cancel the Notifying Lender’s Available Commitment.

 

24.6

Prepayment; termination of Commitment

A notice under Clause 24.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrowers’ notice of intended prepayment; and:

 

(a)

on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

 

(b)

on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

 

24.7

Application of prepayment

Clause 8 shall apply in relation to the prepayment.

 

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25

SET-OFF

 

25.1

Application of credit balances

Each Creditor Party may without prior notice:

 

(a)

apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of a Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from that Borrower to that Creditor Party under any of the Finance Documents; and

 

(b)

for that purpose:

 

  (i)

break, or alter the maturity of, all or any part of a deposit of that Borrower;

 

  (ii)

convert or translate all or any part of a deposit or other credit balance into Dollars; and

 

  (iii)

enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

 

25.2

Existing rights unaffected

No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

 

25.3

Sums deemed due to a Lender

For the purposes of this Clause 25, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

 

25.4

No Security Interest

This Clause 25 gives the Creditor Parties a contractual right of set off only and does not create any equitable charge or other Security Interest over any credit balance of any Borrower.

 

26

TRANSFERS AND CHANGES IN LENDING OFFICES

 

26.1

Transfer by Borrowers

No Borrower may, without the consent of the Agent, given on the instructions of all the Lenders:

 

(a)

transfer any of its rights or obligations under any Finance Document; or

 

(b)

enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

 

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26.2

Transfer by a Lender

 

(a)

Subject to Clause 26.4, a Lender (the “Transferor Lender”) may at any time, without the prior written consent of the Borrowers (but with a 15 days’ prior notice), transfer and/or assign:

 

  (i)

its rights in respect of all or part of its Contribution; or

 

  (ii)

its obligations in respect of all or part of its Commitment; or

 

  (iii)

a combination of (i) and (ii),

to another Lender, another branch, subsidiary or affiliate of a Lender, another first class international bank or financial institution, any member of the European System of Central Banks, or to any (re)insurers and insurance brokers or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in shipping loans, securities or other financial assets (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.

However, any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.

 

26.3

Transfer Certificate, delivery and notification

As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

 

(a)

sign the Transfer Certificate on behalf of itself, each Borrower, the Security Parties, the Security Trustee and each of the other Lenders;

 

(b)

on behalf of the Transferee Lender, send to each Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and

 

(c)

send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above,

Provided that the Agent is satisfied that the Transferee Lender has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such Transferee Lender.

 

26.4

Effective Date of Transfer Certificate

A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

 

26.5

No transfer without Transfer Certificate

No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, any Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

 

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26.6

Lender re-organisation; waiver of Transfer Certificate

However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by notice to the successor and the Borrowers and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

 

26.7

Effect of Transfer Certificate

A Transfer Certificate takes effect in accordance with English law as follows:

 

(a)

to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrowers or any Security Party had against the Transferor Lender;

 

(b)

the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate;

 

(c)

the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

 

(d)

the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

 

(e)

any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of any Borrower or any Security Party against the Transferor Lender had not existed;

 

(f)

the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

 

(g)

in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of any Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

 

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26.8

Maintenance of register of Lenders

During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrowers during normal banking hours, subject to receiving at least 3 Business Days prior notice.

 

26.9

Reliance on register of Lenders

The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

 

26.10

Authorisation of Agent to sign Transfer Certificates

The Borrowers, the Security Trustee and each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

 

26.11

Registration fee

In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $1,500 (and all costs, fees and expenses incidental to the transfer (including, but not limited to legal fees and expenses)) from the Transferor Lender or (at the Agent’s option) the Transferee Lender.

 

26.12

Sub-participation; subrogation assignment

A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrowers, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

 

26.13

Disclosure of information

Subject to Clause 26.4, a Lender may, disclose to a potential Transferee Lender or, to any sub-participant any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature only after a potential Transferee Lender or any sub-participant to whom disclosure is made agrees to be bound by the terms of the confidentiality undertaking in this Clause 26.13 by way of a confidentiality agreement in a form recommended by the LMA from time to time or acceptable to the Borrowers.

The Borrowers agree that the terms and conditions of this Agreement shall remain confidential and shall not, or shall procure that the Corporate Guarantor shall not, disclose (whether, without limitation, in writing or orally) to third parties (other than any disclosure to the Corporate Guarantor’s shareholders, officers, employees or professional advisers Provided that the person to whom disclosure is made agrees to be bound by the terms of the confidentiality undertaking in this Clause 26.13 any information required to be disclosed by law, regulation or any governmental or competent regulatory authority (including without

 

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limitation, any securities exchange), provided that, to the extent reasonably practicable, the Corporate Guarantor shall inform the Agent on the proposed form, timing, nature and purpose of the disclosure) the existence of this Agreement or the terms and conditions contained herein without the prior written consent of the Lenders.

 

26.14

Change of lending office

A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

 

(a)

the date on which the Agent receives the notice; and

 

(b)

the date, if any, specified in the notice as the date on which the change will come into effect,

provided that a Lender shall not nominate more than two lending offices.

 

26.15

Notification

On receiving such a notice, the Agent shall notify the Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

 

26.16

Security over Lenders’ rights

In addition to the other rights provided to Lenders under this Clause 26, each Lender may without consulting with or obtaining consent from any Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

 

(a)

any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

 

(b)

in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;

except that no such charge, assignment or Security Interest shall:

 

  (i)

release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or

 

  (ii)

require any payments to be made by the Borrowers or any Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

 

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27

VARIATIONS AND WAIVERS BY MAJORITY LENDERS

 

27.1

Variations, waivers etc. by Lenders

Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrowers, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

 

27.2

Variations, waivers etc. requiring agreement of all Lenders

Subject to Clause 27.4 (Replacement of Screen Rate), as regards the following, Clause 27.1 applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:

 

(a)

a reduction in the Margin;

 

(b)

a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement;

 

(c)

an increase in any Lender’s Commitment;

 

(d)

a change to the definition of “Majority Lenders”;

 

(e)

a change to Clause 3 or this Clause 27;

 

(f)

any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

 

(g)

any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required.

 

27.3

Exclusion of other or implied variations

Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

 

(a)

a provision of this Agreement or another Finance Document; or

 

(b)

an Event of Default; or

 

(c)

a breach by a Borrower or a Security Party of an obligation under a Finance Document or the general law; or

 

(d)

any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

 

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27.4

Replacement of Screen Rate

 

(a)

If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:

 

  (i)

providing for the use of a Replacement Benchmark; and

 

  (ii)

  (A)

aligning any provision of any Finance Document to the use of that Replacement Benchmark;

 

  (B)

enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

 

  (C)

implementing market conventions applicable to that Replacement Benchmark;

 

  (D)

providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

 

  (E)

adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

may be made with the consent of the Agent (acting on the instructions of the Majority Lenders) and the Borrowers.

 

(b)

If, as at 1 January 2023 this Agreement provides that the rate of interest for the Loan in dollars is to be determined by reference to the Screen Rate for LIBOR:

 

  (i)

a Screen Rate Replacement Event shall be deemed to have occurred on that date in relation to the Screen Rate for dollars; and

 

  (ii)

the Agent, (acting on the instructions of the Majority Lenders) and the Borrowers shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in relation to dollars in place of that Screen Rate from and including a date no later than 31 May 2023.

 

(c)

If any Lender fails to respond to a request for an amendment or waiver described in, or for any other vote of Lenders in relation to, paragraphs (a) or (b) above within 10 Business Days (or such longer time period in relation to any request which the Borrowers and the Facility Agent may agree) of that request being made:

 

  (i)

its Commitment or its participation in the Loan (as the case may be) shall not be included for the purpose of calculating the Total Commitments or the amount of the Loan (as applicable) when ascertaining whether any relevant percentage of Total Commitments or the aggregate of participations in the Loan (as applicable) has been obtained to approve that request; and

 

  (ii)

its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.

 

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27.5

Market Flex

The Borrowers agree that the Bookrunner shall be entitled after the Drawdown Date, in order to achieve any transfer of an amount up to $28,000,000 of BNP Paribas’ Contribution and/or Commitment to a Transferee Lender after consultation with the Borrowers, to increase the margin by an aggregate amount not exceeding 0.45 per cent. per annum on the date falling 6 months after the Drawdown Date, and the Borrowers shall (and shall procure that the Security Parties will) enter into such documentation as may be required by the Lenders in order to document the resultant amendments to this Agreement and any of the other Finance Documents.

 

28

NOTICES

 

28.1

General

Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

 

28.2

Addresses for communications

A notice shall be sent:

 

(a)    to a Borrower:    c/o Navios Tankers Management Inc.
      85 Akti Miaouli
      Piraeus 185 38
      Fax No: +30 210 4172070
      for the attention of: Vassiliki Papaefthymiou
      E-mail: vpapaefthymiou@Navios.com
(b)    to a Lender:    At the address below its name in Schedule 1 or (as the case
      may require) in the relevant Transfer Certificate.
(c)    to the Arranger, the Agent,    BNP Paribas
   the Bookrunner and the    CIB – Agency EMEA
   Security Trustee:    9 rue du Débarcadère
      93500 Pantin
      France
      For the attention of: Alexandra Arhab/Patrick Touzeau
      E-mail: alexandra.arhab@bnpparibas.com; patrick.touzeau@bnpparibas.com
      Tel: +33 1 42 98 61 17 /+33 1 42 98 76 15
(d)    to the Mandated Lead    BNP Paribas
   Arrangers:    CIB – Agency EMEA
      9 rue du Débarcadère
     

93500 Pantin

     

France

 

85


     

For the attention of: Alexandra Arhab/Patrick Touzeau

     

E-mail: alexandra.arhab@bnpparibas.com; patrick.touzeau@bnpparibas.com

     

Tel: +33 1 42 98 61 17 /+33 1 42 98 76 15

     

Crédit Agricole Corporate and Investment Bank 12, place des Etats-Unis

     

CS 70052 92547 Montrouge Cedex

     

France

     

E-mail:

     

clementine.costil@ca-cib.com romy.roussel@ca-cib.com charlene.marguetheintz@ca-cib.com

     

Copy :

     

nicoletta.panayiotopoulos@ca-cib.com yannick.legourieres@ca-cib.com

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders and the Security Parties.

 

28.3

Effective date of notices

Subject to Clauses 28.4 and 28.5:

 

(a)

a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

 

(b)

a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

 

28.4

Service outside business hours

However, if under Clause 28.3 a notice would be deemed to be served:

 

(a)

on a day which is not a business day in the place of receipt; or

 

(b)

on such a business day, but after 5 p.m. local time,

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

 

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28.5

Illegible notices

Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

 

28.6

Valid notices

A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

 

(a)

the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

 

(b)

in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

 

28.7

English language

Any notice under or in connection with a Finance Document shall be in English.

