EX-4.8 2 exhibit48.htm

Exhibit 4.8

 

Private and Confidential

 

DATED JANUARY 7, 2021

 

( 1) KNA USE NHOLDING LLC ( a s B o r r o w e r )

 

( 2) EACHOFTHEENTITIESLISTEDINSCHEDULE1PART I ( a s V e s s e l O w n e r s )

 

( 3) GSLLEGACYHOLDINGLLC ( a s P a r e n t )

 

( 4) GLOBALSHIPLEASE,INC. ( a s U l t i m a t e P a r e n t )

 

(5) THEFINANCIALINSTITUTIONSLISTEDINSCHEDULE1PART II 1

 

( a s O r i g i n a l L e n d e r s )

 

( 6) HAYFINSERVICESLLP ( a s A g e n t )

 

( 7) HAYFINSERVICESLLP ( a s S e c u r i t y A g e n t )

 

FACILITY AGREEMENT

 

SECUREDTERMLOANFACILITYOFUPTOUS$236,200,000

 

EXECUTIONVERSION

 

REFERENCE:RAW/CEH/382792.00053

 

r e d s m i t h . c o m

 

 

 

 

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    CONTENTS
CLAUSE  
1. DEFINITIONS AND INTERPRETATION 1
2. THE FACILITY 33
3. PURPOSE 33
4. CONDITIONS OF UTILISATION 34
5. UTILISATION 35
6. REPAYMENT 37
7. PREPAYMENT AND CANCELLATION 38
8. INTEREST 42
9. INTEREST PERIODS 42
10. CHANGES TO THE CALCULATION OF INTEREST 43
11. FEES 44
12. TAX GROSS UP AND INDEMNITIES 44
13. INCREASED COSTS 49
14. OTHER INDEMNITIES 51
15. MITIGATION BY THE LENDERS 53
16. COSTS AND EXPENSES 54
17. GUARANTEE AND INDEMNITY 55
18. REPRESENTATIONS AND WARRANTIES 57
19. INFORMATION UNDERTAKINGS 64
20. FINANCIAL COVENANTS 69
21. GENERAL UNDERTAKINGS 70
22. VESSEL UNDERTAKINGS 76
23. INSURANCE UNDERTAKINGS 81
24. ACCOUNTS 86
25. SECURITY SHORTFALL 88
26. EVENTS OF DEFAULT 90
27. CHANGES TO THE LENDERS 96
28. CHANGES TO THE OBLIGORS 100
29. ROLE OF THE AGENT AND THE SECURITY AGENT 100
30. APPLICATION OF PROCEEDS 114
31. CONDUCT OF BUSINESS BY THE FINANCE PARTIES 115
32. SHARING AMONG THE FINANCE PARTIES 116
33. PAYMENT MECHANICS 117
34. SET-OFF 120
35. CONTRACTUAL RECOGNITION OF BAIL-IN 120
36. NOTICES 121
37. CALCULATIONS AND CERTIFICATES 123
38. PARTIAL INVALIDITY 123
39. REMEDIES AND WAIVERS 123
40. AMENDMENTS AND WAIVERS 124
41. CONFIDENTIALITY 128
42. COUNTERPARTS 131
43. GOVERNING LAW 131
44. ENFORCEMENT 131
SCHEDULE 1 THE ORIGINAL PARTIES 133
    - ii -

 

PART I THE OBLIGORS 133
PART II THE ORIGINAL LENDERS 143
PART III AGENT AND SECURITY AGENT 144
SCHEDULE 2 CONDITIONS PRECEDENT 145
PART I CONDITIONS PRECEDENT TO UTILISATION REQUEST 145
PART II CONDITIONS PRECEDENT TO UTILISATION 147
PART III CONDITIONS SUBSEQUENT 151
SCHEDULE 3 UTILISATION REQUEST 153
SCHEDULE 4 FORM OF TRANSFER CERTIFICATE 154
SCHEDULE 5 FORM OF ASSIGNMENT AGREEMENT 156
SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE 158
SCHEDULE 7 FORM OF MERGER CONDITIONS CERTIFICATE 159
SCHEDULE 8 TIMETABLES 160
SCHEDULE 9 DETAILS OF VESSELS 161
SCHEDULE 10 NOTIONAL VESSEL TRANCHE AMOUNTS 170
SCHEDULE 11 INITIAL BUDGETED OPEX 171
SCHEDULE 12 QUARTERLY DD CONTRIBUTIONS 172
SCHEDULE 13 SCREEN RATE CONTINGENCY PERIODS 174
SCHEDULE 14 EXAMPLE BUDGET 175

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THIS AGREEMENT dated 2021
     

BETWEEN:

 

(1) KNAUSEN HOLDING LLC, a limited liability company formed under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Republic of the Marshall Islands, MH 96960 (“Borrower”);

 

(2) EACH OF THE ENTITIES listed in Part I of Schedule 1 (The Original Parties) as vessel owners (together the “Vessel Owners” and each a “Vessel Owner”);

 

(3) GSL LEGACY HOLDING LLC, a limited liability company formed under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Republic of the Marshall Islands, MH 96960 (“Parent”);

 

(4) GLOBAL SHIP LEASE, INC., a corporation incorporated under the laws of the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, the Republic of the Marshall Islands, MH 96960 (“Ultimate Parent”);

 

(5) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 (The Original Parties) as lenders (“Original Lenders”);

 

(6) HAYFIN SERVICES LLP as agent of the Finance Parties (“Agent”); and

 

(7) HAYFIN SERVICES LLP as security agent for the Finance Parties (“Security Agent”).

 

BACKGROUND

 

The Lenders have agreed to make available to the Borrower a loan facility of up to the Maximum Loan Amount for the purposes of refinancing the existing indebtedness incurred in relation to certain of the Vessels pursuant to the Senior Secured Notes and to pay any fees, costs or expenses under this Agreement.

 

IT IS AGREED as follows:

 

1.         Definitions and Interpretation 1.1 Definitions

In this Agreement:

 

Account” means each of the Earnings Accounts, each of the Dry Docking Reserve Accounts, the Minimum Liquidity Account and any other account opened, made or established in accordance with Clause 24 (Accounts).

 

Account Bank” means, in relation to any Account, ABN AMRO Bank NV or any other bank or financial institution approved by the Agent (with the prior written consent of the Majority Lenders).

 

Account Holder” means, in relation to any Account, each Obligor in whose name that Account is held.

 

Accounts Security” means, in relation to an Account, a deed or other instrument granted by the Account Holder in favour of the Security Agent conferring Security over that Account in the agreed form.

 

Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

 

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Approved Brokers” means Maersk Broker or the head offices of Barry Rogliano Salles or Howe Robinson Partners (or any Affiliate of such persons through which valuations are commonly issued), or any independent international sale and purchase broker mutually agreed by the Agent (acting on the instructions of the Majority Lenders) and the Borrower from time to time (and “Approved Broker” means any one of them).

 

Approved Commercial Manager” means, in relation to a Vessel:

 

(a) Global Ship Lease Services Limited;

 

(b) Conchart Commercial Inc.;

 

(c) any other wholly owned subsidiary of the Ultimate Parent; or

 

(d) any other third party management company as the Agent may, with the authorisation of the Majority Lenders acting reasonably, approve in writing from time to time in respect of that Vessel.

 

Approved Flag” means Hong Kong, Liberia, Panama, Bahamas, Marshall Islands, Malta, Bermuda or Cyprus flag or any other flag mutually agreed by the Agent (with the authorisation of all Lenders) and the Borrower, provided that, for the avoidance of doubt, no flag under which a Vessel may be registered may be changed from one Approved Flag to another Approved Flag without the consent of the Agent (with the authorisation of all Lenders), such consent not to be unreasonably withheld or delayed.

 

Approved Manager” means each Approved Technical Manager and each Approved Commercial Manager.

 

Approved Sub-Manager” means, in relation to an Approved Manager, any sub-manager appointed by an Approved Manager with the approval of the Agent, with the authorisation of the Majority Lenders, pursuant to Clause 22.18 (Management Agreement).

 

Approved Technical Manager” means, in relation to a Vessel, Technomar Shipping Inc. as well as any Affiliates thereof or any other management company as the Agent may, with the authorisation of the Majority Lenders, approve in writing from time to time in respect of that Vessel (such approval not to be unreasonably withheld or delayed).

 

Assignment Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.

 

Auditor” means a certified public auditor or audit firm seated in an EEA Member Country, the United Kingdom, Hong Kong, Canada or the United States of America and licensed by the relevant national authorities.

 

Availability Period” means the period from and including the date of this Agreement to and including 31 January 2021 (or such later date as the Agent may agree in its sole discretion acting on the instructions of the Majority Lenders).

 

Available Commitment” means a Lender’s Commitment minus:

 

(a) the amount of its participation in the outstanding Loan; and

 

(b) in relation to any proposed Utilisation, the amount of its participation in the Utilisation that is due to be made on or before the proposed Utilisation Date.

 

Available Facility” means the aggregate for the time being of each Lender’s Available Commitment.

 

Bail-In Action” means the exercise of any Write-down and Conversion Powers.

 

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Bail-In Legislation” means:

 

(a) in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, 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.

 

Blocking Law” means any of the following:

 

(a) the U.S. Export Administration Regulations, 15 C.F.R. Part 760, and Section 1771-4 of P.L. 115-232, or Section 999 of the internal Revenue Code of 1986, as amended (referred to as the Ribicoff Amendment) and their respective implementing rules and regulations;

 

(b) any provision of Council Regulation (EC) No. 2271/1996 of 22 November 1996, as amended (or any law or regulation implementing such regulation in any member state of the European Union);

 

(c) any provision of Council Regulation (EC No. 2271/1996 of 22 November 1996, as amended and as it applies in the UK pursuant to

 

(i) the European Union (Withdrawal) Act of 2018 of the UK and (ii) the European Union (Withdrawal Agreement) Act 2020 of the UK;

 

(d) section 7 of the German Foreign Trade Regulation (Außenwirtshaftsverordnung);

 

(e) any provision of the UK Protection of Trading Interests Act 1980 or any subsidiary legislation; or

 

(f) any similar blocking or anti-boycott law. “Board of Directors” means:

 

(a) with respect to a corporation, the board of directors of the corporation or, other than for purposes of the definition of “Change of Control,” any committee thereof duly authorised to act on behalf of such board; and

 

(b) with respect to any other person, the functional equivalent of a board of directors of a corporation or, other than for purposes of the definition of “Change of Control,” any committee thereof duly authorised to act on behalf thereof.

 

Break Costs” means the amount (if any) by which:

 

(a) the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

 

exceeds:

 

(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

 

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Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Amsterdam, Athens, London and New York.

 

Capital Stock” means:

 

(a) in the case of a corporation, corporate stock;

 

(b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) in the equity of such association or entity;

 

(c) in the case of a partnership or limited liability company, partnership interests (whether general or limited), membership interests or limited liability company interests; and

 

(d) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

 

Cash” means, at any time with respect to any person, cash in hand or at a bank and (in the latter case) credited to an account in the name of that person and to which that person alone is beneficially entitled and for so long as:

 

(a) that cash is repayable within thirty (30) days after the relevant date of calculation;

 

(b) repayment of that cash is not contingent on the prior discharge of any other indebtedness of that person or of any other person whatsoever or on the satisfaction of any other condition other than any such conditions under Transaction Security referred to in paragraph (c) below;

 

(c) there is no Security over that cash except for Transaction Security; and

 

(d) the cash is freely and (except as mentioned in paragraph (a) and (c) above) immediately available to be applied in repayment or prepayment of the Loan.

 

Cash Equivalents” means:

 

(a) United States dollars, pounds sterling or Euro or other currency of a member of the Organization for Economic Cooperation and Development (including such currencies as are held as overnight bank deposits and demand deposits with banks);

 

(b) securities issued or directly and fully guaranteed or insured by the government of the United States of America or any Member State of the European Union or any other country whose sovereign debt has a rating of at least “A3” from Moody’s and at least “A-” from S&P or any agency or instrumentality thereof having maturities of not more than one year from the date of acquisition;

 

(c) demand and time deposits and eurodollar time deposits and certificates of deposit or bankers’ acceptances with maturities of one year or less from the date of acquisition, in each case, with any financial institution organised under the laws of any country that is a member of the Organization for Economic Cooperation and Development (i) whose long-term debt obligations are rated at least “A-3” or the equivalent thereof by S&P or at least “P-3” or the equivalent thereof by Moody’s (or if at the time neither is issuing comparable ratings, then a comparable rating of another Rating Agency) and (ii) having capital and surplus and undivided profits in excess of

 

US$250 million;

 

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(d) repurchase obligations with a term of not more than 60 days for underlying securities of the types described in paragraph (b) of this definition entered into with any financial institution meeting the qualifications specified in paragraph (c) of this definition;

 

(e) commercial paper and variable or fixed rate notes rated “P-1” or higher by Moody’s or “A-1” or higher by S&P and, in each case, maturing within one year after the date of acquisition;

 

(f) money market funds that invest primarily in Cash Equivalents of the kinds described in paragraphs (a) through (e) of this definition; and

 

(g) instruments equivalent to those referred to in paragraphs (a) through (f) of this definition denominated in any other foreign currency and comparable in credit quality and tenor to those referred to above and customarily to the extent reasonably required in connection with

 

(i) any business conducted by the Ultimate Parent or any of its Subsidiaries in such jurisdiction or (ii) any investment in the jurisdiction in which such investment is made.

 

Change of Control” means:

 

(a) in respect of the Ultimate Parent, the occurrence of any of the following events:

 

(i) at any time, the Ultimate Parent becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor provision), other than the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership of more than 35% of the total voting power of the Voting Stock of the Ultimate Parent or any direct or indirect parent company of the Ultimate Parent; provided that (x) so long as the Ultimate Parent is a Relevant Subsidiary of a parent company, no person shall be deemed to be or become a beneficial owner of more than 35% of the total voting power of the Voting Stock of the Ultimate Parent unless such person shall be or become a beneficial owner of more than 35% of the total voting power of the Voting Stock of such parent company and

(y) any Voting Stock of which any Permitted Holder is the beneficial owner shall not in any case be included in calculating the Voting Stock of which any such person first referred to above in this paragraph (i) is the beneficial owner;

 

(ii) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Ultimate Parent and its Relevant Subsidiaries, taken as a whole, to any person other than a wholly owned Relevant Subsidiary or one or more Permitted Holders in connection with which any person other than one or more Permitted Holders, is or becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), directly or indirectly, of a majority of the total voting power of the Voting Stock of the transferee person in such sale or transfer of assets, as the case may be; provided that (x) so long as such transferee person is a Relevant Subsidiary of a Permitted Parent, no person shall be deemed to be or become a beneficial owner of a majority of the total voting power of the Voting Stock of such transferee person unless such person shall be or become a beneficial owner of a majority of the total voting power of the Voting Stock of such Permitted Parent and (y) any Voting Stock of which any Permitted Holder is the beneficial owner shall not in any case be included in the calculation of any Voting Stock of which any such person first referred to above in this paragraph (ii) is the beneficial owner;

 

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(iii) the Ultimate Parent shall adopt a plan of liquidation or dissolution or any such plan shall be approved by the stockholders of the Ultimate Parent;

 

(iv) de-listing of the Ultimate Parent’s common stock from the New York Stock Exchange or another internationally recognised stock exchange (if applicable) that does not occur in connection with a listing of the Ultimate Parent’s common stock on another internationally recognised stock exchange;

 

(v) Mr George Giouroukos ceases to own (either directly or through one or more affiliates) at least 50% of the number of shares of the Ultimate Parent held by him on the date of the completion of the Merger (excluding any share split or reverse split) other than by reason of death or other incapacity in managing his affairs; or

 

(vi) Mr George Giouroukos ceases to be the Executive Chairman of (or to hold an equivalent executive officer position in) the Ultimate Parent other than by reason of death or other incapacity in managing his affairs;

 

(b) in respect of the Parent:

 

(i) a sale, lease or transfer of all or substantially all of the Parent’s assets to any person or group; or

 

(ii) at any time during which and for any reason, the Ultimate Parent fails to legally and beneficially own, directly, one hundred per cent. (100%) of the limited liability company interests and other equity interests of the Parent;

 

(c) in respect of the Borrower:

 

(i) a sale, lease or transfer of all or substantially all of the Borrower’s assets to any person or group; or

 

(ii) at any time during which and for any reason, the Parent fails to legally and beneficially own, directly, one hundred per cent. (100%) of the limited liability company interests and other equity interests of the Borrower;

 

(d) in respect of each Vessel Owner:

 

(i) a sale, lease or transfer of all or substantially all of that Vessel Owner’s assets to any person or group other than as expressly permitted by the terms of this Agreement; or

 

(ii) at any time on or after the date falling one (1) Business Day after the Preposition Date during which and for any reason, the Borrower fails to legally and beneficially own, directly, one hundred per cent. (100%) of the capital stock, limited liability company interests and other equity interests of that Vessel Owner.

 

Charged Property” means the shares or limited liability company interests, as applicable, in each of the relevant Obligors and all of the assets of the relevant Obligors which from time to time are, or are expressed or intended to be, the subject of the Security Documents.

 

Charter” means, in respect of a Vessel, any time charter or other contract of employment between the relevant Vessel Owner owning that Vessel and any charterer, which exceeds or is capable of exceeding twenty four (24) months (including by virtue of optional extensions).

 

Charter Assignment” means the first priority assignment of any Charter in the agreed form.

 

Classification” means, in relation to a Vessel, the classification with the Classification Society specified in Schedule 9 (Details of Vessels) or such other classification with a Classification Society as the Agent may, with the authorisation of the Majority Lenders, approve in writing (such authorisation not to be unreasonably withheld or delayed).

 

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Classification Society” means, in relation to a Vessel, DNV-GL, Bureau Veritas, ABS, Lloyds, NKK, RINA or such other classification society being a member of the International Association of Classification Societies mutually agreed by the Agent (with the authorisation of the Majority Lenders) and the Borrower.

 

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

 

Commercial Management Agreement” means, in relation to a Vessel, any commercial management agreement entered into or to be entered into (as applicable) between the Vessel Owner owning that Vessel and an Approved Commercial Manager in form and substance acceptable to the Agent (such acceptance not to be unreasonably withheld or delayed, and acting on the instructions of the Majority Lenders).

 

Commission” means the U.S. Securities and Exchange Commission.

 

Commitment” means:

 

(a) in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Part I of Schedule 1 (The Original Parties) and the amount of any other Commitment transferred or assigned to it under this Agreement; and

 

(b) in relation to any other Lender, the amount of any Commitment transferred or assigned to it under this Agreement,

 

to the extent not cancelled, reduced or transferred by it under this Agreement.

 

Compliance Certificate” means a certificate in the form set out in Schedule 6 (Form of Compliance Certificate) or otherwise in form and substance satisfactory to the Agent.

 

Confidential Information” means all information relating to the Ultimate Parent and any Group member, the Finance Documents or the Loan of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Loan from either:

 

(a) any Obligor or any of its advisers; or

 

(b) another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Obligor 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 information that:

 

(i) is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 41 (Confidentiality); or

 

(ii) is identified in writing at the time of delivery as non-confidential by any Obligor or any of its advisers; or

 

(iii) is known by that Finance Party before the date the information is disclosed to it in accordance with (a) or (b) or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with any Obligor and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

 

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Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the LMA from time to time or in any other form agreed between the Borrower and the Agent.

 

Corresponding Debt” means any amount, other than a Parallel Debt, which a Transaction Obligor owes to a Finance Party under or in connection with the Finance Documents.

 

Deed of Covenants” means, in relation to a Vessel registered under Hong Kong, Bahamas, Bermuda, Malta or Cyprus flag (or under any other Approved Flag whose laws prescribe a statutory form of vessel mortgage), a first priority deed of covenants collateral to the relevant Mortgage, in the agreed form.

 

Default” means an Event of Default or any event or circumstance specified in Clause 26 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

 

Defaulting Lender” means any Lender:

 

(a) which has failed to make its participation in the Loan available (or has notified the Agent that it will not make its participation in the Loan available) by the Utilisation Date in accordance with Clause 5.4 (Lenders’ participation);

 

(b) which has otherwise rescinded or repudiated a Finance Document; or

 

(c) with respect to which an Insolvency Event has occurred and is continuing,

 

unless, in the case of paragraph (a) above:

 

(i) its failure to pay is caused by:

 

(A) administrative or technical error; or

 

(B) a Disruption Event, and

 

payment is made within two (2) Business Days of its due date; or

 

(ii)        the Lender is disputing in good faith whether it is contractually obliged to make the payment in question. “Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.

 

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 Facility (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.

 

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Dividend / Loan Payment Criteria” means, at the time of a proposed dividend, distribution or loan payment by the Borrower (in the case of a dividend, distribution or loan payment to the Parent) or the Parent (in the case of a dividend, distribution or loan payment to the Ultimate Parent):

 

(a) the Borrower provides a Compliance Certificate to the Agent evidencing that the Minimum Liquidity Test will continue to be satisfied following the making of such dividend, distribution or loan payment;

 

(b) no Default has occurred and is continuing or would result from the making of such dividend, distribution or loan payment;

 

(c) such dividend, distribution or loan payment is made within 30 days of a Quarter Date; and

 

(d) no such dividend, distribution or loan payment is made before 31 March 2021.

 

DOC” means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration (as defined in the ISM Code) under paragraph 13.2 of the ISM Code.

 

Dollars” and “US$” mean the lawful currency, for the time being, of the United States of America.

 

Dry Docking Costs” means, in respect of a Vessel, costs in respect of any intermediate or special survey of that Vessel which is scheduled to take place prior to the Termination Date.

 

Dry Docking Reserve” means, in relation to each Vessel, amounts paid into the relevant Dry Docking Reserve Account in accordance with Clause 24.8 (Dry Docking Reserve).

 

Dry Docking Reserve Accounts” means, in relation to each Vessel Owner, an account in the name of that Vessel Owner with the Account Bank, or any other account opened or established with that office of the Account Bank or another office of the Account Bank which is designated by the Agent as a “Dry Docking Reserve Account” for the purposes of this Agreement and “Dry Docking Reserve Account” means any of them.

 

Earnings” means, in relation to a Vessel, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the

 

Vessel Owner owning that Vessel or the Security Agent and which arise out of the use or operation of the Vessel including (but not limited to):

 

(a) all freight, hire and passage moneys, money or compensation payable for the provision of services by or from a Vessel or under any charter commitment, compensation payable to that Vessel Owner or the Security Agent in the event of requisition of a Vessel for hire, general average consolidation, 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 a Vessel;

 

(b) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

 

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

 

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Earnings Accounts” means, in relation to each Vessel Owner, an account in the name of that Vessel Owner with the Account Bank, or any other account opened or established with that office of the Account Bank or another office of the Account Bank which is designated by the Agent as an “Earnings Account” for the purposes of this Agreement and “Earnings Account” means any of them.

 

EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway.

 

Eligible Institution” means any Lender or other bank, financial institution, trust, fund or other entity selected by the Borrower and which, in each case, is not the Ultimate Parent or a member of the Group.

 

Environment” means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:

 

(a) air (including, without limitation, air within natural or man-made structures, whether above or below ground);

 

(b) water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and

 

(c) land (including, without limitation, land under water).

 

Environmental Approval” means any present or future permit, ruling, variance or other authorisation required under Environmental Law.

 

Environmental Claim” means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, 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:

 

(a) any release, emission, spill or discharge into a Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from a Vessel; or

 

(b) any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Obligor and/or any operator or manager of a Vessel 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, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Obligor and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.

 

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Environmental Law” means any applicable or relevant present or future law or regulation relating to pollution or protection of human health or the Environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.

 

Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances 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 event or circumstance specified as such in Clause 26 (Events of Default) or any other event or circumstance described as such in any other provision of a Finance Document.

 

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto and, in each case, the rules and regulations promulgated by the Commission thereunder.

 

Existing Security” means the security provided by the Obligors in favour of Citibank N.A., London Branch as security for the obligations owed by the Ultimate Parent under the Senior Secured Notes.

 

Facility” means the term loan facility made available under this Agreement as described in Clause 2.1 (The Facility).

 

Facility Office” means:

 

(a) in respect of a Lender, the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five (5) Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement; and

 

(b) in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes.

 

Facility Period” means the period from and including the date of this Agreement to and including the date on which the Total Commitments have been reduced to zero and all Secured Liabilities have been fully paid and discharged.

 

FATCA” means:

 

(a) sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

 

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

 

(c) any agreement pursuant to the implementation of any treaty, law, regulation or other official guidance 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.

 

- 11 -
 
 

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;

 

(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 a Finance Document required by FATCA.

 

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

 

Fee Letter” means any letter or letters dated on or about the date of this Agreement between (i) the Agent or the Security Agent and (ii) the Borrower setting out any of the fees referred to in Clause 11 (Fees).

 

Finance Document” means:

 

(a) this Agreement;

 

(b) any Security Document;

 

(c) any Fee Letter; or

 

(d) any other document designated as a Finance Document by the Agent and any Obligor party to it. “Finance Party” means the Agent, the Security Agent or a Lender (together the “Finance Parties”). “Financial Half Year” means each period of six (6) months ending on a Half Year Date.

 

Financial Indebtedness” means any indebtedness for or in respect of:

 

(a) moneys borrowed;

 

(b) any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

 

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

 

(d) any redeemable preference share issues which mature prior to the date which is 6 months after the Termination Date (excluding, for this purpose, any preference shares issued by the Ultimate Parent which have a maturity date prior to such date and which covert into ordinary shares at maturity) or are otherwise classified as borrowings under GAAP;

 

(e) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be treated as a finance or capital lease;

 

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

 

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(g) any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition having the commercial effect of a borrowing;

 

(h) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount) shall be taken into account);

 

(i) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and

 

(j) the amount of any liability in respect of any guarantee, indemnity or similar assurance against financial loss in respect of any of the items referred to in paragraphs (a) to (i) above.

 

Financial Quarter” means each period of three (3) months ending on a Quarter Date.

 

Fresh Equity Injection” means, at any time after the date of this Agreement:

 

(a) any Cash actually received by the Borrower from the Parent in consideration for the Borrower’s limited liability company interests, which was in turn received in full by the Parent from the Ultimate Parent in consideration for the Parent’s limited liability company interests; or

 

(b) any Cash actually received by the Borrower from the Parent by way of Permitted Intercompany Debt, which was in turn received in full from the Ultimate Parent in consideration for the Parent’s limited liability company interests.

 

GAAP” means generally accepted accounting principles in the United States of America.

 

General Assignment” means, in relation to a Vessel Owner, any assignment of the Earnings, Insurances and Requisition Compensation in respect of the Vessel owned by that Vessel Owner, entered into by that Vessel Owner in favour of the Security Agent in the agreed form.

 

Group” means the Parent, the Borrower and each Vessel Owner and their respective Subsidiaries for the time being.

 

GSLS” means Global Ship Lease Services Limited.

 

Guarantees” means the guarantees and indemnities in Clause 17 (Guarantee and indemnity) (and “Guarantee” means any of them).

 

Guarantors” means, together, the Ultimate Parent, the Parent and each Vessel Owner.

 

Half Year Date” means 30th June and 31st December of each calendar year.

 

Holding Company” means, in relation to a person, any other person in respect of which it is a Subsidiary.

 

Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China.

 

IAPPC” means a valid and current International Air Pollution Prevention Certificate.

 

Impaired Agent” means the Agent at any time when:

 

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(a) it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;

 

(b) the Agent otherwise rescinds or repudiates a Finance Document;

 

(c) (if the Agent is also a Lender) it is a Defaulting Lender under paragraph (a) or (b) of the definition of “Defaulting Lender”; or

 

(d) an Insolvency Event has occurred and is continuing with respect to the Agent;

 

unless, in the case of paragraph (a) above:

 

(i) its failure to pay is caused by:

 

(A) administrative or technical error; or

 

(B) a Disruption Event; and

 

payment is made within two (2) Business Days of its due date; or

 

(ii) the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.

 

Insolvency Event” in relation to an entity means that the entity:

 

(a) is dissolved (other than pursuant to a consolidation, amalgamation or merger);

 

(b) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

 

(c) makes a general assignment, arrangement or composition with or for the benefit of its creditors;

 

(d) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;

 

(e) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in (d) and:

 

(i) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or

 

(ii) is not dismissed, discharged, stayed or restrained in each case within thirty (30) days of the institution or presentation thereof;

 

(f) has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;

 

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(g) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

 

(h) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in (d));

 

(i) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within thirty (30) days thereafter;

 

(j) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in (a) to (i); or

 

(k) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

 

Insurances” means, in relation to a Vessel:

 

(a) any policy and contract of insurance including entries of that Vessel in any protection and indemnity or war risk association, effected in relation to that Vessel and that Vessel’s Earnings whether before or after the date of this Agreement; and

 

(b) all rights and other assets relating to, or derived from, any such policies and contracts of insurance (including any rights to a return for a premium).

 

Interest Period” means, in relation to the Loan, each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).

 

Interpolated Screen Rate” means, in relation to the Loan, 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 the Interest Period of the Loan; and

 

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

 

each as of the Specified Time for the currency of the Loan.

 

Intra-Company Loan Agreement” means any agreement to be entered into by the Ultimate Parent, the Parent, the Borrower and/or the Vessel Owners, exclusively for the purpose of making Permitted Intercompany Debt available in accordance with the terms of the Finance Documents.

 

ISM Code” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (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).

 

ISM Company” means, at any given time, the company responsible for a Vessel’s compliance with the ISM Code.

 

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

 

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

 

Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.

 

Legal Reservations” means:

 

(a) the principle that equitable remedies may be granted or refused at the discretion of a court and 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 the Limitation Acts, the possibility that an undertaking to assume liability for or to indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

 

(c) the limitation of the enforcement of the terms of leases of real property by laws of general application to those leases;

 

(d) similar principles, rights and remedies under the laws of any Relevant Jurisdiction; and

 

(e) any other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinions supplied to the Agent as a condition precedent under this Agreement on or before the Utilisation Date.

 

Lender” means:

 

(a) any Original Lender; and

 

(b) any bank, financial institution, trust, fund or other entity which has become a Party in accordance with Clause 27 (Changes to the Lenders),

 

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

 

LIBOR” means, in relation to the Loan or any part of it:

 

(a) the applicable Screen Rate; or

 

(b) (if no Screen Rate is available for the Interest Period of the Loan or any part of it) the Interpolated Screen Rate for the Loan;

 

(c) if:

 

(i) no Screen Rate is available for Dollars; or

 

(ii) no Screen Rate is available for the Interest Period of the Loan or any part of it and it is not possible to calculate the Interpolated Screen Rate for the Loan or part of it,

 

the Reference Bank Rate,

 

as of in the case of paragraphs (a) and (c) above the Specified Time on the Quotation Day for Dollars and for a period equal in length to the Interest Period of the Loan, or part of it and, if any such rate is below 0.5% per annum, LIBOR shall be deemed to be 0.5% per annum.

 

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Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.

 

Loan” means the loan made or to be made under the Facility or, as the context requires, the principal amount outstanding for the time being of the loan (which shall for the avoidance of doubt shall be equal to the aggregate principal amount outstanding for the time being of all Notional Vessel Tranches).

 

Loan to Own Investor” means any entity whose principal investment strategy is the purchase of loans to, or debt securities issued by, an entity (the “Target”) at a material discount to the face value of such loans or debt securities and with a view of either (i) owning the equity in, or gaining control of the business of, the Target or (ii) pursuing active enforcement policies with respect to such loans or debt securities.

 

LTV Ratio” means, at any time, the Loan as a percentage of the aggregate Market Value of all Vessels.

 

Major Casualty” means, in relation to a Vessel, any casualty to that Vessel in respect of which the claim or the aggregate of the claims against all insurers, inclusive of any franchise or deductible, exceeds or may exceed the Major Casualty Amount.

 

Major Casualty Amount” means, in relation to a Vessel, US$750,000 or the equivalent in any other currency.

 

Majority Lenders” means a Lender or Lenders whose Commitments aggregate at least 662/3% of the Total Commitments or, if the Total Commitments have been reduced to zero, aggregated at least 662/3% of the Total Commitments immediately prior to the reduction.