 

28.8

Meaning of “notice”

In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

 

29

SUPPLEMENTAL

 

29.1

Rights cumulative, non-exclusive

The rights and remedies which the Finance Documents give to each Creditor Party are:

 

(a)

cumulative;

 

(b)

may be exercised as often as appears expedient; and

 

(c)

shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

 

29.2

Severability of provisions

If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

 

29.3

Third party rights

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

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29.4

Waiver of Banking Secrecy

The Borrowers hereby irrevocably authorise and give consent to the Agent and, each of its affiliates, and their respective subsidiaries, branches and representative offices and their respective directors, officers, employees and agents (the “Authorised Persons” and each an “Authorised Person”), to disclose and transmit to the Applicable Persons, whether orally, in writing or by any other means, information and documents which relates to, or are connected with, the Borrowers, their beneficial owner, any other member of the Group, their business, dealings or assets (the “Information”), from time to time and to the extent that the Authorised Person deems such disclosure or transmission to be necessary or desirable for or incidental to the carrying out of its duties, obligations, commitments and activities whether arising under contract or by operation of law and/or consolidated supervision and risk management policy, to the extent that the Information is covered by banking secrecy under any applicable law in general and Swiss banking secrecy rules in particular and/or:

 

(a)

necessary or desirable for the purposes of its internal cross-selling enabling the Borrowers and/or any other member of the Group to benefit from the Agent’s or any other Authorised Person’s business activities; and/or

 

(b)

necessary or desirable to insure a risk related to the Borrowers and/or any other member of the Group; and/or

 

(c)

necessary or desirable to syndicate a risk related to the Borrowers and/or any other member of the Group; and/or

 

(d)

necessary or desirable to securitise a risk related to the Borrowers and/or any other member of the Group; and/or

 

(e)

necessary or desirable to open an account or to start a business relation with the Agent’s or any other Authorised Person’s parent company or any of its subsidiaries or branches.

In this Clause 29.4, “Applicable Person” means any or all of the following persons:

 

  (i)

any authority or person against which, pursuant to any applicable law, administrative order or court ruling, banking secrecy may not be validly asserted by an Authorised Person;

 

  (ii)

the Agent’s or any other Authorised Person’s parent company, any of its subsidiaries, branches or representative offices;

 

  (iii)

any rating agency, auditor, insurance and reinsurance company, broker or professional adviser, to the extent such entity or person is bound by a statutory or contractual duty of confidentiality;

 

  (iv)

any financial institution and institutional or other investor who is or might be involved in securitisation schemes, hedging agreements, participations, credit derivatives or any other risk transfer or sharing arrangements, including, inter alia, a bank and/or other financial institution’s participation in, or syndication in respect of, the Loan;

 

  (v)

any potential assignee or transferee or person who has entered into or is proposing to enter into contractual arrangements with the Authorised Person in relation to a Borrower; and

 

88


  (vi)

any external computer services provider, for the purpose of maintenance or repair of the Agent’s or any other Authorised Person’s computer systems and date provided that such external computer services provider is bound by the confidentiality policy of BNP Paribas.

 

29.5

Reference Banks

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an affiliate) ceases to be a Lender, the Agent shall (in consultation with the Borrowers) appoint another Lender or an affiliate of a Lender to replace that Reference Bank.

 

29.6

Role of Reference Banks

 

(a)

No Reference Bank is under any obligation to provide a quotation or any other information to the Agent but may do so at the Agent’s request.

 

(b)

No Reference Bank will be liable for any action taken by it under or in connection with any Finance Document, or for any quotation provided to the Agent.

 

(c)

No Party (other than the relevant Reference Bank) may take any proceedings against any officer, employee or agent of any Reference Bank in respect of any claim it might have against that Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document, or to any quotation provided to the Agent, and any officer, employee or agent of each Reference Bank may rely on this clause subject to clause 29.3 and the provisions of the Third Parties Act.

 

29.7

Third party Reference Banks

Any Reference Bank which is not a party to this Agreement may rely on Clause 29.6 subject to Clause 29.3 and the provisions of the Third Parties Act.

 

29.8

Counterparts

A Finance Document may be executed in any number of counterparts.

 

30

CONFIDENTIALITY

 

30.1

Confidential Information

Each Creditor Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clauses 30.2 and 30.3 and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information taking also into account the public nature of the Corporate Guarantor.

 

30.2

Disclosure of Confidential Information

Any Creditor Party may disclose:

 

(a)

to any of its affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, insurers, reinsurers, partners and Representatives such Confidential Information as that Creditor Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in

 

89


  writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

 

(b)

to any person:

 

  (i)

to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Agent and, in each case, to any of that person’s affiliates, Related Funds, Representatives and professional advisers;

 

  (ii)

with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or the Borrowers and/or any Security Party and to any of that person’s affiliates, Related Funds, Representatives and professional advisers;

 

  (iii)

appointed by any Creditor Party or by a person to whom paragraph (b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

 

  (iv)

who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (b)(ii) above;

 

  (v)

to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

 

  (vi)

to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

 

  (vii)

to whom or for whose benefit that Creditor Party charges, assigns or otherwise creates a Security Interest (or may do so) pursuant to Clause 26.16 (Security over Lenders’ rights), including to a federal reserve or central bank (including, for the avoidance of doubt, the European Central Bank) to (or through) whom it creates Security Interest pursuant to Clause 26.16 (Security over Lenders’ rights) and any federal reserve or central bank (including, for the avoidance of doubt, the European Central Bank) may disclose such Confidential Information to a third party to whom it transfers (or may potentially transfer) rights under the Finance Documents or the securities issued by the special purpose vehicle in connection with the enforcement of such Security Interest;

 

  (viii)

who is a party to a Finance Document, a member of the Group or any related entity of the Borrowers or any Security Party; or

 

  (ix)

with the consent of the Borrowers;

in each case, such Confidential Information as that Creditor Party shall consider appropriate if:

 

90


  (A)

in relation to paragraphs (b)(i), (b)(ii) and (b)(iii) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

 

  (B)

in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;

 

  (C)

in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Creditor Party, it is not practicable so to do in the circumstances;

 

(c)

to any person appointed by that Creditor Party or by a person to whom paragraph (b)(i) or (b)(ii) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrowers and the relevant Creditor Party; and

 

(d)

to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Borrowers and/or the Security Parties.

 

30.3

Disclosure to numbering service providers

 

(a)

Any Creditor Party may disclose to any national or international numbering service provider appointed by that Creditor Party to provide identification numbering services in respect of this Agreement, the Loan and/or the Borrowers and/or the Security Parties the following information:

 

  (i)

names of the Borrowers and the Security Parties;

 

  (ii)

country of domicile of the Borrowers and the Security Parties;

 

  (iii)

place of incorporation of the Borrowers and the Security Parties;

 

  (iv)

date of this Agreement;

 

  (v)

governing law;

 

  (vi)

the name of the Agent;

 

91


  (vii)

date of each amendment and restatement of this Agreement;

 

  (viii)

amount of the Loan;

 

  (ix)

amount of Total Commitments;

 

  (x)

currency of the Loan;

 

  (xi)

type of facility;

 

  (xii)

ranking of facility;

 

  (xiii)

final Repayment Date;

 

  (xiv)

changes to any of the information previously supplied pursuant to paragraphs (i) to (xiii) above; and

 

  (xv)

such other information agreed between such Creditor Party and the Borrowers,

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

 

(b)

The parties to this Agreement acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or the Borrowers and/or any Security Party by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

 

(c)

The Borrowers represent that none of the information set out in paragraphs (a)(i) to (a)(xv) above is, nor will at any time be, unpublished price-sensitive information.

 

(d)

The Agent shall notify the Borrowers and the other Creditor Parties of:

 

  (i)

the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Loan and/or the Borrowers and/or the Security Parties; and

 

  (ii)

the number or, as the case may be, numbers assigned to this Agreement, the Loan and/or the Borrowers and/or the Security Parties by such numbering service provider.

 

30.4

Entire agreement

This Clause 30 constitutes the entire agreement between the parties to this Agreement in relation to the obligations of the Creditor Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

 

30.5

Inside information

Each of the Creditor Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Creditor Parties undertakes not to use any Confidential Information for any unlawful purpose.

 

92


30.6

Notification of disclosure

Each of the Creditor Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers:

 

(a)

of the circumstances of any disclosure of Confidential Information made pursuant to paragraph (b)(v) of Clause 30.2 except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

 

(b)

upon becoming aware that Confidential Information has been disclosed in breach of this Clause 30.

 

30.7

Continuing obligations

The obligations in this Clause 30 are continuing and, in particular, shall survive and remain binding on each Creditor Party for a period of 12 months from the earlier of:

 

(a)

the date on which all amounts payable by the Borrowers and the Security Parties under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and

 

(b)

the date on which such Creditor Party otherwise ceases to be a Creditor Party.

 

31

LAW AND JURISDICTION

 

31.1

English law

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

 

31.2

Exclusive English jurisdiction

Subject to Clause 31.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.

 

31.3

Choice of forum for the exclusive benefit of the Creditor Parties

Clause 31.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

 

(a)

to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; and

 

(b)

to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

No Borrower shall commence any proceedings in any country other than England in relation to a Dispute.

 

31.4

Process agent

Each Borrower irrevocably appoints Hill Dickinson LLP at their office for the time being, presently at The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with a Dispute.

 

93


31.5

Creditor Party rights unaffected

Nothing in this Clause 31 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

 

31.6

Meaning of “proceedings” and “Dispute”

In this Clause 31, “proceedings” means proceedings of any kind, including an application for a provisional or protective measure and a “Dispute” means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement.