 

Make Whole Amount” means an amount equal to the greater of:

 

(a) 3% of the principal amount to be prepaid; and

 

(b) the excess of:

 

(i) the present value on the date of prepayment of the aggregate of: (x) 103% of the principal amount to be prepaid as if that amount would otherwise be prepaid on the date which is immediately after the date falling on the twenty four month anniversary of the Utilisation Date; and (y) the amount equal to the amount of all interest which would otherwise have accrued for the period from the date of such prepayment (assuming for these purposes that LIBOR is the greater of (I) the LIBOR rate for a period of six months on the date which is two (2) Business Days prior to the date of prepayment and (II) 0.5%) to the date which is immediately after the date falling on the twenty four month anniversary of the Utilisation Date, computed using a discount rate equal to the US Treasury Rate plus 50 basis points; over

 

(ii) the principal amount to be prepaid.

 

Management Agreements” means any Technical Management Agreement and any Commercial Management Agreement.

 

Manager’s Undertaking” means, in relation to a Vessel, the letter(s) of undertaking from each Approved Manager in favour of the Security Agent, in the agreed form.

 

Margin” means seven per cent. (7%) per annum.

 

Market Value” means, in relation to a Vessel, the value of that Vessel as determined in accordance with Clause 25.3 (Valuation of Vessels).

 

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

 

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(a) the business, operations, property, financial condition or financial prospects of the Ultimate Parent and the Group taken as a whole; or

 

(b) the ability of an Obligor to perform its payment obligations under the Finance Documents; or

 

(c) the validity or enforceability of, or the effectiveness or ranking of any Security granted or purported to be granted pursuant to any of, the Finance Documents; or

 

(d) the rights or remedies of any Finance Party under any of the Finance Documents.

 

MaximumLoan Amount” means an amount of up to the lower of:

 

(a) US$236,200,000; and

 

(b) an amount equal to seventy five (75%) per cent. of the aggregate Market Value of the Mortgaged Vessels (but excluding, for the avoidance of doubt, any Mortgaged Vessel which has been directly or indirectly sold or become a Total Loss) established by the Valuations provided under Clause 4.2 (Utilisation Conditions precedent).

 

Merger” means the stock-for-stock merger that closed on 15 November 2018 between the Ultimate Parent, Poseidon Containers Holdings LLC and K&T Marine LLC.

 

Merger Conditions Certificate” means a certificate in the form set out in Schedule 7 (Form of Merger Conditions Certificate) or otherwise in form and substance satisfactory to the Agent.

 

Minimum Liquidity Account” means an account in the name of the Borrower with the Account Bank, or any other account opened or established with that office of the Account Bank or another office of the Account Bank which is designated by the Agent as the “Minimum Liquidity Account” for the purposes of this Agreement.

 

Minimum Liquidity Amount” has the meaning given in Clause 24.6 (Minimum Liquidity Account).

 

Mortgage” means, in relation to a Vessel, the first priority or first preferred ship mortgage (as the case may be) granted or to be granted (as the context so requires) over that Vessel by the relevant Vessel Owner in favour of the Security Agent in the agreed form.

 

Mortgaged Vessel” means, at any relevant time, any Vessel which is or purports to be subject to a Mortgage and/or whose Earnings, Insurances and Requisition Compensation are or purport to be subject to Security under the Finance Documents.

 

Net Worth” means, in respect of the Ultimate Parent, Total Assets less Total Liabilities.

 

New Lender” has the meaning given to that term in Clause 27 (Changes to the Lenders).

 

Notional Vessel Tranche” means, in respect of any Vessel, the proportion of the Loan allocated to that Vessel based on its allocated contribution to the Maximum Loan Amount (which shall be as set out in Schedule 10 (Notional Vessel Tranche Amounts) provided that if the Total Commitments are not utilised in full they shall initially be as set out in the Utilisation Request and approved by the Lenders) (and as reduced by any repayments (whether Repayment Instalments or otherwise) or prepayments from time to time in accordance with the terms of this Agreement).

 

Obligors” means the parties to the Finance Documents, other than the Finance Parties, the Account Bank and (to the extent it is not a Related Party) any Approved Manager and “Obligor” means any one of them.

 

OFAC” means the Office of Foreign Assets Control of the US Department of the Treasury.

 

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Operating Expenses” means, in relation to a Vessel, the aggregate expenditure necessarily incurred by the Vessel Owner which is the owner of that Vessel in operating, insuring, maintaining, repairing and generally trading that Vessel (including crewing fees paid and management fees due under a Technical Management Agreement) and administrative expenses specific to that Vessel, but excluding any share of central costs incurred in operating and managing the fleet under the control of the Ultimate Parent.

 

Original Financial Statements” means:

 

(a) in respect of the Ultimate Parent

 

(i) its unaudited financial statements for the Financial Quarter ended 30 September 2020; and

 

(ii) its audited financial statements for the financial year ended 31 December 2019

 

(b) in respect of each Vessel Owner, its balance sheet and income statement as on 30 September 2020.

 

Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated or formed, as applicable, as at the date of this Agreement or, as the case may be, when they have acceded to this Agreement.

 

Parallel Debt” has the meaning given in Clause 29.28(a) (Parallel Debt).

 

Participating Member State” means any member state of the European Union that adopts or has adopted 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 this Agreement (together the “Parties”).

 

Permitted Dividend” means a dividend or distribution made by a Vessel Owner to the Borrower, by the Borrower to the Parent or by the Parent to the Ultimate Parent, in conformity with the Dividend / Loan Payment Criteria at the date of the declaration of such dividend or distribution, as certified to the Agent in writing by the Borrower or the Parent (as the case may be).

 

Permitted Holders” means any investment funds managed and/or advised by Kelso & Company, L.P., including KEP VI (Newco Marine), Ltd.

 

and KIA VIII (Newco Marine), Ltd.

 

Permitted Intercompany Debt” means any downstream loan from:

 

(a) the Ultimate Parent to the Parent;

 

(b) the Parent to the Borrower (solely using the proceeds received from the Ultimate Parent); and

 

(c) the Borrower to a Vessel Owner (solely using the proceeds received from the Parent),

 

provided that, in each case, such loan is (i) made under and on the terms contained in the Intra-Company Loan Agreement and (ii) subordinated and subject to the Transaction Security under and in accordance with the terms of the Subordination and Assignment Agreement.

 

Permitted Maritime Lien” means, in relation to a Vessel:

 

(a) unless a Default is continuing, any ship repairer’s or outfitter’s possessory lien in respect of that Vessel for an amount not exceeding the Major Casualty Amount or the equivalent in any other currency;

 

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(b) any lien on that Vessel for master’s, officer’s or crew’s wages outstanding in the ordinary course of its trading and in accordance with usual maritime practice;

 

(c) liens for salvage;

 

(d) liens for master’s disbursements incurred in the ordinary course of trading; or

 

(e) any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair, maintenance, insurance, dry-docking or chartering of that Vessel or due to the carrying out of any modifications on that Vessel, but not as a result of any default or omission by an Obligor and subject, in the case of liens for repair or maintenance, to paragraph (g) of Clause 22.13 (Restrictions on chartering etc.); provided that (i) in each case, no such lien is not more than 30 days outstanding and (ii) such liens are not, in aggregate, for an amount greater than the Major Casualty Amount,

 

provided that, in the case of a lien arising in connection with the scheduled dry-docking of a Vessel where there is sufficient cash standing to the credit of the relevant Dry Docking Reserve Account to cover the Dry Docking Costs to which such lien relates, any such lien arising in respect of such scheduled dry-docking shall constitute a Permitted Maritime Lien for the purposes of paragraphs (a) and (e) above.

 

Permitted Parent” means any direct or indirect parent of the Ultimate Parent formed not in connection with, or in contemplation of, a transaction that, assuming such parent was not formed, after giving effect thereto would constitute a Change of Control in respect of the Ultimate Parent.

 

Permitted Security” means any Security which is:

 

(a) granted by the Finance Documents;

 

(b) a Permitted Maritime Lien;

 

(c) approved in writing by the Agent (on behalf of all Lenders);

 

(d) any pledge or set-off right created pursuant to the general banking conditions of the Account Bank; or

 

(e) until it is released on a date falling not later one (1) Business Day after the Preposition Date, the Existing Security. “Permitted Transaction” means:

 

(a) any disposal required, Financial Indebtedness incurred, guarantee, indemnity or Security or Quasi-Security given, or other transaction arising, under the Finance Documents;

 

(b) transactions (other than (i) any sale, lease, license, transfer or other disposal and (ii) the granting or creation of any Security or the incurring or permitting to subsist of Financial Indebtedness) conducted in the ordinary course of trading on arm’s length terms;

 

(c) any charter of a Vessel expressly permitted under the terms of the Finance Documents; or

 

(d) the acquisition of the Vessel Owners by the Borrower on a date falling not later than one (1) Business Day after the Preposition Date pursuant to the terms of the Shares Purchase Agreement.

 

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Permitted Vessel Disposal” means a sale of a Vessel by a Vessel Owner provided always that:

 

(a) no Event of Default has occurred and is continuing or would occur as a result of the sale;

 

(b) the sale is on arm’s length terms for cash proceeds payable in full on completion and for no less than its Market Value as at the date of contracting for sale;

 

(c) the sale must be to a third party who is not a Related Party;

 

(d) (prior to the relevant Vessel Owner entering into a legally binding commitment in relation to such sale) the Agent has received evidence in form and substance satisfactory to it demonstrating that the net sale proceeds from the sale of that Vessel are sufficient to ensure that the prepayment requirements set out in Clause 7.3 (Mandatory prepayment) and Clause 7.9 (Restrictions) will be satisfied (including but not limited to the requirement to pay all accrued interest, fees, any prepayment fees and other amounts due and payable under the Finance Documents), provided that, if the net sale proceeds are not sufficient to ensure that the prepayment requirements set out in Clause 7.3 (Mandatory prepayment) and Clause 7.9 (Restrictions) will be satisfied, the Ultimate Parent shall be permitted to provide additional funds in order satisfy any such shortfall on the condition that such additional funds shall be (i) provided by the Ultimate Parent and down-streamed to an account of the Borrower by way of a Permitted Intercompany Loan and/or a Fresh Equity Injection and such account is blocked and pledged in favour of the Security Agent on or before the date that any legal commitment (whether by way of any memorandum of agreement or otherwise) is provided for the sale and purchase of the Vessel, and (ii) released to the Security Agent upon the sale of the Vessel for application towards the Borrower’s prepayment obligations under Clause 7.3 (Mandatory Prepayment);

 

(e) upon completion of the sale of that Vessel the net sale proceeds are immediately applied in prepayment in accordance with Clause 7.3 (Mandatory prepayment) and Clause 7.9 (Restrictions) and in payment of such other amounts due and payable under the Finance Documents; and

 

(f) upon completion of the sale of that Vessel, the VTL Coverage set out in Clause 25.1(a) (Additional security) shall be maintained for any remaining Vessels.

 

Pool A Vessels” means each of m.vs. “GSL Nicoletta”, “GSL Christen”, “Tasman”, “Dimitris Y” and “Ian H”.

 

Pool B Vessels” means each of m.vs. “GSL Keta”, “GSL Julie”, “Kumasi”, “Marie Delmas”, “CMA CGM La Tour”, “CMA CGM Manet”, “CMA CGM Alcazar”, “GSL Château d’If”, “CMA CGM Thalassa”, “CMA CGM Jamaica”, “CMA CGM Sambhar”, “CMA CGM America”, “CMA CGM Berlioz”, “MSC Qingdao, “GSL Ningbo” and “MSC Tianjin”.

 

Prepayment Fee” means, in respect of any amount of principal prepaid under Clause 7 (Prepayment and Cancellation):

 

(a) the Make Whole Amount if the prepayment occurs on or before the date falling 24 months after the Utilisation Date of the amount prepaid;

 

(b) 3% of the amount prepaid if the prepayment occurs following the date falling 24 months after the Utilisation Date of the amount prepaid but on or before the date falling 36 months after the Utilisation Date of the amount prepaid;

 

(c) 1.5% of the amount prepaid if the prepayment occurs following the date falling 36 months after the Utilisation Date of the amount prepaid but on or before the date falling 48 months after the Utilisation Date of the amount prepaid; and

 

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(d) nil if the prepayment occurs following the date falling 48 months after the Utilisation Date of the amount prepaid. “Preposition Date” has the meaning given in Clause 5.6 (Prepositioning of funds).

 

Quarter Date” means 31st March, 30th June, 30th September and 31st December of each calendar year. “Quasi-Security” has the meaning given to that term in Clause 21.8 (Negative pledge).

 

Quotation Day” means, in relation to any period for which an interest rate is to be determined, two (2) Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

 

Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Property.

 

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 as the rate at which the relevant Reference Bank could borrow funds in the Relevant Interbank Market in Dollars for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.

 

Reference Banks” means the principal London offices of Barclays Bank PLC, Lloyds Bank plc and HSBC Bank plc, or such other banks as may be appointed by the Agent in consultation with the Borrower.

 

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.

 

Related Party” means any member of the Group or any of their respective Affiliates (or any officer, employee or director of any member of the Group or of any of their respective Affiliates) or any person which directly or indirectly owns more than 5% of the shares of the Ultimate Parent either alone and/or with other persons with whom it is acting in concert.

 

Relevant Affiliate” of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For purposes of this definition, “control,” as used with respect to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

 

Relevant Document” means:

 

(a) any Finance Document;

 

(b) any Management Agreement;

 

(c) each Charter;

 

(d) any Intra-Company Loan Agreement; and

 

(e) any other document designated as such by the Agent and any Obligor.

 

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Relevant Interbank Market” means the London interbank market.

 

Relevant Jurisdiction” means, in relation to an Obligor:

 

(a) its Original Jurisdiction;

 

(b) any jurisdiction where any Charged Property owned by it is situated;

 

(c) any jurisdiction where it conducts its business; and

 

(d) any jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.

 

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 Subsidiary” means, with respect to any specified person:

 

(a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that person or one or more Subsidiaries of such person (or a combination thereof); and

 

(b) any other person of which at least a majority of the voting interest (without regard to the occurrence of any contingency) is at the time directly or indirectly owned by such person or one or more Subsidiaries of such person (or a combination thereof).

 

Repeating Representations” means each of the representations set out in Clause 18 (Representations and warranties), other than Clauses 18.8 (Insolvency),18.9 (No filing or stamp taxes), 18.13 (No proceedings pending or threatened), 18.14 (Taxes and VAT) and

 

18.31 (Vessel) and any representation in any other Finance Document which is expressed to be a “Repeating Representation” or is otherwise expressed to be repeated.

 

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.

 

Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

 

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Requisition Compensation” means, in relation to a Vessel:

 

(a) any and all compensation or other monies payable by reason of any act or event such as is referred to in paragraph (b) or (c) of the definition of “Total Loss” relating to that Vessel; and

 

(b) all claims, rights and remedies of the relevant Vessel Owner against the government or official authority or person or persons claiming to be or to represent a government or official authority or other entity in relation to (a) above.

 

Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers.

 

Restricted Person” means a person that is:

 

(a) listed on, or owned or controlled by a person listed on any Sanctions List;

 

(b) located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of a Sanctioned Country; or

 

(c) otherwise a target of Sanctions (being a person with whom a US person or other national under the jurisdiction of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities or against whom Sanctions are otherwise directed).

 

Sanctioned Country” means a country or territory that is, or whose government is, the subject of Sanctions broadly prohibiting dealings with such government, country or territory, including, without limitation, as at the date of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria.

 

Sanctions” means any economic or trade sanctions, laws, embargoes, regulations, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):

 

(a) imposed by law or regulation of the United Kingdom, the Council of the European Union or any of its Members States, the United Nations or its Security Council or the government of the United States of America, whether or not any Obligor or any Affiliate is legally bound to comply with the foregoing;

 

(b) the respective governmental institutions and agencies of any of the foregoing, including without limitation, OFAC, the United States Department of State, and the Office of Financial Sanctions Implementation Her Majesty’s Treasury (OFSI) (together, the “Sanctions Authorities”); or

 

(c) otherwise imposed by any law or regulation by which any Obligor or any Affiliate of any of them is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Obligor or any Affiliate of any of them.

 

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 OFSI, or any similar list issued or maintained or made public by any of the Sanctions Authorities that has the effect of prohibiting transactions with such persons.

 

Scrap Exposure” means, in relation to all Mortgaged Vessels, an amount in Dollars equal to (A) divided by (B), where:

 

(A) is the aggregate amount of the Loan outstanding; and

 

(B) is the aggregate lightweight tonnage of the Mortgaged Vessels.

 

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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 the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any 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 the 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;

 

(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;

 

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

 

(v) in the case of a Screen Rate for LIBOR, 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;

 

(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:

 

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(i) the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Majority Lenders and the Borrower) temporary; or

 

(ii) that Screen Rate is calculated in accordance with any such policy or arrangement for a period no less than the period opposite that Screen Rate in Schedule 13 (Screen Rate contingency periods); or

 

(d) 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 present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of each Obligor to any Finance Party under or in connection with any Finance Document.

 

Secured Notes Redemption Notice” has the meaning given in Clause 5.6(a) (Prepositioning of funds).

 

Secured Party” means each Finance Party, from time to time party to this Agreement, any Receiver or any Delegate (together the “Secured Parties”).

 

Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

 

Security Documents” means:

 

(a) any Mortgage;

 

(b) any Deed of Covenants;

 

(c) any General Assignment;

 

(d) any Accounts Security;

 

(e) any Charter Assignment;

 

(f) any Guarantee;

 

(g) any Manager’s Undertaking;

 

(h) any Share Charge;

 

(i) any Subordination and Assignment Agreement; and

 

(j) any other document as may be executed to guarantee and/or secure any amounts owing to the Finance Parties under any Finance Document.

 

Security Property” means:

 

(a) the Transaction Security expressed to be granted in favour of the Security Agent as trustee for the Secured Parties and all proceeds of that Transaction Security;

 

(b) all obligations expressed to be undertaken by an Obligor to pay amounts in respect of the Secured Liabilities to the Security Agent as trustee for the Finance Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by an Obligor or any other person in favour of the Security Agent as trustee for the Finance Parties;

 

(c) the Security Agent’s interest in any turnover trust created under the Finance Documents; and

 

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(d) any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as trustee on trust for the Secured Parties.

 

Senior Secured Notes” means the 9.875% First Priority Secured Notes due 2022 issued by the Ultimate Parent pursuant to the indenture dated 31 October 2017 (as amended or supplemented from time to time) between, amongst others, the Ultimate Parent and Citibank N.A., London Branch.

 

Share Charges” means together:

 

(a) the share security deed granted or to be granted (as the context so requires) by the Parent in favour of the Security Agent over all of the limited liability company interests in the Borrower; and

 

(b) each share security deed granted or to be granted (as the context so requires) by the Borrower in favour of the Security Agent over the entire share capital in or all of the limited liability company interests of (as applicable) each Vessel Owner,

 

in each case in the agreed form (and each a “Share Charge”).

 

“Shares Purchase Agreement” means any share purchase agreement between the Ultimate Parent and the Borrower in respect of the acquisition by the Borrower of each of the Vessel Owners.

 

Specified Time” means a time determined in accordance with Schedule 8 (Timetables).

 

Subordination and Assignment Agreement” means a subordination and assignment agreement entered into or to be entered into by the Transaction Obligors and the Security Agent in the agreed form.

 

Subsidiary” means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006.

 

Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

 

Technical Management Agreement” means, in relation to a Vessel, any technical management agreement entered into or to be entered into (as applicable) between the Vessel Owner owning that Vessel and an Approved Technical Manager in form and substance acceptable to the Agent (acting reasonably and without delay, and on the instructions of the Majority Lenders).

 

Termination Date” means:

 

(a) the date falling on the fifth (5th) anniversary of the Utilisation Date, provided that the Utilisation Date occurs on or before 15 January 2021; and

 

(b) 15 January 2026, if the Utilisation Date occurs after 15 January 2021.

 

Total Assets” means, at any financial testing date under this Agreement, the consolidated total assets of Ultimate Parent and its Subsidiaries at that date as determined in accordance with GAAP.

 

Total Commitments” means the aggregate of the Commitments.

 

Total Liabilities” means, at any financial testing date under this Agreement, the consolidated total liabilities of Ultimate Parent and its Subsidiaries at that date as determined in accordance with GAAP.

 

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Total Loss” means, in relation to a Vessel:

 

(a) any actual, constructive, compromised, agreed or arranged total loss of that Vessel;

 

(b) any expropriation, confiscation, requisition or acquisition of that Vessel (excluding requisition for hire) , whether or not for consideration (full, partial or nominal), 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; and

 

(c) any arrest, capture, seizure or detention of that Vessel (including any hijacking or theft) unless it is within sixty (60) days redelivered to the relevant Vessel Owner’s full control.

 

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

 

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

 

(b) in the case of a constructive, compromised, agreed or arranged total loss of that Vessel, the earliest of:

 

(i) the date on which a notice of abandonment is given to the insurers; and

 

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the relevant Vessel Owner with that Vessel’s insurers in which the insurers agree to treat that Vessel as a total loss.

 

Transaction Obligors” means the Borrower, the Vessel Owners, the Parent and the Ultimate Parent.

 

Transaction Security” means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.

 

Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrower.

 

Transfer Date” means, in relation to an assignment or a transfer, the later of:

 

(a) the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and

 

(b) the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.

 

UK Bail-In Legislation” means Part I 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 institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).

 

Ultimate Parent Group” means the Ultimate Parent and its Subsidiaries for the time being.

 

Ultimate Parent Merger Conditions” means, in relation to any proposed merger by the Ultimate Parent with any other person:

 

(a) the Ultimate Parent would, following such merger, remain the surviving entity of any such merger process;

 

(b) no Default has occurred at the relevant time or would be triggered as a result of such merger process;

 

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(c) such merger process would not have a Material Adverse Effect; and

 

(d) the Net Worth of the Ultimate Parent (as the surviving entity in such merger) would, following completion of such merger process, not be less than its Net Worth immediately prior to such merger process.

 

Unpaid Sum” means any sum due and payable but unpaid by an Obligor under any Finance Document.

 

US Tax Obligor” means:

 

(a) an Obligor which is resident for tax purposes in the United States of America; or

 

(b) an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.

 

Utilisation” means the utilisation of the Facility.

 

Utilisation Date” means the date of the Utilisation, being the date on which that Utilisation is to be made.

 

Utilisation Request” means a notice substantially in the form set out in Schedule 3 (Utilisation Request).

 

Valuation” means, in relation to a Vessel, a valuation prepared:

 

(a) as at a date not more than fifteen (15) days previously or, in the case of a valuation prepared for the purposes of Clause 4 (Conditions of Utilisation), not more than thirty (30) days previously;

 

(b) by an Approved Broker;

 

(c) with or without physical inspection of the Vessel (as the Agent may require);

 

(d) on the basis of an “as is, where is” 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.

 

VAT” means:

 

(a) any value added tax imposed by the Value Added Tax Act 1994;

 

(b) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

 

(c) any other tax of a similar nature, whether imposed in the United Kingdom or in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraphs (a) or (b) above, or imposed elsewhere.

 

Vessels” means each Vessel described in Schedule 9 (Details of Vessels) (each a “Vessel”) except to the extent it has been sold or has become a Total Loss or is no longer a Mortgaged Vessel.

 

Voting Stock” means, of any person as of any date, the Capital Stock of such person that is at the time entitled to vote in the election of the Board of Directors of such person.

 

VTL Coverage” has the meaning given to such term in Clause 25.1 (Additional security).

 

Write-down and Conversion Powers” means:

 

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(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; and

 

(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

 

(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

 

(a) Unless a contrary indication appears, a reference in this Agreement to:

 

(i) the “Account Bank”, the “Agent”, any “Finance Party”, any “Lender”, any “Obligor”, any “Party”, any “Secured Party”, the “Security Agent” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Finance Documents and, in the case of the Security Agent, any person for the time being appointed as Security Agent or Security Agents in accordance with the Finance Documents;

 

(ii) an “agency” of a state includes any local or other authority, self-regulating or other recognised body or agency, central or federal bank, department, government, legislature, minister, ministry, self-regulating organisation, official or public or statutory person (whether autonomous or not) or, or of the government of, that state or political sub-division in or of that state;

 

(iii) a document in “agreed form” is a document which is previously agreed in writing by or on behalf of any Obligor party to it and the Agent or, if not so agreed, is in the form and substance specified by the Agent (acting with the instructions of all Lenders);

 

(iv) approved” means approved in writing by the Agent, acting on the instructions of the Majority Lenders;

 

(v) assets” includes present and future properties, revenues and rights of every description;

 

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(vi) authorisation” means an authorisation, consent, approval, resolution, licence, exemption by a person by whom the same is required by law;

 

(vii) disposal” includes a sale, transfer, assignment, grant, lease, licence, declaration of trust or other disposal, whether voluntary or involuntary, and “dispose” will be construed accordingly;

 

(viii) the “equivalent” of an amount specified in a particular currency (“specific currency amount”) shall be construed as a reference to the amount of the other relevant currency which can be purchased with the specific currency amount in the London foreign exchange market at 11 a.m. on the date the calculation falls to be made for spot delivery, as conclusively determined by the Agent (with the relevant exchange rate of such purchase being the “Agent’s spot rate of exchange”);

 

(ix) excess risks” means, in relation to a Vessel, the proportion (if any) of claims for general average, salvage and salvage charges not recoverable under the hull and machinery insurances in respect of that Vessel in consequence of the value at which a Vessel is assessed for the purpose of such claims exceeding its insured value;

 

(x) a “Finance Document” or “Relevant Document” or any other agreement or instrument is a reference to that Finance Document or Relevant Document or other agreement or instrument as amended, novated, supplemented, extended or restated from time to time;

 

(xi) guarantee” means any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;

 

(xii) indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

 

(xiii) month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

 

(A) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;

 

(B) if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

 

(C) the above rules will only apply to the last month of any period;

 

(xiv) obligatory insurances” means all insurances effected, or which any Vessel Owner is required to effect, under Clause 23.2 (Maintenance of Obligatory Insurances) or any other provision of any Finance Document;

 

(xv) a “person” includes any individual, firm, company, corporation, limited liability company, government, state or agency of a state or any association, trust, joint venture, consortium or partnership or other entity (whether or not having separate legal personality);

 

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(xvi) a “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;

 

(xvii) protection and indemnity risks” means the usual risks covered by a protection and indemnity association that is a member of the International Group of P&I Clubs, 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 Time Clauses (Hulls)(1/11/02 or 1/11/03) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

 

(xviii) a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law and, in the case of any request or guideline, with which it would, in the normal course of its business comply) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

 

(xix) war risks” includes the risk of mines and all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83);

 

(xx) words importing the plural shall include the singular and vice versa and words importing a gender shall include every gender;

 

(xxi) a provision of law is a reference to that provision as amended or re-enacted; and

 

(xxii) a time of day is a reference to London time.

 

(b) Section, Clause and Schedule headings are for ease of reference only.

 

(c) Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

 

(d) A Default (other than an 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.

 

1.3       Third Party Rights

 

(a) Unless expressly provided to the contrary in a Finance Document a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement.

 

(b) Notwithstanding any term of any Finance Document the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

 

(c) Any Receiver, Delegate or any person described in Clause 1.1 (Definitions) may, subject to this Clause 1.3(c) and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it.

 

1.4       Anti-Boycott

 

(a) No provision of this Agreement shall require any Obligor to take or omit to take any action or to make any representation or agreement, to comply with, further or support, any embargo or boycott where such action or omission would:

 

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(i) be unenforceable by or in respect of that Obligor by reason of breach of any applicable Blocking Law; or

 

(ii) in the reasonable opinion of that Obligor, result in a reporting obligation or adverse tax consequences for that Obligor or its affiliates by reason of any applicable Blocking Law,

 

in which event the Obligor invoking this Clause 1.4 shall promptly notify the Agent of the specific action(s) it is not taking or the specific representation or agreement it is not making or entering into pursuant to this Clause (giving sufficient detail as to the legal reasoning), but failure to make such notification shall not affect the applicability of this Clause 1.4.

 

(b) The Obligors are not required to comply with any provision of this Agreement to the extent that such compliance is prohibited by or conflicts with a Blocking Law.

 

1.5       Conflict

 

In the event of conflict between the provisions of this Agreement and any other Finance Documents, unless a contrary intention appears the provision of this Agreement shall prevail.

 

2.         The Facility 2.1 The Facility

Subject to the terms of this Agreement, the Lenders shall make available to the Borrower a term loan facility in a single advance in an amount not exceeding the Maximum Loan Amount (as adjusted in accordance with the terms of this Agreement).

 

2.2       Finance Parties’ rights and obligations

 

(a) The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

 

(b) The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.

 

(c) A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

 

3. Purpose

 

3.1       Purpose

 

The Borrower shall apply all amounts borrowed by it under the Facility only for the purpose of refinancing the existing indebtedness incurred in relation to the Senior Secured Notes or payment of any fees, costs or expenses payable under this Agreement.

 

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3.2 Monitoring

 

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

 

4. Conditions of Utilisation

 

4.1       Initial conditions precedent

 

The Borrower may not deliver the Utilisation Request unless the Agent, or its duly authorised representative, has received all of the documents and other evidence listed in Schedule 2 Part I (Conditions Precedent to Utilisation Request) in form and substance satisfactory to the Agent. The Agent shall notify the Obligors and the Lenders promptly upon being so satisfied.

 

4.2       Utilisation conditions precedent

 

The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) in relation to the Utilisation if:

 

(a) in respect of the Utilisation Date (and prior to the Utilisation), the Agent has received all of the documentation and other evidence listed in Schedule 2Part II (Conditions Precedent to Utilisation) in form and substance satisfactory to the Agent;

 

(b) on the date of the Utilisation Request and on the proposed Utilisation Date:

 

(i) no Default is continuing or would result from the proposed Utilisation;

 

(ii) all representations and warranties under any of the Finance Documents made or to be made by an Obligor are true and accurate as at that date with reference to the facts and circumstances then existing;

 

(iii) the provisions of Clause 10.3 (Alternative basis of interest or funding) do not apply; and

 

(iv) the relevant Vessel has not been the subject of a sale (or binding commitment to sell) by the relevant Vessel Owner or Total Loss; and

 

(c) the Utilisation requested is not for more than the Maximum Loan Amount.

 

4.3       Waiver of Conditions Precedent

 

If the Agent, acting upon the instructions of all Lenders (which authorisation the relevant Lenders shall have full power to withhold), permits the Utilisation of the Facility before certain of the conditions referred to in Clause 4.2(a) and/or Clause 4.2(b) are satisfied, the Borrower shall ensure that such conditions are satisfied with five (5) Business Days after the Utilisation Date (or such longer period as the Agent may, with the authorisation of all Lenders, specify) and any failure of the Borrower to do so within that period shall constitute an immediate Event of Default.

 

4.4       Conditions subsequent

 

(a) The Borrower undertakes to deliver or to cause to be delivered to the Agent within thirty (30) days after the Utilisation Date the relevant additional documents and other evidence listed in paragraphs (1) to (7) of Schedule 2Part III (Conditions Subsequent).

 

(b) The Borrower undertakes to deliver or to cause to be delivered to the Agent no later than the earlier to occur of (i) the date of redemption of the Senior Secured Notes and (ii) the date falling one (1) Business Day after the Preposition Date, the relevant additional documents and other evidence listed in paragraphs (8) to (16) of Schedule 2Part III (Conditions Subsequent).

 

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5. Utilisation

 

5.1       Delivery of Utilisation Request

 

The Borrower may utilise the Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time (or such shorter period as the Agent may agree in its sole discretion, acting on the instructions of the Lenders).

 

5.2       Completion of Utilisation Request

 

The Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

 

(a) the proposed Utilisation Date is a Business Day within the Availability Period;

 

(b) the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);

 

(c) it specifies the account and bank to which the proceeds of that Loan are to be credited.

 

5.3       Currency and amount

 

(a) The currency specified in the Utilisation Request must be Dollars.

 

(b) The amount of the proposed Utilisation must be an amount which is not more than the Maximum Loan Amount.

 

(c) There shall be no more than one (1) Utilisation in total.

 

5.4       Lenders’ participation

 

(a) If the conditions set out in this Agreement have been met, each Lender shall make its participation in the Loan available by the Utilisation Date through its Facility Office.