 

32

BAIL-IN

 

32.1

Contractual recognition of bail-in

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each party hereto acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

 

(a)

any Bail-In Action in relation to any such liability, including (without limitation):

 

  (i)

a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

 

  (ii)

a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

 

  (iii)

a cancellation of any such liability; and

 

(b)

a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

 

94


EXECUTION PAGES

BORROWERS

 

SIGNED by Maria Trivela    )   

/s/ Maria Trivela

for and on behalf of    )   
ZAKYNTHOS SHIPPING CORPORATION    )   
SIGNED by Maria Trivela    )   

/s/ Maria Trivela

for and on behalf of    )   
DELOS SHIPPING CORPORATION    )   
SIGNED by Maria Trivela    )   

/s/ Maria Trivela

for and on behalf of    )   
KERKYRA SHIPPING CORPORATION    )   
SIGNED by Maria Trivela    )   

/s/ Maria Trivela

for and on behalf of    )   
ALKMENE SHIPPING CORPORATION    )   
SIGNED by Maria Trivela    )   

/s/ Maria Trivela

for and on behalf of    )   
PERSEPHONE SHIPPING CORPORATION    )   

LENDERS

 

SIGNED by Eleni Antonakou    )   

/s/ Eleni Antonakou

for and on behalf of    )   
BNP PARIBAS    )   
SIGNED by Charalampos Kazantzis    )   

/s/ Charalampos Kazantzis

for and on behalf of    )   
CREDIT AGRICOLE CORPORATE    )   
AND INVESTMENT BANK    )   

 

95


BOOKRUNNER
SIGNED by Eleni Antonakou    )   

/s/ Eleni Antonakou

for and on behalf of    )   
BNP PARIBAS    )   

ARRANGER

 

SIGNED by Eleni Antonakou    )   

/s/ Eleni Antonakou

for and on behalf of    )   
BNP PARIBAS    )   

MANDATED LEAD ARRANGERS

 

SIGNED by Eleni Antonakou    )   

/s/ Eleni Antonakou

for and on behalf of    )   
BNP PARIBAS    )   
SIGNED by Charalampos Kazantzis    )   

/s/ Charalampos Kazantzis

for and on behalf of    )   
CREDIT AGRICOLE CORPORATE    )   
AND INVESTMENT BANK    )   

AGENT

 

SIGNED by Eleni Antonakou    )   

/s/ Eleni Antonakou

for and on behalf of    )   
BNP PARIBAS    )   

SECURITY TRUSTEE

 

SIGNED by Eleni Antonakou

   )   

/s/ Eleni Antonakou

for and on behalf of    )   
BNP PARIBAS    )   

 

96


Witness to all the above    )   

/s/ Georgia Metaxa

Signature    )   
Name: Georgia Metaxa    )   
Address: 34U Syngrou Avenue Kallithea 17674    )   
Athens-Greece      

 

97

Exhibit 4.6

Private and Confidential

DATED 24th August 2021

NAVIOS MARITIME ACQUISITION CORPORATION (1)

as borrower

and

NAVIOS MARITIME PARTNERS L.P. (2)

as lender

 

 

LOAN AGREEMENT

in respect of

a loan of up to USD45,000,000

 

 

 

LOGO

PIRAEUS


Index

 

Clause        Page  

1

  Purpose and definitions      3  

2

  The Lender’s Commitment, Loan and Use of Proceeds      11  

3

  Interest      12  

4

  Repayment and prepayment      12  

5

  Fees and expenses      13  

6

  Payments and taxes; Accounts and calculations      14  

9

  Conditions      26  

10

  Events of Default      27  

11

  Indemnities      30  

12

  Unlawfulness and Increased Costs mitigation      31  

13

  Security and miscellaneous      32  

14

  Intentionally left blank      34  

15

  Assignment, transfer and disclosure      35  

16

  Notices      36  

17

  Governing law      36  

18

  Jurisdiction      36  

Schedule 1 Form of Drawdown Notice

     42  

Schedule 2 Conditions precedent

     43  

 

2


THIS AGREEMENT is dated 24th August 2021 and made BETWEEN:

 

(1)

NAVIOS MARITIME ACQUISITION CORPORATION as Borrower; and

 

(2)

NAVIOS MARITIME PARTNERS L.P. as Lender.

IT IS AGREED as follows:

 

1

PURPOSE AND DEFINITIONS

 

1.1

Purpose

This Agreement sets out the terms and conditions upon which the Lender agrees to make available to the Borrower a loan facility of up to USD45,000,000 for the purpose of funding working capital requirements of ongoing operations.

 

1.2

Definitions

In this Agreement, unless the context otherwise requires:

Advance” means the principal amount of each drawing to be made in respect of the Loan pursuant to Clause 2.2;

Banking Day” means a day on which dealings in deposits in USD are carried on in the London Interbank Eurocurrency Market and a day (other than Saturday or Sunday) on which banks are open for general business in London, Piraeus and New York City;

Borrowed Money” means Indebtedness in respect of (i) money borrowed 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 of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

 

3


Borrower” means Navios Maritime Acquisition Corporation a company incorporated in the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

Certified Copy” means in relation to any document delivered or issued by or on behalf of any company, a copy of such document certified as a true, complete and up to date copy of the original by any of the directors or officers for the time being of such company or by such company’s attorneys or solicitors;

Closing Date” means the date on which the conditions precedent set out in Clause 8 have been satisfied or waived by the Lender;

Commitment” means, in relation to the Loan, the maximum amount which the Lender has agreed to lend to the Borrower under clause 2.1 as reduced by any relevant term of this Agreement;

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;

Dollars” and “USD” mean the lawful currency of the USA and in respect of all payments to be made under this Agreement means funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other US dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in US dollars);

Drawdown Date” means, in respect of an Advance, any date being a Banking Day falling during the Drawdown Period, on which that Advance is, or is to be, made available;

Drawdown Notice” means a notice substantially in the form of schedule 1;

Drawdown Period” means the period commencing on the Closing Date and ending on the earlier of (i) the date falling ninety (90) days after the Closing Date or such other date as the Lender and the Borrower may agree and (ii) any date on which the Commitment is finally cancelled or fully drawn under the terms of this Agreement;

Encumbrance” means any mortgage, charge, pledge, lien, hypothecation, assignment, title retention, preferential right, option, trust arrangement or security interest or any other encumbrance, security or arrangement conferring howsoever a priority of payment in respect of any obligation of any person;

 

4


Event of Default” means any of the events or circumstances listed in clause 10.1;

Execution Date” means the date on which this Agreement has been executed by all the parties hereto;

Facility Period” means the period starting on the first Drawdown Date and ending on such date as the Lender determines that all payment obligations whatsoever of the Borrower under or pursuant to this Agreement whensoever arising, actual or contingent, have been irrevocably paid;

FATCA” means:

 

  (a)

sections 1471 to 1474 of the Code or any associated regulations or other associated official guidance;

 

  (b)

any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

 

  (c)

any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

FATCA Application Date” means:

 

  (a)

in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or

 

  (b)

in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA;

FATCA Deduction” means a deduction or withholding from a payment under this Agreement required by FATCA;

FATCA Exempt Party” means a party that is entitled to receive payments free from any FATCA Deduction;

 

5


“Group” means at any relevant time the Borrower and its subsidiaries ;

Group Member” means any member of the Group;

Indebtedness” means any obligation howsoever arising (whether present or future, actual or contingent, secured or unsecured as principal, surety or otherwise) for the payment or repayment of money;

Interest Payment Date” has the meaning given thereto in Clause 3.1.1;

“Latest Accounts” means, in respect of any financial year of the Group, the latest financial statements required to be prepared pursuant to clause 8.1.6;

“Legal Reservations” means:

 

  (a)

the principle that equitable remedies may be granted or refused at the discretion of a court, the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

 

  (b)

the time barring of claims under applicable limitation laws, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

 

  (c)

any general principles, reservations or qualifications, in each case as to matters of law as set out in any legal opinion;

 

  (d)

the principle that any additional interest imposed under any relevant agreement may be held to be unenforceable on the grounds that it is a penalty and thus void;

 

  (e)

the principle that, in certain circumstances, security granted by way of fixed charge may be characterised as a floating charge or that security purported to be constituted by way of an assignment may be recharacterised as a charge;

 

  (f)

the principle that the courts of England may not give effect to an indemnity for legal costs incurred by an unsuccessful litigant; and

 

  (g)

similar principles, rights and defences under the laws of any Pertinent Jurisdiction

 

6


Lender” means Navios Maritime Partners L.P., a limited partnership formed in the Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

Loan” means the principal amount borrowed by the Borrower under this Agreement or (as the context may require) the principal amount owing to the Lender under this Agreement at any relevant time (as the same shall be increased from time to time by the capitalisation of interest in accordance with clause 3.1);

“Material Adverse Effect” means, a material adverse effect on:

 

  (a)

the business, assets or financial condition of the Borrower or any other Group Member; or

 

  (b)

the ability of the Borrower to perform its obligations under this Agreement;

Permitted Encumbrance” means any Encumbrance created pursuant to or expressly permitted by this Agreement and permitted liens or otherwise permitted by the Lender and any lien arising by the operation of law;

Perfection Requirements” means the making or procuring of appropriate registrations, filings, endorsements, notarisations, stampings and/or notifications of this Agreement determined by the legal advisers to the Lender to be necessary in any Pertinent Jurisdiction for the enforceability or production in evidence of this Agreement to the extent such matters are complied with within any timeframe specified by law or this Agreement;

Pertinent Jurisdiction” means any jurisdiction in which or where the Borrower is incorporated, resident, domiciled or has a permanent establishment or assets;

Proceedings” means any litigation, arbitration, legal action or judicial, quasi-judicial or administrative proceedings whatsoever arising or instigated by anyone in any court, tribunal, public office or other forum whatsoever and wheresoever (including, without limitation, any action for provisional or permanent attachment of any thing or for injunctive remedies or interim relief and any action instigated on an ex parte basis);

Prohibited Person” means a person that is:

 

  (a)

listed on, or owned or controlled by a person listed on any Sanctions List;

 

7


  (b)

permanently located, organised or resident in, a country or territory that is the target of country-wide Sanctions (in each case other than to the extent dealings with such person are licensed, approved, exempted or permitted pursuant to Sanctions); or

 

  (c)

otherwise a target of Sanctions (other than to the extent dealings with such person are licenced, approved, exempted or permitted pursuant to Sanctions).

Register” has the meaning specified in clause 15.3

Repayment Date” means the date which falls on the first anniversary of the first Drawdown Date;

Required Authorisation” means any authorisation, consent, declaration, licence, permit, exemption, approval or other document, whether imposed by or arising in connection with any law, regulation, custom, contract, security or otherwise howsoever which must be obtained at any time from any person, government entity or central bank or other self-regulating or supra-national authority in order to enable the Borrower lawfully to draw the Loan and/or to enable the Borrower lawfully and continuously to continue its corporate existence and/or perform all its obligations whatsoever whensoever arising under this Agreement;

Sanctions” means any economic or trade sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:

 

  (a)

the United States government;

 

  (b)

the United Nations;

 

  (c)

the European Union or any of its Member States;

 

  (d)

the United Kingdom;

 

  (e)

any country to which the Borrower is bound; or

 

  (f)

the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury (“OFAC”), the United States Department of State, and Her Majesty’s Treasury (“HMT”) (together “Sanctions Authorities”).