 

(b) The amount of each Lender’s participation in the Utilisation will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Utilisation.

 

(c) The Agent shall notify each Lender of the amount of the Utilisation and the amount of its participation in the Utilisation by the Specified Time.

 

5.5       Disbursement

 

The Agent shall, on the Utilisation Date, pay to, or for the account of, the Borrower or the relevant Vessel Owner (as the case may be) the amount which the Agent receives from the Lenders in respect of the Utilisation, such payment to be made in like funds as the Agent so receives from the Lenders to the account as specified in the Utilisation Request.

 

5.6       Prepositioning of funds

 

If, in respect of the Utilisation, the Agent, at the request of the Borrower and on terms acceptable to the Agent (acting on the instructions all Lenders, which approval they shall have full power to withhold), prepositions (either from an account of the Agent or an Affiliate of the Agent) any funds with Citibank, N.A., London Branch (“Citibank”) as directed by the Borrower in the Utilisation Request (the date that Citibank confirms receipt of such prepositioned funds, the “Preposition Date”):

 

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(a) the Borrower shall procure that the redemption notice provided by the Ultimate Parent in respect of the Senior Secured Notes (the

 

Secured Notes Redemption Notice”) is in the agreed form, including a condition that the prepositioned funds shall not be released to Citibank without the Ultimate Parent’s confirmation of the satisfaction of the conditions precedent to Utilisation (“Redemption Condition”);

 

(b) the Ultimate Parent undertakes and agrees not to:

 

(i) confirm satisfaction of the Redemption Condition;

 

(ii) rescind the Secured Notes Redemption Notice;

 

(iii) agree to a change in the redemption date from that stated in the Secured Notes Redemption Notice (the “Senior Notes Redemption Date”),

 

in each case without the prior written authorisation of the Agent (which authorisation may be issued by email);

 

(c) the Ultimate Parent undertakes and agrees to confirm satisfaction of the Redemption Condition immediately upon instruction by the Agent to do so (which instruction may be issued by email);

 

(d) the Agent will give the instruction referred to in paragraph (c) above upon the confirmation of receipt by Citibank of the redemption amount set out in the Secured Notes Redemption Notice (the “Redemption Amount”), provided such confirmation is given by Citibank either:

 

(i) at or any time or date prior to 10am (New York time) on the Secured Notes Redemption Date; or

 

(ii) after 10am (New York time) on the Secured Notes Redemption Date or on the Business Day following the Secured Notes Redemption Date, provided in either case that Citibank further confirms that it will apply the Redemption Amount to redeem the Senior Secured Notes on that date;

 

(e) each Lender agrees to fund its participation in the Utilisation on a day not more than two (2) Business Days after the Agent confirms receipt of:

 

(i) a validly served Utilisation Request; and

 

(ii) all of the documentation and other evidence listed in Schedule 2Part II (Conditions Precedent to Utilisation) in form and substance satisfactory to the Agent, other than the documentation and evidence which the Borrower demonstrates to the satisfaction of the Agent that it will not be able to obtain until the Utilisation Date (such other documentation and evidence that remains outstanding, the “Closing CPs”);

 

(f) the Borrower shall, without duplication, indemnify each Finance Party against any costs, loss or liability it may incur in connection with such arrangement;

 

(g) the date on which the Lenders fund the Utilisation or any part of the Utilisation for the purposes of transfer to Citibank constitutes the Utilisation Date and the Borrower agrees to pay interest on the amount of the funds so prepositioned at the rate described in Clause 8.1 (Calculation of interest) on the basis of successive interest periods of one day and so that interest shall be paid together with the first payment of interest on the Loan after the Utilisation Date in respect of it or, if the Utilisation Date does not occur, within three

 

(3) Business Days of demand by the Agent; and

 

(h) if all the conditions stipulated in Schedule 2Part II have not been satisfied by 5.00 p.m. on the first Business Day following the Utilisation Date requested in the Utilisation Request:

 

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(i) the Borrower shall procure that the proceeds of the Utilisation are returned to the Agent in full (who in turn shall return them to the Lenders);

 

(ii) the Borrower shall pay all accrued interest and fees in respect of such returned proceeds in accordance with paragraph (g) above;

 

(iii) the Borrower may submit a further Utilisation Request for re-advance of the proposed Utilisation during the Availability Period if:

 

(A) the Borrower has not previously submitted a reissued Utilisation Request for re-advance of the Loan pursuant to this Clause 5.6 (Prepositioning of funds); and

 

(B) the Borrower procures that the Agent is provided with such confirmations of the continuing effectiveness of the terms of the Finance Documents as the Agent may require.

 

6. Repayment

 

6.1       Repayment Instalments

 

(a) The Loan shall be repaid by the Borrower in twenty (20) equal consecutive quarterly instalments of US$6,560,000 (to be applied pro rata against each Notional Vessel Tranche) commencing on 31 March 2021 and thereafter on each subsequent Quarter Date, provided that the last repayment instalment shall not overrun the Termination Date and such amounts may be adjusted in accordance with Clause 6.4 (Adjustment of Repayment Instalments).

 

(b) The balance of the Loan shall be repaid in full as a balloon repayment on the Termination Date, together with all other amounts then due and outstanding under the Finance Documents (the “Balloon Instalment”).

 

6.2       No Reborrowing

 

Amounts of the Loan which are repaid or prepaid shall not be available for reborrowing other than in accordance with Clause 5.6(h).

 

6.3       Release of Security

 

If no Event of Default is continuing, simultaneously with completion of a Permitted Vessel Disposal by a Vessel Owner (in accordance with the terms and conditions of this Agreement) and prepayment in full of the relevant Notional Vessel Tranche and all other amounts pre- payable or payable under the Finance Documents in connection with such Permitted Vessel Disposal, the Security Agent shall, at the request and cost of the Borrower, release, without recourse or warranty, each of the following Security Documents:

 

(a) the Mortgage in respect of the relevant Vessel;

 

(b) if applicable, the Deed of Covenants in respect of the relevant Vessel;

 

(c) the General Assignment in respect of the relevant Vessel;

 

(d) any Charter Assignment in respect of the relevant Vessel; and

 

(e) each Manager’s Undertaking in respect of the relevant Vessel.

 

6.4       Adjustment of Repayment Instalments

 

If the Total Commitments are not utilised in full, the amount of each Repayment Instalment for the Loan shall be reduced pro rata by the unutilised amount.

 

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7.         Prepayment and cancellation 7.1 Illegality

If, in any applicable jurisdiction, it becomes unlawful for any Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Loan or any part of the Loan or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:

 

(a) that Lender shall promptly notify the Agent upon becoming aware of that event;

 

(b) upon the Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and

 

(c) the Borrower shall repay that Lender’s participation in the Loan on the last day of the Interest Period for the Loan occurring after the Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).

 

7.2       Change of Control

 

(a) If a Change of Control occurs, then:

 

(i) the Borrower shall promptly notify the Agent upon becoming aware of that event;

 

(ii) no Lender shall be obliged to fund the Utilisation; and

 

(iii) the Loan, together with accrued interest, and all other amounts accrued under the Finance Documents shall become immediately due and payable, whereupon the Total Commitments will be cancelled and all such outstanding amounts will become immediately due and payable

 

(b) For the avoidance of doubt, no merger by the Ultimate Parent which satisfies the Ultimate Parent Merger Conditions shall constitute a Change of Control for the purposes of this Clause 7.2.

 

7.3       Mandatory prepayment

 

(a) If a Vessel is sold or becomes a Total Loss, the Borrower shall be obliged to (and without prejudice to the restrictions on sale of a Vessel and/or insurance covenants and requirements as otherwise provided in the Finance Documents) prepay, as a minimum amount, the aggregate of:

 

(i) the outstanding balance of the Notional Vessel Tranche relating to the subject Vessel; and

 

(ii) such amount of the balance of the Loan that would be required to be prepaid in order to ensure that:

 

(A) the LTV Ratio immediately after the sale or Total Loss (and, for the purposes of such calculation, the Vessel which is sold or which becomes a Total Loss shall be excluded but the aggregate value of any additional security provided pursuant to Clause 25 (Security Shortfall) shall be included to the extent that such additional security has not been released pursuant to Clause 25.2 (Release of additional security)) is no greater than the LTV Ratio immediately prior to such sale or Total Loss (including the Vessel which is sold or which becomes a Total Loss); and

 

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(B) the Scrap Exposure immediately after the sale or Total Loss (and, for the purposes of such calculation, the Vessel which is sold or which becomes a Total Loss shall be excluded) is no greater than the Scrap Exposure immediately prior to such sale or Total Loss (including the Vessel which is sold or which becomes a Total Loss).

 

(b) If a Vessel is sold or becomes a Total Loss, the required amount in sub-clause (a) shall be prepaid on the date on which the sale is completed by delivery of that Vessel to the buyer or, if that Vessel becomes a Total Loss, on the earlier of the date falling one hundred and thirty (130) days after the Total Loss Date and two (2) Business Days after the date of receipt by the Agent of the proceeds of insurance relating to such Total Loss.

 

(c) Any prepayments of principal under this Clause 7.3 shall be applied firstly in repayment of the then principal outstandings under the Notional Vessel Tranche relating to that Vessel and any balance to be applied against the other Notional Vessel Tranches pro rata.

 

(d) Any remaining proceeds of the sale or Total Loss of a Vessel after the mandatory prepayments in paragraph (a) above have been made shall be released to the Borrower for use in a manner which is not prohibited by the Finance Documents, provided that if an Event of Default has occurred and is continuing such remaining proceeds shall be applied in full in prepayment of the Loan in accordance with paragraph (c) above.

 

(e) If there is any loss in respect of a Vessel or a claim under the Insurances in respect of a Vessel exceeding the Major Casualty Amount which in each case is not a Total Loss, the Borrower irrevocably authorises, and shall procure that all such things are done to enable the Agent to apply any proceeds received from such loss or claim as a prepayment against the relevant Notional Vessel Tranche relating to that Vessel unless such proceeds are applied within ninety (90) days, or such longer period as the Borrower can demonstrate to the satisfaction of the Agent is necessary to effect the repairs to the Vessel, of being received towards repairing the relevant Vessel in accordance with the relevant Security Documents (or otherwise are used to reimburse the Borrower for amounts made for such repair) and during which time the Borrower, the Parent, the Ultimate Parent and the Vessel Owners shall procure that such funds are immediately credited to and remain in the Earnings Account on and from their receipt.

 

7.4       Automatic cancellation

 

The unutilised Commitment (if any) of each Lender shall be automatically cancelled at the earlier of (i) close of business on the date on which the Loan is made available and (ii) at the end of the Availability Period.

 

7.5       Voluntary cancellation

 

(a) The Borrower may, upon giving to the Agent not less than five (5) Business Days’ prior notice, cancel the whole or any part of the Available Facility (but, if in part, being an amount that reduces the Available Facility by a minimum amount of US$500,000 and thereafter in increments of US$500,000 (or the full remaining Available Facility).

 

(b) Any cancellation under this Clause 7.5 shall reduce the Available Commitments of the Lenders rateably.

 

7.6       Voluntary prepayment

 

(a) The Borrower may, upon giving to the Agent not less than five (5) Business Days’ prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of US$500,000 and thereafter in increments of US$500,000).

 

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(b) The Loan may only be prepaid pursuant to this Clause 7.6 after the last day of the Availability Period (or, if earlier, the day on which the Available Facility is zero).

 

(c) Any partial prepayments under this Clause 7.6 shall be applied against the Loan pro rata as between each Notional Vessel Tranche.

 

7.7       Right of replacement or repayment and cancellation in relation to a single Lender

 

(a) If:

 

(i) any sum payable to any Lender by an Obligor is required to be increased under paragraph (b) of Clause 12.2 (Tax gross-up); or

 

(ii) any Lender claims indemnification from the Company under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs),

 

the Borrower may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Agent notice of cancellation of the Commitment(s) of that Lender and its intention to procure the repayment of that Lender’s participation in the Loan or give the Agent notice of its intention to replace that Lender in accordance with paragraph (d) below.

 

(b) On receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment(s) of that Lender shall immediately be reduced to zero.

 

(c) On the last day of each Interest Period which ends after the Borrower has given notice of cancellation under paragraph (a) above (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay that Lender’s participation in the Loan.

 

(d) If:

 

(i) any of the circumstances set out in paragraph (a) above apply to a Lender; or

 

(ii) an Obligor becomes obliged to pay any amount in accordance with Clause 7.1 (Illegality) to any Lender,

 

the Borrower may, on five (5) Business Days’ prior notice to the Agent and that Lender, replace that Lender by requiring that Lender to (and, to the extent permitted by law, that Lender shall) transfer pursuant to Clause 27 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement to an Eligible Institution which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 27 (Changes to the Lenders) for a purchase price in cash payable at the time of the transfer in an amount equal to the outstanding principal amount of such Lender’s participation in the outstanding Loan and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.

 

(e) The replacement of a Lender pursuant to paragraph (d) above shall be subject to the following conditions:

 

(i) the Borrower shall have no right to replace the Agent (other than in accordance with Clause 29.12 (Resignation of the Agent and the Security Agent);

 

(ii) neither the Agent nor any Lender shall have any obligation to find a replacement Lender;

 

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(iii) in no event shall the Lender replaced under paragraph (d) above be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and

 

(iv) the Lender shall only be obliged to transfer its rights and obligations pursuant to paragraph (d) above once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer.

 

(f) A Lender shall perform the checks described in paragraph 7.7(e)(iv) above as soon as reasonably practicable following delivery of a notice referred to in paragraph (d) above and shall notify the Agent and the Borrower when it is satisfied that it has complied with those checks.

 

7.8       Right of cancellation in relation to a Defaulting Lender

 

(a) If any Lender becomes a Defaulting Lender, the Borrower may, at any time whilst the Lender continues to be a Defaulting Lender, give the Agent five (5) Business Days’ notice of cancellation of each Available Commitment of that Lender.

 

(b) On the notice referred to in paragraph (a) above becoming effective, each Available Commitment of the Defaulting Lender shall immediately be reduced to zero.

 

(c) The Agent shall as soon as practicable after receipt of a notice referred to in paragraph (a) above, notify all the Lenders.

 

7.9       Restrictions

 

(a) Any notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment and cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment. The Agent must notify the Lenders promptly upon receipt of any such notice.

 

(b) Any repayment or prepayment under this Agreement shall be made together with accrued interest on the amount repaid or prepaid, the Prepayment Fee and any applicable Break Costs, provided that no Prepayment Fee shall be payable only in respect of the following:

 

(i) any prepayment pursuant to paragraph 25.1(b)(ii) of Clause 25.1 (Additional security);

 

(ii) any prepayment pursuant to Clause 7.3 (Mandatory prepayment) as a result of a Total Loss of a Vessel;

 

(iii) any prepayment pursuant to Clause 7.7 (Right of replacement or repayment and cancellation in relation to a single Lender);

 

(iv) any prepayment pursuant to Clause 7.3 (Mandatory prepayment) as a result of the sale of any Vessel which is a handymax (being named m.vs. “Keta”, “Julie”, “Kumasi”, “Marie Delmas”, “La Tour” and “Manet” at the date of this Agreement); or

 

(v) any prepayment pursuant to Clause 5.6(h) (Prepositioning of funds).

 

(c) The Borrower shall not repay or prepay all or any part of the Loan or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

 

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(d) No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

 

(e) If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to either the Borrower or the Lenders, as appropriate.

 

(f) If all or part of the Loan is repaid or prepaid, an amount of the Commitments (equal to the amount of the Loan which is repaid or prepaid) will be deemed to be cancelled on the date of repayment or prepayment. Any cancellation under this paragraph shall reduce the Commitments of the Lenders rateably.

 

(g) Any prepayment of the Loan shall be applied pro rata to each Lender’s participation in the Loan and each Notional Vessel Tranche.

 

8. Interest

 

8.1       Calculation of interest

 

The rate of interest on the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

 

(a) Margin; and

 

(b) LIBOR.

 

8.2       Payment of interest

 

The Borrower shall pay accrued interest on the Loan on the last day of each Interest Period.

 

8.3       Default interest

 

If an Obligor fails to pay any amount payable by it under a Finance Document on its due date (after the expiration of any applicable grace period under Clause 26.1 (Non-payment)), interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is 2% per annum higher than the rate which would have been payable if the overdue amount had, during the period of non- payment, constituted the Utilisation in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 8.3 shall be immediately payable by the Obligor on demand by the Agent. Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

 

8.4       Notification of rates of interest

 

The Agent shall promptly notify the Lenders and the Borrower of the determination of a rate of interest under this Agreement.

 

9. Interest Periods

 

9.1       Length of Interest Periods

 

(a) Each Interest Period for the Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period and end on the next Quarter Date.

 

(b) If an Interest Period would otherwise overrun the Termination Date, it will be shortened so that it ends on the Termination Date.

 

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9.2 Non-Business Days

 

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

 

10.       Changes to the calculation of interest 10.1 Absence of quotations

Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

 

10.2       Market disruption

 

(a) If a Market Disruption Event occurs in relation to the Loan for any Interest Period, then the rate of interest on each Lender’s share of the Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

 

(i) the Margin; and

 

(ii) the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the Loan from whatever source it may reasonably select.

 

(b) In this Agreement “Market Disruption Event” means:

 

(i) at or about noon on the Quotation Day for the relevant Interest Period, the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for Dollars for the relevant Interest Period; or

 

(ii) before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Loan exceed fifty per cent. (50%) of the Loan) that the cost to it or them of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR.

 

10.3       Alternative basis of interest or funding

 

(a) If a Market Disruption Event occurs and the Agent so requires or the Borrower so requires, the Agent and the Borrower shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest.

 

(b) Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.

 

10.4       Break Costs

 

(a) The Borrower shall, within three (3) Business Days of demand by a Finance Party (or at the time of prepayment of the relevant amount under Clause 7 (Prepayment and cancellation), pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrower on a day other than the last day of an Interest Period for the Loan or Unpaid Sum.

 

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(b) Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue, provided that neither the Original Lenders nor any other Lenders from time to time managed by Hayfin Capital Management LLP shall be entitled to claim Break Costs.

 

11. Fees

 

11.1       Agency Fee

 

The Borrower shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in the Fee Letter.

 

11.2       Upfront fee

 

The Borrower shall pay to the Agent (for the account of the Lenders) an upfront fee in the amount and at the times agreed in the Fee Letter.

 

11.3       Commitment fee

 

(a) The Borrower shall pay to the Agent (for the account of the Lenders) a commitment fee computed at the rate of forty per cent. (40%) of the Margin per annum on the aggregate amount of each Lender’s Available Commitments in respect of the Facility from the date of this Agreement until the earlier of (i) the Utilisation Date if all Commitments are fully drawn on that date or (ii) the final day of the Availability Period (“Commitment Fee”).

 

(b) The accrued Commitment Fee is payable on the Utilisation Date or, if any amount of the Facility is unutilised as of the expiry of the Availability Period, the Commitment Fee in respect of the Available Commitment shall be paid on the earlier of:

 

(i) the last day of the Availability Period; and

 

(ii) the date on which the cancellation of the Available Commitment is effective.

 

(c) The Agent shall be entitled to deduct any accrued Commitment Fee which has become due and payable and which remains unpaid from the proceeds of the Utilisations and apply it in payment of such fees.

 

(d) No Commitment Fee shall accrue for the account of a Lender on any Available Commitment of that Lender in respect of any day on which that Lender is a Defaulting Lender.

 

12. Tax gross up and indemnities

 

12.1       Definitions

 

In this Agreement:

 

(a) Protected Party” means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

 

(b) Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

 

(c) Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.

 

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(d) Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).

 

(e) Unless a contrary indication appears, in this Clause 12 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination.

 

12.2       Tax gross-up

 

Each Obligor shall (and shall procure that each other Obligor which is a Subsidiary of that Obligor shall) make all payments to be made by it under any Finance Documents without any Tax Deduction, unless a Tax Deduction is required by law, subject as follows:

 

(a) an Obligor shall promptly upon becoming aware that it or any other Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Borrower and any such other Obligor;

 

(b) if a Tax Deduction is required by law to be made by the Borrower or any other Obligor, the amount of the payment due from the Borrower or that other Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required;

 

(c) if any Obligor is required to make a Tax Deduction, that Obligor shall (and shall procure that such other Obligor which is a Subsidiary of that Obligor shall) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law;

 

(d) within thirty (30) days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall (and shall procure that such other Obligor which is a Subsidiary of that Obligor shall) deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

 

12.3       Tax indemnity

 

(a) The Borrower shall (within three (3) Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

 

(b) Clause 12.3(a) above shall not apply:

 

(i) with respect to any Tax assessed on a Finance Party:

 

(A) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

 

(B) under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction, if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

 

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(ii) to the extent a loss, liability or cost:

 

(A) is compensated for by an increased payment under Clause 12.2 (Tax gross-up); or

 

(B) relates to a FATCA Deduction required to be made by a Party.

 

(c) A Protected Party making, or intending to make a claim under Clause 12.3(a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrower.

 

(d) A Protected Party shall, on receiving a payment from the Borrower under this Clause 12.3, notify the Agent.

 

12.4       Tax Credit

 

If the Borrower or any other Obligor makes a Tax Payment and the relevant Finance Party determines that:

 

(a) a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and

 

(b) that Finance Party has obtained and utilised that Tax Credit, that Finance Party shall pay an amount to the Borrower or to that other Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Borrower or that other Obligor.

 

12.5       Stamp taxes

 

The Borrower shall pay and, within three (3) Business Days of demand, indemnify each Finance Party against any cost, loss or liability which that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

 

12.6       VAT

 

(a) All amounts expressed to be payable under a Finance Document by any Party or any Obligor to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 12.6(b) below, if VAT is or becomes chargeable on any supply made by any Finance Party to any Party or any Obligor under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party or Obligor must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to the Borrower).

 

(b) If VAT is or becomes chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the

 

Recipient”) under a Finance Document, and any Party other than the Recipient (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):

 

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(i) (where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this Clause 12.6(b)(i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and

 

(ii) (where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.

 

(c) Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

 

(d) Any reference in this Clause 12.6 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term “representative member” to have the same meaning as in the Value Added Tax Act 1994).

 

(e) In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party’s VAT registration and such other information as is reasonably requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply.

 

12.7       FATCA information

 

(a) Subject to Clause 12.7(c) below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:

 

(i) confirm to that other Party whether it is:

 

(A) a FATCA Exempt Party; or

 

(B) not a FATCA Exempt Party;

 

(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 Clause 12.7(a)(i)(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.

 

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(c) Clause 12.7(a) above shall not oblige any Finance Party to do anything, and Clause 12.7(a)(iii) 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;

 

(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 Clause 12.7(a)(i) or 12.7(a)(ii) above (including, for the avoidance of doubt, where Clause 12.7(c) 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 an Obligor is a US Tax Obligor or the Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lender shall, within ten (10) Business Days of:

 

(i) where an Obligor is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;

 

(ii) where an Obligor is a US Tax Obligor on a Transfer Date and the relevant Lender is a New Lender or an Increase Lender, the relevant Transfer Date; or

 

(iii) where an Obligor is not a US Tax Obligor, the date of a request from the Agent,

 

supply to the Agent:

 

(A) a withholding certificate on Form W-8 or Form W-9 or any other relevant form; or

 

(B) any withholding statement or other document, authorisation or waiver as the Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation.

 

(f) The Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to Clause 12.7(e) above to the Borrower.

 

(g) If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Agent by a Lender pursuant to Clause 12.7(e) is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Agent). The Agent shall provide any such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrower.

 

The Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to Clause 12.7(e) or 12.7(g) without further verification. The Agent shall not be liable for any action taken by it under or in connection with Clause 12.7(e), 12.7(f) or 12.7(g).

 

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12.8 FATCA Deduction

 

(a) Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

 

(b) Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify the Borrower and the Agent and the Agent shall notify the other Finance Parties.

 

13. Increased costs

 

13.1       Increased costs

 

(a) Subject to Clause 13.3 (Exceptions) the Borrower shall, within three (3) Business Days of a demand by the Agent, pay to the Agent for the account of a Finance Party the amount of any Increased Costs incurred by that Finance 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 Finance 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,

 

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.

 

(c) In this Agreement “Basel III” means:

 

(i) 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;

 

(ii) 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

 

(iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.

 

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(d) In this Agreement, “CRD IV” means EU CRD IV and UK CRD IV.

 

(e) In this Agreement, “EU CRD IV” means:

 

(i) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012; and

 

(ii) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.

 

(f) In this Agreement “UK CRD IV” means:

 

(i) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 as it forms part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the “Withdrawal Act”);

 

(ii) the law of the United Kingdom or any part of it, which immediately before IP completion day (as defined in the European Union (Withdrawal Agreement) Act 2020) implemented Directive 2013/36/EU of the European Parliament and of the Council of

 

26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC and its implementing measures; and

 

(iii) direct EU legislation (as defined in the Withdrawal Act), which immediately before IP completion day (as defined in the European Union (Withdrawal Agreement) Act 2020) implemented EU CRD IV as it forms part of domestic law of the United Kingdom by virtue of the Withdrawal Act.

 

13.2       Increased cost claims

 

(a) A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower.

 

(b) Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.

 

13.3       Exceptions

 

(a) Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:

 

(i) attributable to a Tax Deduction required by law to be made by an Obligor;

 

(ii) attributable to a FATCA Deduction required to be made by a Party;

 

(iii) compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in Clause 12.3 (Tax indemnity) applied);

 

(iv) attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation;

 

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(v) attributable to 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 (but excluding any amendment arising out of Basel III) (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates); or

 

(vi) attributable to a bank levy or similar charge.

 

(b) In this Clause 13.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 12.1 (Definitions).

 

14.       Other indemnities 14.1 Currency indemnity

 

(a) If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

 

(i) making or filing a claim or proof against that Obligor; or

 

(ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

 

that Obligor shall as an independent obligation, within three (3) Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between

 

(A)  the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

 

(b) Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

 

14.2       Other indemnities

 

(a) Each of the Borrower, the Parent, the Ultimate Parent and each Vessel Owner shall jointly and severally, within three (3) Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:

 

(i) the occurrence of any Event of Default;

 

(ii) a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 32 (Sharing among the Finance Parties);

 

(iii) funding, or making arrangements to fund, its participation in the Loan requested by the Borrower in the Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); or

 

(iv) the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by a Borrower.

 

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(b) Each of the Borrower, the Parent, the Ultimate Parent and each Vessel Owner shall jointly and severally, on demand, indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate (each such person for the purposes of this Clause 14.2 (an “Indemnified Person”), against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Security constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, any Vessel unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.

 

(c) Without limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:

 

(i) arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions; or

 

(ii) in connection with any Environmental Claim.

 

(d) Any Affiliate or any officer or employee of a Finance Party or of any of its Affiliates may rely on this Clause subject to Clause 1.3 (Third Party Rights) and the provisions of the Third Parties Act.

 

14.3       Indemnity to the Agent

 

The Borrower, the Parent, the Ultimate Parent and each Vessel Owner jointly and severally shall promptly indemnify the Agent against:

 

(a) any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:

 

(i) investigating any event which it reasonably believes is a Default; or

 

(ii) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or

 

(iii) instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and

 

(b) any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent in acting as Agent under the Finance Documents.

 

14.4       Indemnity to the Security Agent

 

(a) The Borrower, the Parent, the Ultimate Parent and each Vessel Owner jointly and severally shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

 

(i) any failure by an Obligor to comply with its obligations under Clause 16 (Costs and expenses);

 

(ii) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

 

(iii) the taking, holding, protection or enforcement of the Transaction Security;

 

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(iv) the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;

 

(v) any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents;

 

(vi) instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; or

 

(vii) acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property (otherwise, in each case, than by reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct).

 

(b) The Security Agent and every Receiver and Delegate may, in priority to any payment to the Finance Parties, indemnify itself out of the Security Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.4(b) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it.

 

14.5       Indemnity Survival

 

The indemnities in this Agreement shall survive repayment of the Loan.

 

14.6       Priority of Indemnity

 

The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Security Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in Clause 14.4 (Indemnity to the Security Agent) and shall have a lien on the Transaction Security and the proceeds of enforcement of the Transaction Security for all moneys payable to it.

 

15.       Mitigation by the Lenders 15.1 Mitigation

(a) Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax gross up and indemnities) or Clause 13 (Increased costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

 

(b) Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.

 

15.2       Limitation of liability

 

(a) The Transaction Obligors shall, within three (3) Business Days of demand, indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation).

 

(b) A Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.

 

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16.       Costs and expenses 16.1 Transaction expenses

The Borrower, the Parent, the Ultimate Parent and each Vessel Owner shall jointly and severally, within five (5) Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including but not limited to legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, any Receiver or Delegate) in connection with the negotiation, preparation, printing, execution, syndication and perfection of:

 

(a) this Agreement and any other documents referred to in this Agreement or in a Security Document;

 

(b) the Transaction Security;

 

(c) any other Finance Documents executed after the date of this Agreement;

 

(d) any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for or obtain under any Finance Document (including, for the avoidance of doubt, any Valuation or survey and inspection costs except where a Finance Party is expressly required under the terms of the Finance Documents to pay any such amount without reimbursement from any Obligor); and

 

(e) any discharge, release or reassignment of any of the Finance Documents.

 

16.2       Amendment costs

 

If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 33.10 (Change of currency), the Borrower shall, within five (5) Business Days of demand, reimburse each Finance Party for the amount of all costs and expenses (including legal fees) reasonably incurred by that Finance Party (and, in the case of the Security Agent, any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.

 

16.3       Enforcement and preservation costs

 

The Borrower shall, within five (5) Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the Transaction Security and with any proceedings instituted by or against that Finance Party as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights.

 

16.4       Other costs

 

The Borrower shall, within five (5) Business Days of demand, pay to each Finance Party and each other Secured Party the amount of all sums which that Finance Party or other Secured Party may pay or become actually liable for on account of the Borrower or a Vessel Owner in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which that Finance Party or other Secured Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by that Finance Party or other Secured Party in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which that Finance Party or other Secured Party may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.

 

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17.       Guarantee and indemnity 17.1 Guarantee and indemnity

Each of the Guarantors irrevocably and unconditionally:

 

(a) guarantees to each Finance Party punctual performance by each other Obligor of all that Obligor’s obligations under the Finance Documents;

 

(b) undertakes with each Finance Party that whenever another Obligor does not pay any amount when due under or in connection with any Finance Document, the Guarantors shall immediately on demand pay that amount as if they were the principal obligor; and

 

(c) agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of an Obligor (other than the Guarantors) not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by the Guarantors under this indemnity will not exceed the amount it would have had to pay under this Clause 17 if the amount claimed had been recoverable on the basis of a guarantee.

 

17.2       Continuing guarantee

 

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

 

17.3       Reinstatement

 

If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Guarantors under this Clause 17 will continue or be reinstated as if the discharge, release or arrangement had not occurred.

 

17.4       Waiver of defences

 

The obligations of the Guarantors under this Clause 17 will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 17 (without limitation and whether or not known to it or any Finance Party) including:

 

(a) any time, waiver or consent granted to, or composition with, any Obligor or other person;

 

(b) the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of the Ultimate Parent or any member of the Group;

 

(c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

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(d) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

 

(e) any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including without limitation any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;

 

(f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

 

(g) any insolvency or similar proceedings.

 

17.5       Guarantors’ Intent

 

Without prejudice to the generality of Clause 17.4 (Waiver of defences), each of the Guarantors expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital, enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities, refinancing any other indebtedness; making facilities available to new borrowers, any other variation or extension of the purposes for which any such facility or amount might be made available from time to time, and any fees, costs and/or expenses associated with any of the foregoing.

 

17.6       Immediate recourse

 

Each of the Guarantors waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from it or commencing proceedings under this Clause 17. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

 

17.7       Appropriations

 

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

 

(a) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Guarantors shall be entitled to the benefit of the same; and

 

(b) hold in an interest-bearing suspense account any moneys received from the Guarantors or on account of the Guarantors’ liability under this Clause 17.

 

17.8       Deferral of Guarantors’ rights

 

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, the Guarantors will not exercise any rights which either of them may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 17:

 

(a) to be indemnified by an Obligor;

 

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(b) to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents;

 

(c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;

 

(d) to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Obligor has given a guarantee, undertaking or indemnity under Clause 17.1 (Guarantee and indemnity);

 

(e) to exercise any right of set-off against any Obligor; and/or

 

(f) to claim or prove as a creditor of any Obligor in competition with any Finance Party.