 

8


Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list issued by OFAC, the “Consolidated List of Financial Sanctions Targets and Investment Ban List” issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities;

Taxes” includes all present and future income, corporation, capital or value-added taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges and withholdings whatsoever together with interest thereon and penalties in respect thereto, if any, and charges, fees or other amounts made on or in respect thereof (and “Taxation” shall be construed accordingly); and

Unlawfulness” means any event or circumstance which either is or, as the case may be, might in the reasonable opinion of the Lender become the subject of a notification by the Lender to the Borrower under clause 12.1.

 

1.3

Construction

In this Agreement, unless the context otherwise requires:

 

1.3.1

clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

 

1.3.2

references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules;

 

1.3.3

references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as duly amended and/or supplemented and/or novated;

 

1.3.4

references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority (including, without limitation, any regulation implementing or complying with (1) the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004, in the form existing on the date of this Agreement (“Basel II”) and/or (2) Basel III and/or (3) Basel IV and (4) any other law or regulation which, at any time and from time to time, implements and/or amends and/or supplements and/or re-enacts and/or supersedes, whether in whole or in part, Basel II and/or Basel III and/or Basel IV (including CRD IV and CRR), and whether such implementation, application or compliance is by a Government Entity, a lender or any company affiliated to it);

 

9


1.3.5

references to any person in or party to this Agreement shall include reference to such person’s lawful successors and assigns and references to the Lender shall also include a Transferee;

 

1.3.6

words importing the plural shall include the singular and vice versa;

 

1.3.7

references to a time of day are, unless otherwise stated, to London time;

 

1.3.8

references to a person shall be construed as references to an individual, firm, company, corporation or unincorporated body of persons or any Government Entity;

 

1.3.9

references to a “guarantee” include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall be construed accordingly;

 

1.3.10

references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re-enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision;

 

1.3.11

a certificate by the Lender as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrower except for manifest error;

 

1.3.12

if any document, term or other matter or thing is required to be approved, agreed or consented to by the Lender such approval, agreement or consent must be obtained in writing unless the contrary is stated; and

 

1.3.13

the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible.

 

1.4

Contracts (Rights of Third Parties Act) 1999

Except for clause 17.6.4 no part of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

 

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2

THE LENDERS COMMITMENT, LOAN AND USE OF PROCEEDS

 

2.1

The Commitment

In reliance upon each of the representations and warranties in clause 7, the Lender agrees to make available by way of loan to the Borrower on the terms of this Agreement the principal sum of up to USD45,000,000 for the purpose of funding working capital requirements of ongoing operations.

 

2.2

Drawdown

On the terms and subject to the conditions of this Agreement, the Loan shall be advanced in as many Advances as required by the Borrower up to a maximum aggregate amount of USD45,000,000, each on a Drawdown Date following receipt by the Lender from the Borrower of a Drawdown Notice not later than 10 a.m. London time on the Banking Day before such proposed Drawdown Date. A Drawdown Notice shall be effective on actual receipt by the Lender and, once given, shall be irrevocable.

 

2.3

Amount

The principal amount specified in a Drawdown Notice for borrowing on a Drawdown Date shall, subject to the terms of this Agreement, (A) not exceed (i) USD45,000,000 less (ii) the aggregate of such amounts as may have been made available under this Agreement prior thereto and (B) be a whole multiple of USD1,000,000.

 

2.4

Availability

Upon receipt of a Drawdown Notice complying with the terms of this Agreement the Lender shall, subject to the provisions of clause 8, make an Advance available to the Borrower on the relevant Drawdown Date in payment to such account as the Borrower shall specify in the relevant Drawdown Notice. No Advance may be made after the expiry of the Drawdown Period.

 

2.5

Cancellation

If any part of the Loan is not drawn down by the end of the Drawdown Period, the Commitment shall thereupon be automatically cancelled and the Lender shall have no further obligation under this Agreement.

 

11


2.6

Use of Proceeds

The Lender shall have no responsibility for the Borrower’s use of the proceeds of the Loan and is not bound to monitor or verify the application of any amount borrowed pursuant to the terms of this Agreement.

 

3

INTEREST

 

3.1

Interest rate

 

3.1.1

Subject to Clause 3.1.2, the Loan shall bear interest at the rate of 11.50% per annum, payable on the day falling three (3) months after the first Drawdown Date and at three-monthly intervals thereafter (each, an “Interest Payment Date”).

 

3.1.2

Interest on the Loan shall be compounded on each Interest Payment Date and shall be payable by the Borrower on the Repayment Date. Notwithstanding the foregoing, the Borrower may, at its option, pay all or any part of such compounded interest in cash at any time.

 

3.2

Default interest

If the Lender fails to receive any sum whatsoever on its due date for payment under this Agreement, the Borrower must 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 of two (2.0) per cent per annum over the interest rate referred to in Clause 3.1. Such interest shall be due and payable on demand, shall accrue daily and shall be compounded annually.

 

4

REPAYMENT AND PREPAYMENT

 

4.1

Repayment

Subject as otherwise provided in this Agreement, the Borrower must repay the Loan on the Repayment Date.

 

4.2

Voluntary prepayment

The Borrower may prepay the Loan in whole or in part (being USD1,000,000 or any larger sum which is a whole multiple of USD1,000,000) at any time.

 

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4.3

Amounts payable on prepayment

Any prepayment of all or part of the Loan under this Agreement shall be made without any prepayment penalty but together with:

 

4.3.1

accrued interest on the amount to be prepaid to the date of such prepayment;

 

4.3.2

any additional amount payable under clause 6.6; and

 

4.3.3

if of the whole Loan, all other sums payable by the Borrower to the Lender under this Agreement.

 

4.4

Notice of prepayment;

 

4.4.1

No prepayment may be effected under clause 4.2 unless the Borrower shall have given the Lender at least three (3) Banking Day’s prior written notice of its intention to make such prepayment. Every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrower to make such prepayment on the date specified.

 

4.4.2

Amounts prepaid may not be re-borrowed.

 

5

FEES AND EXPENSES

 

5.1

Fees

The Borrower agrees to pay to the Lender on the first Drawdown Date a non-refundable upfront fee of USD450,000.

 

5.2

Expenses

The Borrower agrees to reimburse the Lender on a full indemnity basis on demand for all expenses and/or disbursements whatsoever:

 

5.2.1

in respect of, legal fees certified by the Lender as having been incurred by it from time to time and at any time and all other expenses and/or disbursements certified by the Lender as having been incurred by it in relation to the negotiation, consideration, approval and structuring of this Agreement and the arrangements contemplated hereby:

 

5.2.2

in connection howsoever with the negotiation, preparation, execution and, where relevant, registration of this Agreement and of any contemplated or actual amendment, indulgence or the granting of any waiver or consent howsoever in connection with this Agreement; and

 

13


5.2.3

in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretion under this Agreement or any amendment thereto or consideration of the Lender’s rights thereunder or any action proposed or taken with interest at the rate referred to in clause 3.3 from the date on which such expenses and/or disbursements were demanded by the Lender to the date of payment (as well after as before judgment).

 

5.3

Value Added Tax

All fees and expenses payable under to this clause 5 must be paid with value added tax or any similar tax (if any) properly chargeable thereon. Any value added tax chargeable in respect of any services supplied by the Lender under this Agreement must, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.

 

5.4

Stamp and other duties

The Borrower must pay all stamp, documentary, registration or other like duties or taxes (including any duties or taxes payable by the Lender) imposed on or in connection with this Agreement or the Loan and agree to indemnify the Lender against any liability arising by reason of any delay or omission by the Borrower to pay such duties or taxes other than to the extent such duties or taxes arise as a result of the Lender transferring its Loan or Commitments under this Agreement.

 

6

PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS

 

6.1

No set-off or counterclaim

All payments to be made by the Borrower under this Agreement must be made in full, without any set-off or counterclaim whatsoever and, subject to clause 6.6, free and clear of any deductions or withholdings, in USD not later than 11 a.m. London time on the due date to such account of the Lender as the Lender may from time to time notify to the Borrower.

 

6.2

Payment by the Lender

The proceeds of the Loan to be advanced by the Lender to the Borrower under this Agreement must be remitted by in USD on the relevant Drawdown Date to the account or accounts specified in the relevant Drawdown Notice.

 

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6.3

Non-Banking Days

When any payment under this Agreement 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.

 

6.4

Calculations

All interest and other payments of an annual nature under this Agreement shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year.

 

6.5

Currency of account

If any sum due from the Borrower under this Agreement, or under any order or judgment given or made in relation thereto or for any other reason whatsoever, must be converted from the currency (“the first currency”) in which the same is payable thereunder into another currency (“the second currency”) for the purpose of (i) making or filing a claim or proof against the Borrower, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation thereto, the Borrower undertakes to indemnify and hold harmless the Lender from and against any loss suffered as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Borrower under this clause 6.5 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 this Agreement 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.

 

6.6

Grossing-up for Taxes

If at any time the Borrower must make any deduction or withholding in respect of Taxes from any payment due under this Agreement, the sum due from the Borrower in respect of such payment must then be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lender 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 made

 

15


and the Borrower agrees to indemnify the Lender on demand against any losses or costs certified by the Lender to have been 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 must promptly deliver to the Lender any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. . The Lender shall use commercially reasonable efforts (including the delivery of properly completed and executed Tax forms or documentation prescribed by applicable law) to reduce or eliminate any deduction or withholding for Taxes from any payment due under this Agreement and to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to this clause 6.6.

 

6.7

Loan account

The Lender agrees to maintain a control account showing the Loan and other sums owing by the Borrower under this Agreement and all payments in respect thereof being made from time to time. The control account shall, in the absence of manifest error, absent prompt objection by the Borrower, be conclusive as to the amount from time to time owing by the Borrower under this Agreement.

 

6.8

Partial payments

If, on any date on which a payment is due to be made by the Borrower under this Agreement, the amount received by the Lender from the Borrower falls short of the total amount of the payment due to be made by the Borrower on such date then, without prejudice to any rights or remedies available to the Lender under this Agreement, the Lender must apply the amount actually received from the Borrower in or towards discharge of the obligations of the Borrower under this Agreement in the following order, notwithstanding any appropriation made, or purported to be made, by the Borrower:

 

6.8.1

first, in or towards payment, on a pro-rata basis, of any unpaid costs and expenses of the Lender under this Agreement;

 

6.8.2

secondly, in or towards payment of any fees payable to the Lender under, or in relation to, this Agreement which remain unpaid;

 

16


6.8.3

thirdly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under this Agreement but remains unpaid;

 

6.8.4

fourthly, in or towards payment to the Lender of any principal in respect of the Loan which shall have become due but remains unpaid;

 

6.8.5

fifthly, in or towards payment to the Lender of any other sum which shall have become due under this Agreement but remains unpaid (and, if more than one such sum so remains unpaid, on a pro rata basis).