 

If any Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 33 (Payment mechanics).

 

17.9       Additional security

 

This guarantee and any other Security given by the Guarantors is in addition to and is not in any way prejudiced by, and shall not prejudice, any other guarantee or Security or any other right of recourse now or subsequently held by any Finance Party, or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.

 

18.       Representations and warranties 18.1 Representations

Each Obligor makes the representations and warranties set out in this Clause 18 to each Finance Party and the times specified in Clause 18.32 (Times when representations are made).

 

18.2       Status

 

Each of the Obligors:

 

(a) is a corporation or a limited liability company, duly incorporated or formed and validly existing under the law of its jurisdiction of incorporation or formation; and

 

(b) has the power to own its assets and carry on its business as it is being conducted.

 

18.3       Binding obligations

 

Subject to the Legal Reservations:

 

(a) the obligations expressed to be assumed by each of the Obligors in each of the Relevant Documents to which it is a party are legal, valid, binding and enforceable obligations; and

 

(b) (without limiting the generality of paragraph (a)), each Security Document to which it is a party creates or will create upon execution and delivery and, where applicable, registration, the security interests that that Security Document purports to create and those security interests are, or will be when created or intended to be created, valid and effective.

 

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18.4 Non-conflict with other obligations

 

The entry into and performance by each of the Obligors of, and the transactions contemplated by, the Relevant Documents do not conflict with:

 

(a) any law or regulation applicable to such Obligor;

 

(b) the constitutional documents of such Obligor; or

 

(c) any agreement or instrument binding upon such Obligor or any of such Obligor’s assets or constitute a default or termination event (however described) under any such agreement or instrument.

 

18.5       Power and authority

 

(a) Each of the Obligors has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Relevant Documents to which it is or will be a party and the transactions contemplated by those Relevant Documents.

 

(b) No limit on the powers of any Obligor will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Relevant Documents to which it is a party.

 

18.6       Validity and admissibility in evidence

 

All authorisations required or desirable:

 

(a) to enable each of the Obligors lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party; and

 

(b) to make the Relevant Documents to which any Obligor is a party admissible in evidence in its Relevant Jurisdictions,

 

have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Schedule 2Part III (Conditions Subsequent).

 

18.7       Governing law and enforcement

 

(a) Subject to the Legal Reservations, the choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Transaction Obligor.

 

(b) Any judgment obtained in relation to any Finance Document in the jurisdiction of the governing law of that Finance Document will, subject to the Legal Reservations, be recognised and enforced in the Relevant Jurisdictions of each relevant Transaction Obligor.

 

18.8       Insolvency

 

No corporate action, legal proceeding or other procedure or step described in Clause 26.7 (Insolvency proceedings) or creditors’ process described in Clause 26.8 (Creditors’ process) has been taken or, to the knowledge of any Transaction Obligor, threatened in relation to that Transaction Obligor; and none of the circumstances described in Clause 26.6 (Insolvency) applies to a Transaction Obligor.

 

18.9       No filing or stamp taxes

 

Under the laws of the Relevant Jurisdictions of each relevant Transaction Obligor it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in any of those jurisdictions or that any stamp, registration, notarial or similar tax or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except:

 

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(a) any filing, recording or any tax or fee payable in relation to any Finance Document which is referred to in any legal opinion referred to in Clause 4 (Conditions of Utilisation); and

 

(b) registration of each Mortgage at the registry of the Approved Flag where title to the relevant Vessel is registered in the ownership of the relevant Vessel Owner.

 

18.10 No default

 

(a) No Event of Default is continuing or is reasonably likely to result from the advance of the Utilisation or the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents.

 

(b) No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (howsoever described) under any other agreement or instrument which is binding on any of the Transaction Obligors or to which its assets are subject and which has or is reasonably likely to have a Material Adverse Effect.

 

18.11 No misleading information

 

(a) All information supplied by it or at the request or direction of an Obligor on its behalf to any Finance Party in connection with the Relevant Documents was true and accurate in all material respects as at the date it was provided or as at any date at which it was stated to be given.

 

(b) Any financial projections contained in the information referred to in paragraph (a) above have been prepared as at their date on the basis of recent historical information and on the basis of reasonable assumptions as of that same date.

 

(c) It has not omitted to supply any information which, if disclosed, would make the information referred to in paragraph (a) above untrue or misleading in any material respect.

 

(d) Nothing has occurred since the date of the information referred to in paragraph (a) above which, if disclosed, would make that information untrue or misleading in any material respect as at the same date.

 

18.12 Financial statements

 

(a) The Original Financial Statements were prepared in accordance with GAAP consistently applied.

 

(b) The unaudited Original Financial Statements fairly present the Ultimate Parent’s and the Group’s financial condition as at the end of the relevant financial quarter and results of operations during the relevant financial quarter.

 

(c) The audited Original Financial Statements give a true and fair view of the Ultimate Parent’s and the Group’s financial condition as at the end of the relevant financial year and results of operations during the relevant financial year.

 

(d) From the date of this Agreement until the date of delivery of the audited financial statements for the financial year ending 31 December 2020 pursuant to Clauses 19.1(a) and 19.1(c) (Financial statements), there has been no material adverse change in any Transaction Obligor’s assets, business or financial condition since the date of the Original Financial Statements.

 

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(e) Each Transaction Obligor’s most recent financial statements delivered pursuant to Clause 19.1 (Financial statements):

 

(i) have been prepared in accordance with GAAP as applied to the Original Financial Statements; and

 

(ii) give a true and fair view of (if audited) or fairly present (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.

 

(f) Since the date of the most recent financial statements delivered pursuant to Clauses 19.1(a) and 19.1(c) (Financial statements) there has been no material adverse change in the business, assets or financial condition of any of the Transaction Obligors or the Group.

 

18.13 No proceedings pending or threatened

 

No litigation, arbitration or administrative or investigative proceedings of or before any court, arbitral body, authority or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to its knowledge and belief, following due and careful enquiry) been started or threatened against any of the Obligors.

 

18.14 Taxes and VAT

 

(a) It is not required to make any Tax Deduction from any payment made by it under any of the Finance Documents.

 

(b) It is not a member of a value added tax group.

 

18.15 No breach of laws

 

None of the Obligors has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

 

18.16 Environmental laws

 

(a) Each of the Obligors is in compliance with Clause 21.3 (Environmental compliance) and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

 

(b) No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened against any of the Obligors where that claim has or is reasonably likely to have a Material Adverse Effect.

 

18.17 Taxation

 

(a) None of the Obligors is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax to an extent which has or is reasonably likely to have a Material Adverse Effect.

 

(b) No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Obligors with respect to Taxes.

 

(c) Unless otherwise disclosed to the Agent, each of the Vessel Owners is resident for Tax purposes only in its Original Jurisdiction, save that GSL Alcazar Inc. shall be permitted to leave the Cyprus tonnage tax system and cease to be tax resident in Cyprus.

 

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18.18 Anti-corruption law

 

Each of the Obligors and each Affiliate of any of them has conducted its businesses in compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

 

18.19 No Security or Financial Indebtedness

 

(a) No Security (other than Permitted Security) exists over all or any of the present or future assets of any Transaction Obligor in breach of this Agreement.

 

(b) No Transaction Obligor (other than the Ultimate Parent) has any Financial Indebtedness outstanding other than the Permitted Intercompany Debt or as otherwise permitted by this Agreement.

 

18.20 Pari passu ranking

 

The payment obligations of each of the Transaction Obligors under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

 

18.21 Ranking of Security

 

The security conferred by each Security Document constitutes a first priority security interest of the type described, over the assets referred to, in that Security Document and those assets are not subject to any prior or pari passu Security except Permitted Security.

 

18.22 Centre of main interests and establishments

 

For the purposes of Regulation (EU) No. 2015/848 of 20 May 2015 on insolvency proceedings (recast) (the “Regulation”), the centre of main interest of each of the Obligors (as that term is used in Article 3(1) of the Regulation) is situated in that Obligor’s Original Jurisdiction and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.

 

18.23 No adverse consequences

 

(a) It is not necessary under the laws of the Relevant Jurisdictions of any of the Transaction Obligors:

 

(i) in order to enable any Finance Party to enforce its rights under any Finance Document; or

 

(ii) by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,

 

that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of the Relevant Jurisdictions of any of the Transaction Obligors.

 

(b) No Finance Party is or will be deemed to be resident, domiciled or carrying on business in any of the Relevant Jurisdictions of any of the Transaction Obligors by reason only of the execution, performance and/or enforcement of any Finance Document.

 

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18.24 Completeness of Relevant Documents

 

The copies of any documents or evidence listed in Schedule 2 (Conditions Precedent) provided or to be provided by the Borrower to the Agent in accordance with Clause Schedule 2 (Conditions of Utilisation) are, or will be, true, accurate and complete copies of the originals.

 

18.25 No Immunity

 

No Transaction Obligor or any of its assets is immune to any legal action or proceeding.

 

18.26 Money laundering

 

Any borrowing by the Borrower under this Agreement, and the performance of its obligations under this Agreement and under the other Finance Documents, will be for its own account and will not involve any breach by it of any law or regulatory measure relating to “money laundering” as defined in Article 1 of the Directive (2005/EC/60) of the European Parliament and of the Council of the European Communities.

 

18.27 Sanctions

 

As regards Sanctions:

 

(a) None of the Obligors or any of their respective direct or indirect shareholders or members (as applicable) (excluding any direct or indirect shareholder of the Ultimate Parent which individually and/or with any persons with whom it is acting in concert is not a controlling direct or indirect shareholder of the Ultimate Parent) or any director, officer, agent, employee or person acting on behalf of any of them is a Restricted Person or is owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Restricted Person and none of such persons owns or controls a Restricted Person.

 

(b) No proceeds of the Loan shall be made available, directly or indirectly, to or for the benefit of a Restricted Person in violation of Sanctions, or otherwise shall be, directly or indirectly, applied in a manner or for a purpose that will expose any of the Finance Parties to Sanctions.

 

(c) The Obligors shall not use any revenue or benefit derived from any activity or dealing with a Restricted Person in violation of Sanctions in discharging any obligation due or owing to the Finance Parties.

 

(d) Each of the Obligors and each Affiliate of any of them is in compliance with Sanctions.

 

(e) Each Obligor shall, to the extent permitted by law, promptly upon becoming aware of them supply to the Agent details of any claim, action, suit, proceedings or formal investigation against it brought by any Sanctions Authority, with respect to the activities of an Obligor or any of their principals or Affiliates (excluding any direct or indirect shareholder of the Ultimate Parent which individually and/or with any persons with whom it is acting in concert does not own 50% or more of the Ultimate Parent and is otherwise not a controlling direct or indirect shareholder of the Ultimate Parent).

 

18.28 Valuation

 

(a) All information supplied by it or on its behalf to the Agent for the purposes of each Valuation was true and accurate as at its date or (if appropriate) as at the date (if any) at which it is stated to be given.

 

(b) It has not omitted to supply any information to the Agent in accordance with sub- paragraph (a) above which, if disclosed, would materially and adversely affect a Valuation or the Market Value of a Vessel.

 

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18.29 No other business

 

(a) None of the Parent, the Borrower or any Vessel Owner has traded or carried on any business since the date of its incorporation or formation, as applicable, except for:

 

(i) in the case of the Parent, the ownership of the Borrower;

 

(ii) in the case of the Borrower, the ownership of each Vessel Owner; and

 

(iii) in the case of each Vessel Owner, the acquisition, ownership and operation of the Vessel owned by it.

 

(b) As at the date of this Agreement, none of the Parent, the Borrower nor any Vessel Owner is party to any material agreement other than the Relevant Documents, the Senior Secured Notes and the Existing Security.

 

(c) As at the date of this Agreement no Vessel Owner has any Subsidiaries.

 

(d) As at the date falling one (1) Business Day after the Preposition Date:

 

(i) the Parent does not have any Subsidiaries other than the Borrower and the Vessel Owners; and

 

(ii) the Borrower does not have any Subsidiaries other than the Vessel Owners.

 

(e) None of the Parent, the Borrower or any Vessel Owner:

 

(i) has, or has had, any employees; and

 

(ii) has any obligation in respect of any retirement benefit or occupational pension scheme.

 

18.30 Ownership

 

(a) All of the Parent’s issued limited liability company interests are directly legally and beneficially owned and controlled by the Ultimate Parent.

 

(b) All of the Borrower’s issued limited liability company interests are directly legally and beneficially owned and controlled by the Parent.

 

(c) As from the date falling one (1) Business Day after the Preposition Date, each Vessel Owner’s entire issued share capital or all of the issued limited liability company interests (as applicable) are directly legally and beneficially owned and controlled by the Borrower.

 

(d) The shares in the capital or all of the issued limited liability company interests (as applicable) of each Transaction Obligor (other than the Ultimate Parent) are fully paid and are not subject to any option to purchase or similar rights.

 

(e) Each Vessel Owner is the sole legal and beneficial owner of the relevant Vessel, its Earnings and its Insurances.

 

(f) Each Transaction Obligor is the sole legal and beneficial owner of any other asset that is the subject of any Transaction Security created or intended to be created by it.

 

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18.31 Vessel

 

(a) Each Pool A Vessel is and, from the date falling one (1) Business Day after the Preposition Date, each Pool B Vessel is:

 

(i) either permanently registered in the name of the relevant Vessel Owner under the relevant Approved Flag or will be permanently registered within 90 days of such date;

 

(ii) free from Security (other than Permitted Security);

 

(iii) operationally seaworthy and in every way fit for service;

 

(iv) classed in accordance with the relevant Classification free of all overdue conditions and recommendations of the relevant Classification Society (except as disclosed to and approved by the Agent prior to the Effective Date); and

 

(v) insured in the manner required by the Finance Documents.

 

(b) To the best of its knowledge:

 

(i) no material breach of any law or regulation is outstanding which might have a Material Adverse Effect; and

 

(ii) no adverse claim has been made by any person in respect of the ownership of that Vessel or any interest in it.

 

18.32 Times when representations are made

 

(a) All of the representations and warranties set out in this Clause 18 (other than the representations and warranties set out in Clause 18.29(d) (No other business), Clause 18.30(c) (Ownership) and Clause 18.31 (Vessel)) are deemed to be made on the date of this Agreement, the date of the Utilisation Request and the Utilisation Date.

 

(b) The Repeating Representations are deemed to be made on the first day of each Interest Period.

 

(c) The representations and warranties set out in Clause 18.29(d) (No other business), Clause 18.30(c) (Ownership) and Clause 18.31 (Vessel) are deemed to be made on the Utilisation Date.

 

19. Information undertakings

 

The undertakings in this Clause 19 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

 

19.1       Financial statements

 

The Ultimate Parent and the Parent shall supply to the Agent:

 

(a) Ultimate Parent’s audited consolidated (so as to include the Parent, the Borrower and each Vessel Owner) financial statements for each of its financial years, as soon as the same become available, but in any event within 120 days after the end of each of its financial years;

 

(b) Ultimate Parent’s unaudited consolidated (so as to include the Parent, the Borrower and each Vessel Owner) financial statements for each Financial Half Year, as soon as the same become available, but in any event within 90 days after the end of each such Financial Half Year;

 

(c) to the extent they are produced, Ultimate Parent’s unaudited consolidated (so as to include the Parent, the Borrower and each Vessel Owner) financial statements for each Financial Quarter which does not end on a Half Year Date, as soon as the same become available, but in any event within 90 days after the end of each such Financial Quarter;

 

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(d) Parent’s unaudited consolidated (so as to include the Borrower and each Vessel Owner) financial statements as extracts from the Ultimate Parent’s filed 20-F in accordance with NYSE rules and certified as to their correctness by an officer of the Ultimate Parent for each of its financial years, as soon as the same become available, but in any event within 120 days after the end of each of its financial years; and

 

(e) Parent’s unaudited consolidated (so as to include the Borrower and each Vessel Owner) financial statements for each Financial Half Year, as soon as the same become available, but in any event within 90 days after the end of each such Financial Half Year; and

 

(f) as soon as possible after the end of each Financial Quarter, but in any event within 90 days after the end of each such Financial Quarter, results of the operations of each Vessel during the relevant Financial Quarter and the daily Operating Costs of each Vessel.