The order of application set out in clauses 5.8.1 to 5.8.5 may be varied by the Lender without any reference to, or consent or approval from, the Borrower.

 

6.9

FATCA

 

6.9.1

Subject to Clause 5.9.3 below, each party shall, within ten (10) Banking Days of a reasonable request by another party:

 

  (a)

confirm to that other party whether it is:

 

  (i)

a FATCA Exempt Party; or

 

  (ii)

not a FATCA Exempt Party; and

 

  (b)

supply to that other party such forms, documentation and other information relating to its status under FATCA (including its applicable passthru percentage or other information required under the Treasury Regulations or other official guidance including intergovernmental agreements) as that other party reasonably requests for the purposes of that other party’s compliance with FATCA.

 

6.9.2

If a party confirms to another party pursuant to Clause 5.9.1(a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify that other party reasonably promptly.

 

6.9.3

Clause 5.9.1(a) above shall not oblige the Lender to do anything which would or might in its reasonable opinion constitute a breach of:

 

  (a)

any law or regulation;

 

  (b)

any policy of the Lender;

 

17


  (c)

any fiduciary duty; or

 

  (d)

any duty of confidentiality.

 

6.9.4

If the Borrower is required to make a FATCA Deduction, the Borrower shall make that FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA;

 

6.9.5

The Borrower shall promptly upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of a FATCA Deduction) notify the Lender accordingly; and

 

6.9.6

Within thirty days of making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Borrower shall deliver to the Lender evidence satisfactory to the Lender that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority.

 

7

REPRESENTATIONS AND WARRANTIES

 

7.1

Continuing representations and warranties

The Borrower represents and warrants to the Lender that:

 

7.1.1

Due incorporation

it is duly incorporated and validly existing in good standing, under the laws of the Marshall Islands as a corporation and has power to carry on its respective business as it is now being conducted and to own its property and other assets to which it has unencumbered legal and beneficial title except as disclosed to the Lender in writing;

 

7.1.2

Corporate power

it has power to execute, deliver and perform its obligations and, as the case may be, to exercise its rights under this Agreement; all necessary corporate, shareholder or member and other action has been taken to authorise the execution, delivery and on the execution of this Agreement performance of the same and no limitation on the powers of the Borrower to borrow or to howsoever incur liability will be exceeded as a result of borrowing any part of the Loan;

 

18


7.1.3

Binding obligations

subject to the Legal Reservations and the Perfection Requirements, this Agreement, when executed, will constitute valid and legally binding obligations of the Borrower enforceable in accordance with its terms and admissible in evidence;

 

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, this Agreement by the Borrower will not (i) contravene in any material respect any existing applicable law, statute, rule or regulation or any judgment, decree or permit of any Pertinent Jurisdiction to which the Borrower or other member of the Group 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 member of the Group is a party or is subject or by which it or any of its property is bound which is likely to have a Material Adverse Effect or (iii) contravene or conflict with any provision of the constitutional documents of the Borrower;

 

7.1.5

No default

no Default has occurred which is continuing;

 

7.1.6

No litigation or judgments

no Proceedings are current, pending or threatened against the Borrower or any other Group Members or their assets which could have a Material Adverse Effect and there exist no judgments, orders, injunctions which would materially affect the obligations of the Borrower under this Agreement other than have been publicly disclosed by the Borrower prior to the Execution Date;

 

7.1.7

No filings required

it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Pertinent Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Pertinent Jurisdiction on or in relation to this Agreement is in proper form for its enforcement in the courts of each Pertinent Jurisdiction;

 

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7.1.8

Required Authorisations and legal compliance

all Required Authorisations have been obtained or effected and are in full force and effect and the Borrower has not in any way contravened any applicable law, statute, rule or regulation (including all such as relate to money laundering);

 

7.1.9

Choice of law

the choice of English law to govern this Agreement and the submissions by the Borrower to the jurisdiction of the English courts and the obligations of the Borrower associated therewith, are valid and binding;

 

7.1.10

No immunity

neither the Borrower or any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any Proceedings whatsoever;

 

7.1.11

Financial statements correct and complete

the Latest Accounts of the Borrower in respect of the relevant financial year as delivered to the Lender present fairly and accurately the financial position of the Borrower for the financial year, ended on such date and, as at such date, the Borrower had no material 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 or notes thereto;

 

7.1.12

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 present and future unsubordinated Indebtedness of the Borrower except for obligations which are mandatorily preferred by operation of law and not by contract;

 

7.1.13

Information/ Material Adverse Effect

all written factual information, whatsoever provided by the Borrower to the Lender in connection with the negotiation and preparation of this Agreement or otherwise provided hereafter in relation to, or pursuant to this Agreement is true and accurate in all material respects and not misleading and the Borrower’s public filings do or will not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained therein as of such date and there has not occurred a Material Adverse Effect on the Borrower since such information was provided to the Lender;

 

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7.1.14

Copies true and complete

the copies of the constitutional documents of the Borrower delivered or to be delivered to the Lender pursuant to clause 8.1 are, or will when delivered be, true and complete copies; and there have been no amendments or variations thereof;

 

7.1.15

Indebtedness

the Borrower has not incurred any Indebtedness other than as disclosed to the Lender in writing or as disclosed in the Group’s public filings;

 

7.1.16

Use of proceeds

the Borrower shall apply the Loan only for the purposes specified in clauses 1.1. and 2.1;

 

7.1.17

Filings

subject to any permissible extensions, the Borrower has filed all material tax and other fiscal returns required to be filed with any tax authority to which it is subject;

 

7.1.18

Office

the Borrower does not have an office in England or in the United States of America;

 

7.1.19

Prohibited Persons, unlawful activity

none of the Group Members are a Prohibited Person; and

 

7.1.20

Insolvency

the Borrower is not unable or has admitted inability to pay its debts as they fall due, has not suspended making payments on any of its debts nor it has announced an intention to do so nor has become insolvent; or, save as disclosed to the Lender prior to the Execution Date, the Borrower has not suffered the declaration of a moratorium in respect of any of its Indebtedness;

 

7.1.21

Sanctions

neither the Borrower nor any director, officer, agent, employee of the Borrower or any person acting on behalf of the Borrower, is a Prohibited Person nor acts directly or indirectly on behalf of a Prohibited Person; and

 

21


7.2

Repetition of representations and warranties

On the Execution Date, each Drawdown Date and on each Interest Payment Date, the Borrower shall be deemed to repeat the representations and warranties in clause 7.1 updated mutatis mutandis as if made with reference to the facts and circumstances existing on such day.

 

8

UNDERTAKINGS

 

8.1

General

The Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will:

 

8.1.1

Notice of Default and Proceedings

promptly inform (and any public filing of the Borrower containing the relevant information about the matters hereafter described shall constitute compliance with this covenant to inform) the Lender, in writing, of the details of any Proceedings involving the Borrower or member of the Group which could have a Material Adverse Effect as soon as the same is instituted or formally threatened and will, from time to time, if so reasonably requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Default has occurred and is continuing and no such Proceedings are on foot or have been formally threatened in writing;

 

8.1.2

Authorisation

obtain or cause to be obtained, maintain in full force and effect and comply fully with all Required Authorisations, provide the Lender, upon request, with Certified Copies of the same and do, or cause to be done, all other acts and things which may from time to time be necessary under any applicable law for the continued due performance of all the obligations of the Borrower under this Agreement;

 

8.1.3

Corporate Existence/Ownership

ensure that it maintains its corporate existence as a body corporate duly organised and validly existing and in good standing under the laws of the Pertinent Jurisdiction and ensure that the Borrower is owned and controlled, directly or through other companies, by the persons disclosed to the Lender prior to the date hereof;

 

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8.1.4

Use of proceeds

use the Loan exclusively for the purposes specified in clauses 1.1 and 2.1;

 

8.1.5

Pari passu

ensure that its obligations under this Agreement shall at all times rank at least pari passu with all its present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;

 

8.1.6

Financial statements

provide the Lender (or procure that is provided):

 

  (a)

as soon as possible, but in no event later than 120 days after the end of each of its financial years, annual audited (prepared in accordance with US GAAP by a firm of accountants acceptable to the Lender) consolidated balance sheet and profit and loss accounts of the Borrower (commencing with the financial year ending 31 December 2021) and public filing in respect of the Borrower shall constitute delivery;

 

  (b)

as soon as possible, but in no event later than 90 days after the end of each of its first three financial quarters, commencing with the second financial quarter of 2021, the Borrower’s unaudited consolidated balance sheet and profit and loss accounts for that 3 month period certified as to their correctness by its chief financial officer;

 

  (c)

prior to the start of each of its financial years, an annual forecast in respect of the Borrower;

 

  (d)

details of any litigation, arbitration, administrative proceedings, Default and any other events or circumstances which are likely to have a Material Adverse Effect on the Borrower;

 

8.1.7

Provision of further information

provide the Lender with such financial or other information concerning the Borrower, all vessels (including those under construction) owned, acquired, sold or managed by any Group Member, or any of its subsidiaries, including, commitments, financial standing, operations and in relation to Borrowed Moneys, repayment of Borrowed Money, as the Lender may from time to time reasonably require;

 

23


8.1.8

Compliance with Laws and payment of taxes

comply in all material respects with all relevant applicable laws, statutes, directives, decrees, rulings and analogous rules (including, but not limited to, those relating to Sanctions) and regulations (other than in the case of Sanctions) where failure to do so would be reasonably likely to have a Material Adverse Effect and pay all taxes for which it is liable as they fall due unless disputed in good faith;

 

8.1.9

Sanctions

will not and will use reasonable endeavours to ensure that no Group Member does, conduct or undertake any business:

 

  (a)

in breach of any Sanctions of:

 

  (i)

the United Nations Security Council;

 

  (ii)

the European Union;

 

  (iii)

the United Kingdom;

 

  (iv)

the United States of America

 

  (v)

the Marshall Islands

as they apply to their members or nationals; or

 

  (b)

in any trade, carriage of goods or business which is forbidden by the laws of the United Kingdom or the United States of America as they apply to their members or nationals, or any law applicable to the Borrower; or

 

  (c)

in carrying illicit or prohibited goods; or

 

  (d)

in a way which may make it liable to be condemned by a prize court or destroyed, seized or confiscated; or

 

24


  (e)

to the knowledge of the Borrower, by or for the benefit of a Prohibited Person;

 

8.1.10

Delivery of reports

deliver to the Lender upon request a copy of each report, circular, notice or like document issued by the Borrower to its shareholders or creditors generally;

 

8.1.11

If, in the opinion of the Lender, any member of the Group agrees with any lender in the context of a financing made or to be made available to that member of the Group, financial covenants with respect to the Borrower (including without limitation any dividend restrictions on the Guarantor, the “Covenants”) which place such lender or lenders in a more favourable position than that applicable to the Lender pursuant to this Agreement, the Borrower shall give the Lender the benefit of such Covenants which, in the opinion of the Lender, would place them in an equivalent position as that applicable to the other lender or lenders at the relevant time. The Borrower shall also enter, if required by the Lender, into a supplemental agreement to this Agreement to amend the same accordingly (with such supplemental agreement or agreements being entered into on or immediately after the date on which the Covenants are granted).

 

8.2

Negative undertakings

The Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will not, without the prior written consent of the Lender:

 

8.2.1

Negative pledge

permit any Encumbrance (other than a Permitted Encumbrance or as otherwise disclosed in writing by the Borrower to the Lender on or prior to the date of this Agreement) to subsist, arise or be created or extended over any shares or equivalent rights of ownership owned by the Borrower to secure or prefer any present or future Indebtedness or other liability or obligation of any Group Member or any other person;

 

8.2.2

Transactions

enter into any transactions with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain at arm’s length; or

 

25


8.2.3

Prohibited Persons

and shall use reasonable endeavours to procure that no Group Member will, have any course of dealings, directly or indirectly, with any Prohibited Person.

 

9

CONDITIONS

 

9.1

Documents and evidence

The Lender’s obligation to make available the Loan and any Advance is subject to the following conditions precedent:

 

9.1.1

that on or before the relevant Drawdown Date, the Lender has received the documents described in Schedule 2 in form and substance satisfactory to the Lender;

 

9.1.2

the representations and warranties contained in clause 7.1 being then true and correct as if each was made with respect to the facts and circumstances existing at such time; and

 

9.1.3

no Default shall have occurred and be continuing and no Default would result from the making of the Loan.

 

9.2

Waiver of conditions precedent

The conditions specified in this clause 9 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions.

 

9.3

English language

All documents required to be delivered under and/or supplied in connection with this Agreement must either be in the English language or accompanied by an English translation certified by a notary, lawyer or consulate acceptable to the Lender.                

 

9.4

Further conditions precedent

Not later than two (2) Banking Days prior to the Drawdown Date of an Advance and not later than five (5) Banking Days prior to any Interest Payment Date, the Lender may request and the Borrower must, prior to such date, deliver to the Lender (at the Borrowers’ expense) on such request further favorable certificates and/or opinions and/or other evidence satisfactory to the Lender (acting reasonably) as to any or all of the matters which are referred to in clauses 6, 7, 8, and 9.

 

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10

EVENTS OF DEFAULT

 

10.1

Events

Each of the following events shall constitute an Event of Default (whether such event shall occur voluntarily or involuntarily or by operation of law or regulation or in connection with any judgment, decree or order of any court or other authority or otherwise, howsoever):

 

10.1.1

Non-payment: the Borrower fails to pay any sum payable by it under this Agreement at the time, in the currency and in the manner stipulated in this Agreement (and so that, for this purpose, sums payable (i) under clause 4.1 shall be treated as having been paid at the stipulated time if (a) received by the Lender within five (5) days of the dates therein referred to and (b) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within five (5) Banking Days of demand); or

 

10.1.2

Breach of other obligations: the Borrower commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any this Agreement (other than those referred to in clause 9.1.1 above) unless such breach or omission, in the reasonable opinion of the Lender is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied within thirty (30) Business Days of the Lender giving written notice to the Borrower of, or the Borrower becoming aware of the occurrence thereof; or

 

10.1.3

Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of the Borrower in or pursuant to this Agreement or in any notice, certificate or statement referred to in or delivered under this Agreement is or proves to have been incorrect or misleading in any material respect unless the circumstances giving rise to the misrepresentation are in the reasonable opinion of the Lender capable of remedy and are remedied within thirty 30 Business Day of the Lender giving written notice to the Borrower of, or the Borrower becoming aware of, the occurrence thereof; or

 

10.1.4

Cross-default: any Indebtedness of the Borrower or any other Group Member (which is not intra group or subordinated debt) in excess of USD25,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of the Borrower or any other Group Member 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

 

27


  otherwise have become due (unless as a result of the exercise by the Borrower or by the relevant Group Member of a voluntary right of prepayment), or any creditor of the Borrower or of any other Group Member becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to the Borrower or any other Group Member relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned (unless the relevant creditor has granted to the Borrower a waiver in respect thereof) ; or

 

10.1.5

Execution: any uninsured judgment or order made against the Borrower or any other Group Member in an amount in excess of USD25,000,000 is not stayed, appealed against or complied with within twenty (20) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of the Borrower or any other Group Member and is not discharged within thirty (30) days; or

 

10.1.6

Insolvency: the Borrower is unable or admits inability to pay its debts as they fall due; suspends making payments on all or substantially all of its debts or announces an intention to do so; becomes insolvent; or suffers the declaration of a moratorium in respect of all or substantially all of its Indebtedness; or

 

10.1.7

Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up the Borrower or an order is made or resolution passed for the dissolution or winding up of the Borrower; or

 

10.1.8

Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of the Borrower or an administration order is made in relation to the Borrower ; or

 

10.1.9

Appointment of receivers and managers: any administrative or other receiver is appointed anywhere of the Borrower 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 the Borrower; or

 

10.1.10

Compositions: any corporate action, legal proceedings or other procedures are taken, by the Borrower or by any of its creditors with a view to the general readjustment or rescheduling of all or substantially all of its Indebtedness, or to proposing any kind of composition, compromise or arrangement involving such company and all or substantially all of its creditors; or

 

28


10.1.11

Analogous proceedings: there occurs, in relation to the Borrower, in any country or territory in which it carries on business or to the jurisdiction of whose courts any part of its assets is subject, any event which, in the reasonable opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 9.1.6 to 9.1.10 (inclusive) or the Borrower otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or

 

10.1.12

Cessation of business: the Borrower suspends or ceases to carry on its business; or

 

10.1.13

Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, the Borrower are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government entity; or

 

10.1.14

Invalidity: this Agreement or any of its provisions, other than as a result of any act or omission of the Lender, at any time and for any reason are or shall become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of this Agreement or any of its provisions or the exercise of any right of the Lender hereunder, shall at any time and for any reason be contested by the Borrower or by any creditor of the Borrower (other than the Lender), or if the Borrower shall deny that it has any, or any further, liability thereunder; or

 

10.1.15

Unlawfulness: any Unlawfulness occurs or it becomes impossible or unlawful at any time for the Borrower, to fulfil any of the covenants and obligations expressed to be assumed by it in this Agreement or for the Lender to exercise the rights or any of them vested in it under this Agreement or otherwise; or

 

10.1.16

Material events: any other event occurs or circumstance arises which, in the reasonable opinion of the Lender, is likely to have a Material Adverse Effect or, if such event or circumstance is capable of remedy it is not remedied within 15 Business Days of the earlier of (i) the Lender notifying the Borrower of such event or (ii) the Borrower becoming aware of the same; or

 

10.1.17

Litigation: any Proceedings are current, pending or threatened against the Borrower or any other Group Member which are reasonably likely to have a Material Adverse Effect;

 

29


10.1.18

Required Authorisations: any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect or if any exchange control or other law or regulation shall exist which would make any transaction under this Agreement or the continuation thereof, unlawful or would prevent the performance by the Borrower of any term of this Agreement;

 

10.1.19

Money Laundering: the Borrower is in breach of or fails to observe any law, requirement, measure or procedure implemented to combat “money laundering” as defined in Article 1 of the Directive (91/308 EEC) of the Council of the European Communities.

 

10.2

Acceleration

The Lender may, without prejudice to any other rights of the Lender, at any time after the happening of an Event of Default so long as the same is continuing, by notice to the Borrower:

 

10.2.1

declare that the obligation of the Lender to make the Commitment available shall be terminated, whereupon the Commitment shall immediately be cancelled; and/or

 

10.2.2

declare that the Loan and all interest accrued and all other sums payable whensoever under this Agreement have become due and payable, whereupon the same shall, immediately or in otherwise accordance with the terms of such notice, become due and payable; and/or

 

10.2.3

exercise any or all of its rights, remedies, powers or discretions under this Agreement.

 

10.3

Demand basis

If, under clause 9.2.2, the Lender has declared the Loan to be due and payable on demand, at any time thereafter the Lender may by further notice to the Borrower demand repayment of the Loan on such date as may be specified whereupon the Loan shall become due and payable accordingly with all interest accrued and all other sums payable under this Agreement.

 

11

INDEMNITIES

 

11.1

General indemnity

The Borrower agrees to indemnify the Lender on demand, without prejudice to any of the Lender’s other rights under this Agreement, against any loss (including loss of interest), cost or expense which the Lender shall certify as sustained at any time by it in connection with this Agreement, including (without limitation) any such loss, cost or expense arising from any action, claim, suit or proceeding directly or indirectly related to this Agreement or the Loan (excluding any default by the Lender determined by a court of competent jurisdiction to have resulted from (i) the gross negligence, bad faith or willful misconduct of the Lender or (ii) a material breach of this Agreement by the Lender).

 

30


12

UNLAWFULNESS AND INCREASED COSTS MITIGATION

 

12.1

Unlawfulness

Regardless of any other provision of this Agreement, in the event that the Lender notifies the Borrower that by reason of:

 

  (a)

the introduction of or any change in any applicable law or regulation or any change in the interpretation or application thereof; or

 

  (b)

compliance by the Lender with any directive, request or requirement (whether or not having the force of law) of any central bank or Government Entity

it becomes unlawful or it is prohibited by or contrary to such directive request or requirement for the Lender to maintain or give effect to any of its obligations in connection howsoever with this Agreement then (i) the Commitment shall be reduced to zero and (ii) the Borrower shall be obliged to prepay the Loan either immediately or on a future date (specified in the Lender’s notice) not being earlier than the latest date permitted by the relevant law, regulation, directive, request or requirement with interest and commitment commission accrued to the date of prepayment and all other sums payable whensoever by the Borrower under this Agreement.

 

12.2

Increased costs

If the Lender certifies to the Borrower that at any time the effect of any applicable law, regulation or regulatory requirements or the interpretation or application thereof or any change therein is to:

 

12.2.1

subject the Lender to Taxes or change the basis of Taxation of the Lender relating to any payment under this Agreement (other than Taxes or Taxation on the overall net income of the Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

 

31


12.2.2

increase the cost to, or impose an additional cost on, the Lender in making or keeping the Commitment available or maintaining or funding all or part of the Loan; and/or

 

12.2.3

reduce the amount payable or the effective return to the Lender under this Agreement; and/or

 

12.2.4

require the Lender to make a payment or forgo a return on or calculated by reference to any amount received or receivable by the Lender under this Agreement; and/or

then and in each such case (subject to clause 11.3) the Borrower must on demand either:

 

  (a)

pay to the Lender the amount which the Lender certifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which the Lender or its holding company regards as confidential) is required to compensate the Lender for such liability to Taxes, cost, reduction, payment, forgone return or loss; or

 

  (b)

prepay the Loan, in respect of which prepayment the terms of clause 4.2 shall apply.

 

12.3

Exception

Nothing in clause 11.2 shall entitle the Lender to receive any amount relating to 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 5.3, 5.4 or 6.6.

 

13

SECURITY AND MISCELLANEOUS

 

13.1

Application of moneys

All moneys received by the Lender under or pursuant to this Agreement and expressed to be applicable in accordance with the provisions of this clause 13.1 shall be applied by the Lender as follows:

 

13.1.1

first in or toward payment of all unpaid fees, sums which have been demanded by way of indemnity and expenses which may be owing to the Lender under this Agreement;

 

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);

 

32


13.1.4

fourthly in or towards payment to the Lender of any other sums which the Lender certifies are owing to it under this Agreement; and

 

13.1.5

fifthly the surplus (if any) shall be paid to the Borrower.

 

13.2

No implied waivers, remedies cumulative

No failure or delay on the part of the Lender to exercise any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in this Agreement are cumulative and are not exclusive of any remedies provided by law. No waiver by the Lender shall be effective unless it is in writing.

 

13.3

Severability

If any provision of this Agreement is prohibited, invalid, illegal or unenforceable in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or impair howsoever the remaining provisions thereof or affect the validity, legality or enforceability of such provision in any other jurisdiction.

 

13.4

Force Majeure

Regardless of any other provision of this Agreement the Lender shall not be liable for any failure to perform the whole or any part of this Agreement resulting directly or indirectly from (i) the action or inaction or purported action of any governmental or local authority (ii) any strike, lockout, boycott or blockade (including any strike, lockout, boycott or blockade effected by or upon the Lender or any of its representatives or employees) (iii) any act of God (iv) any act of war (whether declared or not) or terrorism (v) any failure of any information technology or other operational systems or equipment affecting the Lender or (vi) any other circumstances whatsoever outside the Lender’s control.

 

13.5

Amendments

This Agreement may be amended or varied only by an instrument in writing executed by both parties hereto who irrevocably agree that the provisions of this clause 13.8 may not be waived or modified except by an instrument in writing to that effect signed by both of them.

 

33


13.6

Counterparts

This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement which may be sufficiently evidenced by one counterpart.

 

13.7

English language

All documents required to be delivered under and/or supplied whensoever in connection howsoever with this Agreement and all notices, communications, information and other written material whatsoever given or provided in connection howsoever therewith must either be in the English language or accompanied by an English translation certified by a notary, lawyer or consulate acceptable to the Lender.

 

14

INTENTIONALLY LEFT BLANK

 

15

ASSIGNMENT, TRANSFER AND DISCLOSURE

 

15.1

Benefit and burden

This Agreement shall be binding upon, and ensure for the benefit of, the Lender and the Borrower and their respective successors.

 

15.2

No assignment by Borrower

The Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender. Neither the Borrower nor any affiliate of the Borrower may become a Lender or a sub-participant.

 

15.3

Assignment by Lender

The Lender may not assign, sell, sub-participate all or any part of its rights under this Agreement to another branch, subsidiary or affiliate of the Lender, another bank or financial institution, a member of the European System of Central Banks, an insurance company, a trust corporation or a capital investment company (including any credit fund), without the prior written consent of the Borrower. The Lender, acting solely for this purpose as an agent of the Borrower, shall maintain a register for the recordation of the names and addresses of any such assignee or participant of the Lender, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each such assignee or participant pursuant to the terms

 

34


hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Lender, and any such assignee or participant of Lender shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, the Lender and any such assignee or participant of the Lender, at any reasonable time and from time to time upon reasonable prior notice. It is the intention that this Loan Agreement be treated as a registered obligation and in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code of 1986, as amended, and the United States Treasury Regulations thereunder.

 

15.4

Disclosure of information

The Lender may disclose to a prospective assignee, transferee or to any other person who may propose entering into contractual relations with the Lender in relation to this Agreement such information about or in connection with the Borrower and this Agreement as the Lender considers appropriate, provided that the Lender shall consult with the Borrower prior to disclosing (i) any such information which is not public or contained in this Agreement and/or (ii) any documentation other that a copy of this Agreement.

 

16

NOTICES

 

16.1

General

 

16.1.1

unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by electronic mail;

 

16.1.2

in this clause “notice” includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication.

 

16.2

Addresses for communications, effective date of notices

 

16.2.1

Subject to clause 15.2.2 notices to the Borrower shall be deemed to have been given and shall take effect when received in full legible form by the Borrower at the address and/or the email address appearing below (or at such other address or email address as the Borrower may hereafter specify for such purpose to the Lender by notice in writing);

 

35


Address: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960,

Marshall Islands

email:     

notwithstanding the provisions of clause 16.2.1, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Lender to the Borrower to the address or fax number referred to in clause 16.2.1;

 

16.2.2

notices to the Lender shall be deemed to be given, and shall take effect, when received in full legible form by the Lender at the address and/or the email address appearing below (or at any such other address or email address as the Lender may hereafter specify for such purpose to the Borrower by notice in writing);

Address: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH 96960, Marshall Islands

email:     legal_corp@navios.com

if under clause 16.2.1 or clause 16.2.2 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place.

 

17

GOVERNING LAW

 

17.1

Law

This Agreement and any non-contractual obligations arising out of or in connection with it is governed by and shall be construed in accordance with English law.

 

18

JURISDICTION

 

18.1

Exclusive jurisdiction

Subject to clause 17.4 below, the Borrower and the Lender hereby irrevocably agree that the courts of England shall have exclusive jurisdiction:

 

36


18.1.1

to settle any disputes or other matters whatsoever arising under or in connection with this Agreement (or any non-contractual obligation arising out of or in connection with this Agreement) and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and

 

18.1.2

to grant interim remedies or other provisional or protective relief.

 

18.2

Submission and service of process

Subject to clause 17.4 below, the Borrower and the Lender accordingly irrevocably and unconditionally submit to the jurisdiction of the English courts. Without prejudice to any other mode of service the Borrower:

 

18.2.1

irrevocably empowers and appoints Messrs Hill Dickinson Services (London) Ltd at present of The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW, England as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement;

 

18.2.2

agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period;

 

18.2.3

agrees that failure by a process agent to notify the Borrower of service of process will not invalidate the proceedings concerned;

 

18.2.4

without prejudice to the effectiveness of service of process on its agent under clause 17.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 15.2;

 

18.2.5

agrees that if the appointment of any person mentioned in clause 17.2.1 ceases to be effective, the Borrower shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment with in seven (7) days the Lender shall thereupon be entitled and is hereby irrevocably authorised by the Borrower in those circumstances to appoint such person by notice to the Borrower.

 

37


18.3

Forum non conveniens and enforcement abroad

The Borrower and the Lender:

 

18.3.1

waive any right and agree not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 16.1; and

 

18.3.2

agree that a final non-appealable judgment or order of an English court in a dispute or other matter falling within clause 17.1 shall be conclusive and binding on the Borrower and the Lender and may be enforced against them in the courts of any other jurisdiction.

 

18.4

Right of Lender, but not Borrower, to bring proceedings in any other jurisdiction

 

18.4.1

nothing in this clause 18 limits the right of the Lender to bring proceedings in connection with the enforcement of its security, or the enforcement or recovery of any judgment debt or judicial award or order made (i) in each case, in the courts of England and (ii) under or in relation to this Agreement, including third party proceedings, against the Borrower, or to apply for interim remedies, in any other court and/or concurrently in more than one jurisdiction; and

 

18.4.2

the obtaining by the Lender of judgment in one jurisdiction shall not prevent the Lender from bringing or continuing proceedings in any other jurisdiction proceedings in connection with the enforcement of its security, or the enforcement or recovery of any judgment debt or judicial award or order made (i) in each case, in the courts of England and (ii) under or in relation to this Agreement, whether or not these shall be founded on the same cause of action.

IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed on the date first above written.

 

38


EXECUTION PAGE

BORROWER

 

SIGNED by Leonidas Korres    )   
as attorney-in-fact    )   
for and on behalf of    )    /s/Leonidas Korres
NAVIOS MARITIME ACQUISITION    )   
CORPORATION    )   
LENDER      
SIGNED by Efstratios Desypris    )   
as attorney-in-fact    )   
for and on behalf of    )    /s/ Efstratios Desypris
NAVIOS MARITIME PARTNERS L.P.    )   

 

39

Exhibit 99.1

Navios Maritime Partners L.P.

Announces a Merger

with Navios Maritime Acquisition Corporation

Navios Maritime Acquisition Corporation

Ship Mortgage Notes being Redeemed

Conference Call & Webcast: Tuesday, August 31, 2021 at 8:30 am ET

MONACO, August 26, 2021 — Navios Maritime Partners L.P. (“Navios Partners”) (NYSE: NMM), an international owner and operator of dry cargo vessels, and Navios Maritime Acquisition Corp. (“Navios Acquisition”) (NYSE:NNA), an international owner and operator of tanker vessels, announced today a definitive transaction agreement providing for a combination of Navios Partners and Navios Acquisition in a transaction in which shareholders of Navios Acquisition will receive 0.1275 of a common unit of Navios Partners for each outstanding common share of Navios Acquisition. All of Navios Acquisition’s outstanding 8.125% First Priority Ship Mortgage Notes, due on November 15, 2021 (the “Ship Mortgage Notes”), will be redeemed in accordance with their terms with the proceeds of a cash contribution from Navios Partners and newly arranged secured term loan financings (the “Transaction”).

Angeliki Frangou, Chairwoman and Chief Executive Officer, stated, “We are announcing a transformative transaction. The combined entity will be the largest U.S. publicly-listed shipping company in terms of vessel count, with 15 vessel types diversified across three segments, servicing more than 10 end markets. About one-third of our fleet will be in each of the dry bulk, containership and tanker segment. We believe that this combination will result in a stronger, more resilient entity, mitigating sector specific cyclicality. This should enable us to capitalize on opportunities throughout the industry and provide even returns to our stakeholders across cycles.

This combination of two companies with similar core values and beliefs, as it relates to our service offerings, will allow us to continue to deliver the high-quality service that our customers expect. We have a proven model to execute seamless combinations, as evidenced by our prior successful roll-up transactions, and we anticipate a smooth execution for this combination as well.”

Benefits of Combination

The Transaction is expected to:

 

   

Create the #1 largest U.S. publicly-listed shipping company, with over 140 vessels aggregating approximately 15 million deadweight tons operating in three segments through 15 different vessel types and serving more than 10 end markets.

 

   

Scale operations with trades across all sizes with about one-third of its vessels operating in each of the three segments.

 

   

Achieve diversification to mitigate idiosyncratic segment volatility as operational segments are driven by unique fundamentals.

 

   

Optimize strategy allowing management to take advantage of opportunities within each sector, such as by calibrating charter term based upon segment opportunity.

 

   

Realize annual cost reductions.


   

Maintain significant financial flexibility with a combined modest leverage ratio of approximately 35%, based upon the average of publicly available broker reports as of August 20, 2021, and a large collateral value base for refinancing debt maturities.

 

   

Enhance credit profile by increasing cash retention to support growth and continued deleveraging.

 

   

Grow equity market capitalization and depth in share trading to offer an attractive fundamental investment opportunity to investors seeking exposure to global economy.

 

   

Maintain and ultimately grow returns to unitholders of the combined company.

 

   

Provide Navios Acquisition’s shareholders the opportunity to continue to participate in the combined company and avail themselves of market upside

The current value of the combined company’s vessels is estimated at $4.2 billion based upon the average of publicly available broker reports; the combined company will also have an enterprise value of approximately $2.25 billion. With a $1.6 billion pipeline of contracted revenue coupled with about 47,634 available days in 2022, the combined fleet is well-positioned to take advantage of the healthy dry cargo markets as well as any future upturn in the tanker market.

Merger / Merger Consideration

Pursuant to the definitive transaction agreement, Navios Acquisition will merge with a subsidiary of Navios Partners and become a wholly owned subsidiary of Navios Partners. In the merger, Navios Acquisition’s shareholders will receive 0.1275 of a common unit of Navios Partners for each common share of Navios Acquisition. Based on Navios Partners’ August 24, 2021 closing price, the merger consideration reflects a per share value of $3.40, representing premiums to Navios Acquisition shareholders of 65% based on the August 24, 2021 closing price and 17.6% based on the most recent 60-day volume weighted average price of Navios Acquisition’s common shares.

The exchange of shares of Navios Acquisition for common units of Navios Partners in the merger is expected to be a tax-free exchange for shareholders of Navios Acquisition for U.S. federal income tax purposes.

The combined company will be led by the existing board of directors of Navios Partners, comprised of seven directors, a majority of whom are independent.

Redemption and Discharge of Navios Acquisition Ship Mortgage Notes

Pursuant to the definitive transaction agreement, Navios Acquisition has called for redemption all of its outstanding Ship Mortgage Notes (with a redemption date of September 25, 2021) and has discharged its obligations under the Indenture relating to the Ship Mortgage Notes by remitting to the Indenture trustee the aggregate redemption price payable to the holders of the Ship Mortgage Notes.

Navios Acquisition funded the redemption price using a combination of proceeds from the sale pursuant to the definitive transaction agreement of approximately 44.1 million newly issued Navios Acquisition common shares to Navios Partners in exchange for a cash contribution of $150.0 million (the “NNA Equity Issuance”) and borrowings under Navios Acquisition’s newly arranged secured term loan financings. In connection with the new financings, Navios Shipmanagement Holdings Corporation (“NSM”) released all of the collateral securing its loan to Navios Acquisition (the “NSM Loan”) and surrendered its option to exchange all or a portion of the NSM Loan for equity of Navios Acquisition’s material subsidiary, Navios Maritime Midstream Partners L.P. The released collateral was included in the collateral securing Navios Acquisition’s newly arranged secured term loan financings. In addition, NSM canceled $30.0 million of the approximately $98.1 million outstanding balance of the NSM Loan in exchange for 8.8 million newly


issued common shares of Navios Acquisition. The Navios Acquisition common shares issued to NSM will be exchanged in the merger for common units of Navios Partners on the same terms applicable to the other Navios Acquisition shareholders. Any Navios Acquisition common shares owned by Navios Partners (including the shares issued pursuant to the NNA Equity Issuance) will be canceled in connection with closing of the merger for no consideration.

Working Capital Facility

In connection with the Transaction, Navios Partners provided Navios Acquisition with a $45.0 million interim working capital facility.

Approvals

The Transaction was unanimously approved by both the special committee of the Board of Directors of Navios Acquisition (“Special Committee”), consisting of independent directors, and Navios Acquisition’s full board of directors. The Transaction was also unanimously approved by the Conflicts Committee of Navios Partners as well as its full board of directors.

Merger Closing

The closing of the merger is subject to customary closing conditions, including effectiveness of a registration statement on Form F-4 related to the issuance of common units of Navios Partners to the shareholders of Navios Acquisition and the approval of the merger by holders of a majority of the outstanding Navios Acquisition common shares at a special meeting of Navios Acquisition shareholders to be held after the registration statement is declared effective. As a result of the NNA Equity Issuance, Navios Partners owns approximately 62.4% of the outstanding common shares of Navios Acquisition. Pursuant to the definitive transaction documentation, Navios Partners has agreed to vote all of its Navios Acquisition common shares in favor of the merger, which will be sufficient to approve the merger.

The merger is expected to close in the fourth quarter of 2021.

Navios Partners’ management will host a conference call on Tuesday, August 31, 2021 to discuss the transaction.

Advisors

Latham & Watkins LLP acted as legal advisor and Pareto Securities AS acted as financial advisor to the Special Committee of Navios Acquisition. Thomson Hine LLP acted as legal advisor to Navios Acquisition. Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal advisor and Jefferies LLC and S. Goldman Advisors LLC acted as financial advisors to Navios Partners.

Important Information

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. In connection with the proposed Transaction, Navios Partners will file a registration statement and a related prospectus with the Securities and Exchange Commission (“SEC”) pursuant to which the issuance of the common units of Navios Partners in the proposed Transaction will be registered. Investors are urged to read the registration statement and the related prospectus (including all amendments and supplements) because they will contain important information regarding the Navios Partners’ common units and the Transaction. Investors may obtain free copies of the registration statement and the related prospectus when they become available, as well as other filings containing information about Navios Partners and Navios Acquisition, without charge, at the SEC’s Web site (www.sec.gov).


Conference Call Details:

Navios Partners’ management will host a conference call on Tuesday, August 31, 2021 to discuss the transaction.

Call Date/Time: Tuesday, August 31, 2021 at 8:30 am ET

Call Title: Navios Partners combination with Navios Acquisition Conference Call

US Dial In: +1.877.876.9177

International Dial In: +1.785.424.1672

Conference ID: NAVIOS0831 or 6284670831

The conference call replay will be available two hours after the live call and remain available for one week at the following numbers:

US Replay Dial In: +1. 888-566-0151

International Replay Dial In: +1. 402-220-9181

Slides and audio webcast:

There will also be a live webcast of the conference call, through the Navios Partners website (www.navios-mlp.com) under “Investors”. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

A presentation outlining the Transaction described in this press release will be posted under the “Investors” section of Navios Partners Website prior to the call.

About Navios Maritime Partners L.P.

Navios Maritime Partners L.P. (NYSE: NMM) is a publicly traded master limited partnership which owns and operates dry cargo vessels. For more information, please visit the Company’s website: www.navios-mlp.com.

About Navios Maritime Acquisition Corporation

Navios Acquisition (NYSE: NNA) is an owner and operator of tanker vessels focusing on the transportation of petroleum products (clean and dirty) and bulk liquid chemicals. For more information about Navios Acquisition, please visit the Company’s website: www.navios-acquisition.com.

Forward-Looking Statements

This communication contains forward-looking statements relating to the proposed transaction involving Navios Partners and Navios Acquisition, including statements as to the expected timing, completion and effects of the proposed transaction and statements relating to Navios Partners’ future success. Statements in this communication that are not statements of historical fact are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are usually identified by the use of words such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,”


“potential,” “predicts,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. These forward-looking statements are neither forecasts, promises nor guarantees, and are based on the current beliefs of management of Navios Partners and Navios Acquisition as well as assumptions made by and information currently available to Navios Partners and Navios Acquisition. Such statements reflect the current views of Navios Partners and Navios Acquisition with respect to future events and are subject to known and unknown risks, including business, economic and competitive risks, uncertainties, contingencies and assumptions about Navios Partners and Navios Acquisition, including, without limitation, (i) inability to complete the proposed transaction because, among other reasons, conditions to the closing of the proposed transaction may not be satisfied or waived, (ii) uncertainty as to the timing of completion of the proposed transaction, (iii) potential adverse effects or changes to relationships with customers or other parties resulting from the announcement or completion of the proposed transaction, (iv) possible disruptions from the proposed transaction that could harm Navios Partners and Navios Acquisition respective businesses, including current plans and operations, (v) unexpected costs, charges or expenses resulting from the proposed transaction, (vi) uncertainty of the expected financial performance of the combined company following completion of the proposed transaction, including the possibility that the expected cost savings and other benefits expected from the proposed transaction will not be realized or will not be realized within the expected time period, and (vii) the unknown future impact of the COVID-19 pandemic Navios Partners and Navios Acquisition’s operations or operating expenses. More details about these and other risks that may impact Navios Partners and Navios Acquisition respective businesses are described under the heading “Risk Factors” in the reports Navios Partners and Navios Acquisition file with or furnish to the SEC, including their respective Annual Reports on Form 20-F and Reports on Form 6-K, which are available on the SEC’s website at www.sec.gov. Navios Partners and Navios Acquisition caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Navios Partners and Navios Acquisition do not undertake any duty to update any forward-looking statement or other information in this communication, except to the extent required by law. Navios Partners makes no prediction or statement about the performance of its common units.

Contacts

Navios Maritime Partners L.P.

+1 (212) 906 8645

Investors@navios-mlp.com

Nicolas Bornozis Capital Link, Inc.

+1 (212) 661 7566

naviospartners@capitallink.com

Navios Maritime Acquisition Corporation

+1 (212) 906 8644

info@navios-acquisition.com