 

19.2       Compliance Certificates

 

(a) The Ultimate Parent shall supply to the Agent, within ten (10) Business Days of the end of each Financial Quarter, a Compliance Certificate together with evidence of the amounts standing to the credit of each Account as of the last day of each such Financial Quarter:

 

(i) confirming compliance with the Minimum Liquidity Amount, together with a statement of the balance of the Minimum Liquidity Account;

 

(ii) setting out the balances of the Dry Docking Reserve Accounts.

 

(b) In addition to paragraph (a) above, the Ultimate Parent shall supply to the Agent, with each set of financial statements delivered pursuant to Clause 19.1 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 20 (Financial covenants).

 

(c) The Ultimate Parent shall ensure that each Compliance Certificate delivered pursuant to this Clause 19.2 shall be signed by an authorised officer of the Ultimate Parent.

 

(d) Each Obligor shall, if, prior to the delivery of any Compliance Certificate by the relevant Obligor, the relevant Obligor becomes aware that the financial covenants detailed in Clause 20 (Financial Covenants) (or any of them) will not be complied with, promptly notify the Agent accordingly.

 

19.3       Requirements as to financial statements

 

(a) Each set of financial statements delivered by an Obligor pursuant to Clause 19.1 (Financial statements):

 

(i) shall be certified by an authorised officer of that Obligor as giving a true and fair view (in case of annual financial statements), or fairly presenting (in other cases), its financial condition as at the date as at which those financial statements were drawn up; and

 

(ii) shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in GAAP, the accounting practices or reference periods and its auditors deliver to the Agent:

 

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(A) a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which that Obligor’s Original Financial Statements were prepared;

 

(B) sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to determine whether Clause 20.1 (Financial Covenants) has been complied with and to make an accurate comparison between the financial position indicated in those financial statements and that Obligor’s Original Financial Statements; and

 

(C) in the case of annual audited financial statements, not be the subject of any Auditor’s opinion that is qualified in any material way.

 

(b) Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

 

(c) If the Ultimate Parent notifies the Agent of a change in accordance with paragraph 19.3(a)(ii) above, the Ultimate Parent and the Agent shall enter into negotiations in good faith for a period of at least 30 days with a view to agreeing any amendments to this Agreement which are necessary as a result of the change. To the extent practicable, these amendments will be such as to ensure that the change does not result in any material alteration in the commercial effect of the obligations in this Agreement. If any amendments are agreed and executed and all conditions precedent to such amendments taking effect are satisfied, they shall take effect and be binding on each of the parties in accordance with their terms.

 

19.4       Budgets and Report on Operating Expenses

 

(a) The Transaction Obligors shall:

 

(i) supply to the Agent, no later than thirty (30) days prior to the commencement of each calendar year, copies of an annual operating budget of each Vessel Owner (and the Vessel owned by it) for that calendar year; and

 

(ii) procure that an Approved Manager shall supply to the Agent, no later than thirty (30) days prior to the commencement of each calendar year, a copy of an annual Operating Expenses budget in respect of each Vessel for that calendar year,

 

for approval by the Agent (acting on the instructions of the Majority Lenders) and in the form and with such details as the Agent (acting on the instructions of the Majority Lenders) may reasonably require.

 

(b) Without prejudice to the foregoing, each annual Operating Expenses budget under paragraph 19.4(a)(ii) above to be in the form appended to Schedule 14 (Example Budget).

 

(c) The Borrower, the Parent, the Ultimate Parent and the Vessel Owners shall procure that an Approved Manager shall, on 10 Business Days’ request, supply to the Agent a quarterly performance report for each Vessel for the following Financial Quarter showing the estimated daily Operating Expenses for that Vessel, a comparison of the budget for the previous Financial Quarter and actual expenditure in relation to Operating Expenses and, upon the request of the Agent, provide details of trade payables and other liabilities position of each Vessel.

 

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19.5 Permitted Operating Expenses

 

(a) The permitted amount of Operating Expenses for the Mortgaged Vessels in any given calendar year shall not, in aggregate, exceed 110% of the aggregate agreed budgeted amounts for those Mortgaged Vessels (based on an agreed per day amount for each Vessel).

 

(b) The permitted amount of Operating Expenses for each Vessel for the period ending 31 December 2021 is set out in Schedule 11 (Initial Budgeted OPEX).

 

(c) The permitted amount of Operating Expenses for each Vessel for each subsequent calendar year shall be submitted by the Borrower to and approved by the Agent in advance of that calendar year (based on an agreed per day amount for that Vessel, which shall not exceed what was permitted in the previous calendar year by more than 3.0% without the prior written consent of the Agent (such consent not to be unreasonably withheld or delayed)).

 

(d) Without prejudice to the Transaction Obligors’ obligations under paragraphs (a) to (c) above, the Transaction Obligors shall notify or procure that the Approved Technical Manager notifies the Agent on a timely basis of any actual or anticipated material increases in the Operating Expenses budget with respect to a Vessel.

 

19.6       Information on Parent Group

 

(a) In the event that the Ultimate Parent by reason of actual or anticipated financial difficulties enters into discussions or negotiations with more than 35% (by value) of the Ultimate Parent Group’s creditors (taken as a whole) with a view to obtaining any form of moratorium, suspension or deferral of payments or reorganisation of debt (or certain debt) (“Parent Group Restructuring”), then:

 

(i) the Obligors shall give notice to the Agent (which notice shall include information as to the identity of the creditors that the Ultimate Parent intends to enter into discussions with, together with the general terms of the proposal to be discussed with the respective creditors and any presentation materials and/or other written materials related thereto), such notice to be provided promptly, if possible before commencement of the discussions or negotiations and, in any case, within two (2) Business Days of commencement of such discussions or negotiations; and

 

(ii) the Obligors shall inform and update the Agent upon request regarding any developments in relation to such discussions or negotiations and provide the Agent with any information which it may reasonably request regarding the Parent Group Restructuring.

 

(b) The Obligors shall, within two (2) Business Days of the occurrence of such event, notify the Agent if any Financial Indebtedness in respect of any member of the Ultimate Parent Group:

 

(i) is not paid when due nor within any originally applicable grace period;

 

(ii) is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described); or

 

(iii) is capable of being declared by a creditor to be due and payable prior to its specified maturity as a result of such an event.

 

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19.7 Information: miscellaneous

 

The Borrower, the Parent, the Ultimate Parent and the Vessel Owners shall supply to the Agent (in sufficient copies for all the Lenders, if the

 

Agent so requests):

 

(a) at the same time as they are dispatched, copies of all documents dispatched by the Borrower, the Parent, the Ultimate Parent or that Vessel Owner to its shareholders or members (as applicable) generally (or any class of them) or dispatched by the Borrower, the Parent, the Ultimate Parent or that Vessel Owner to its creditors generally (or any class of them);

 

(b) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings (including proceedings related to any alleged or actual breach of the ISM Code or the ISPS Code) which are current, threatened or pending against any Obligor, and which are likely to have a Material Adverse Effect;

 

(c) promptly, such further information regarding the financial condition, business and operations of any Transaction Obligor as any Finance Party (through the Agent) may reasonably request, including without limitation cash flow analyses and details of the Operating Expenses of any Vessel, any dividends and/or loans made by the Borrower, the Parent, the Ultimate Parent and/or Vessel Owner, and annual inspection certificates (including any annual inspection report (if required by the Agent)); and

 

(d) promptly on request, such further information regarding the financial condition, assets and operations of any Transaction Obligor (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Transaction Obligor under this Agreement and an up to date copy of its shareholders’ register (or equivalent in its Original Jurisdiction)) as any Finance Party through the Agent may reasonably request, except information which is confidential in relation to third parties or the disclosure of which is contrary to law or regulation.

 

19.8       Notification of default

 

Each Transaction Obligor shall notify the Agent of any Event of Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Transaction Obligor is aware that a notification has already been provided by another Obligor).

 

19.9       “Know your customer” checks

 

(a) If:

 

(i) 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;

 

(ii) any change in the status of a Transaction Obligor after the date of this Agreement; or

 

(iii) 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 (iii) above, 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, each Transaction Obligor 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 any Lender (for itself or, in the case of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the

 

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case of the event described in paragraph (iii) above (and which is obtainable and may lawfully be disclosed by the relevant Transaction Obligor), 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.

 

(b) Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

19.10 USA Patriot Act Notice

 

Each Lender hereby notifies each Transaction Obligor that, pursuant to the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub.: 107-56 (signed into law October 26, 2001) (the “Patriot Act”) it is required to obtain, verify, and record information that identifies the Borrower, which information includes the name of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act, and the Borrower agrees to provide such information from time to time to any Lender.

 

20.       Financial covenants 20.1 Financial covenants

 

(a) At each and all times during the Facility Period, the Borrower shall procure that Cash is maintained in the Minimum Liquidity Account in an amount of not less than the applicable Minimum Liquidity Amount.

 

(b)

 

(i) The Ultimate Parent shall ensure that, as of each Quarter Date, the Ultimate Parent and its Subsidiaries (excluding the Parent, the Borrower and any Vessel Owner) maintain an amount of unrestricted Cash and Cash Equivalents equal to at least

 

US$20 million on a consolidated basis (“Minimum Liquidity Test”); provided that for the purpose of determining compliance with this Clause 20.1(b)(i), Cash and Cash Equivalents as of each Quarter Date shall be deemed to include the Minimum Liquidity Amount and contracted charter-hire receivables as of such date, so long as any such unpaid charter-hire receivables are collected within 20 Business Days following such Quarter Date.

 

(ii) If the Ultimate Parent fails to comply with the Minimum Liquidity Test on any Quarter Date, such failure may be cured (and, for the avoidance of doubt, no Default or Event of Default shall occur as a result of such failure) if, within 30 Business Days following such Quarter Date, (1) the Ultimate Parent receives net cash proceeds in exchange for the issuance of the common shares, preference shares or other equity securities of the Ultimate Parent or other cash contribution to the equity of the Ultimate Parent, (2) after adjusting the calculation of the Ultimate Parent’s Cash and Cash Equivalents as of such Quarter Date to give effect to the amount of net cash proceeds received, the Ultimate Parent would have complied with the Minimum Liquidity Test as of such Quarter Date and (3) the Ultimate Parent provides an officer’s certificate in form and substance satisfactory to the Agent notifying the Agent of the occurrence of (1) and (2).

 

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The above covenants shall be tested on each Quarter Date and reported to the Agent in each Compliance Certificate to be delivered to the Agent pursuant to Clause 19.2(b) (Compliance certificates).

 

20.2       Most favoured Lenders

 

If at any time any other Financial Indebtedness of the Ultimate Parent and/or any of its Subsidiaries shall include any financial covenant in respect of the Ultimate Parent (whether set forth as a covenant, undertaking, event of default, restriction or other such provision) (a “Financial Covenant”) that would be more beneficial to the Lenders than any analogous provision contained in this Agreement (an “Additional Financial Covenant”), then such Additional Financial Covenant shall be deemed automatically incorporated into the terms of this Agreement (an “MFN Amendment”). Such MFN Amendment shall be reversed and the financial covenants restored to those that were in effect immediately prior to an MFN Amendment when (i) such other financial indebtedness containing the Additional Financial Covenant is repaid in full other than as a result of or in connection with an actual event of default (howsoever defined); or (ii) the original terms of an Additional Financial Covenant provide that it has ceased to apply.

 

21. General undertakings

 

The undertakings in this Clause 21 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

 

21.1       Authorisations

 

Each Obligor shall promptly:

 

(a) obtain, comply with, renew and do all that is necessary to maintain in full force and effect each Relevant Document; and

 

(b) upon request, supply certified copies to the Agent of any authorisation required under any law or regulation of its jurisdiction of incorporation or formation, as applicable, to:

 

(i) enable it to perform its obligations under the Relevant Documents to which it is a party;

 

(ii) ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation or formation, as applicable, of any Relevant Document; or

 

(iii) enable any Obligor to carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.

 

21.2       Compliance with laws

 

(a) Each Obligor shall comply (and shall procure that each Affiliate of any of them shall comply) in all respects with all laws, regulations and directives to which it may be subject if (except as regards Sanctions, to which Clause 21.2(b) applies, and anti- corruption laws, to which Clause 21.5 (Anti-corruption laws) applies) failure to do so has or is reasonably likely to have a Material Adverse Effect.

 

(b) Each Obligor shall (and shall procure that each Affiliate of any of them shall comply) in all respect with all Sanctions.

 

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21.3 Environmental compliance

 

Each Obligor shall:

 

(a) comply with all Environmental Laws applicable to it and the Vessel owned by it, as the case may be;

 

(b) obtain, maintain and ensure compliance with all Environmental Approvals applicable to it and the Vessel owned by it, as the case may be; and

 

(c) implement procedures to monitor compliance with and to prevent liability under any Environmental Law applicable to it and the Vessel owned by it, as the case may be,

 

where failure to do so has or is reasonably likely to have a Material Adverse Effect.

 

21.4       Environmental Claims

 

The Borrower shall, promptly upon becoming aware of the same, inform the Agent in writing of:

 

(a) any Environmental Claim against any of the Obligors which is current, pending or threatened; and

 

(b) any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any of the Obligors, where the claim, if determined against that Obligor, has or is reasonably likely to have a Material Adverse Effect.

 

21.5       Anti-corruption laws

 

(a) No Obligor shall (and each Obligor shall procure that no other Obligor which is a Subsidiary of that Obligor shall) directly or indirectly use the proceeds of the Loan for any purpose that would breach the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other jurisdictions.

 

(b) Each Obligor shall (and shall procure that each other Obligor which is a Subsidiary of that Obligor shall):

 

(i) conduct its businesses in material compliance with applicable anti-corruption laws; and

 

(ii) maintain policies and procedures designed to promote and achieve compliance with such laws.

 

21.6       Taxation

 

(a) Each Transaction Obligor shall (and shall procure that each other Transaction Obligor which is a Subsidiary of that Transaction Obligor shall) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

 

(i) such payment is being contested in good faith;

 

(ii) adequate reserves are being maintained for those Taxes and the costs required to contest them, which have been disclosed in its latest financial statements delivered to the Agent under Clause 19.1 (Financial statements);

 

(iii) such payment can be lawfully withheld; and

 

(iv) failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

 

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(b) No Vessel Owner may change its residence for Tax purposes, save that GSL Alcazar Inc. shall be permitted to leave the Cyprus tonnage tax system and cease to be tax resident in Cyprus.

 

21.7       Pari passu ranking

 

Each Transaction Obligor shall (and shall procure that each other Transaction Obligor which is a Subsidiary of that Transaction Obligor shall) ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

 

21.8       Negative pledge

 

(a) In this Clause 21.8, “Quasi-Security” means an arrangement or transaction described in Clause 21.8(b).

 

(b) Except as permitted under Clause 21.8(c):

 

(i) None of the Borrower, the Parent nor any Vessel Owner shall create nor permit to subsist any Security over any of its assets.

 

(ii) None of the Borrower, the Parent nor any Vessel Owner shall:

 

(A) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by a Transaction Obligor or any other member of the Group or any Related Party;

 

(B) sell, transfer or otherwise dispose of any of its receivables on recourse terms;

 

(C) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

 

(D) enter into any other preferential arrangement having a similar effect, in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

 

(c) Paragraph (b) above does not apply to any Security or (as the case may be) Quasi- Security, which is a Permitted Security, a Permitted Transaction or a Permitted Vessel Disposal.

 

21.9       Disposals

 

(a) Except as permitted under Clause 21.9(b), no Transaction Obligor (other than the Ultimate Parent) shall enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.

 

(b) Clause 21.9(a) does not apply to any sale, lease, transfer or other disposal which is a Permitted Transaction, a Permitted Vessel Disposal or otherwise agreed by the Borrower and the Agent (acting on the instructions of the Lenders).

 

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21.10 Arm’s length basis

 

(a) Except as permitted under Clause 21.10(b), no Obligor shall (and each Obligor shall procure that no other Subsidiary of that Obligor shall) enter into any transaction with any person except on arm’s length terms.

 

(b) Other than the entry by a Vessel Owner into a Management Agreement with an Approved Manager, no Obligor shall enter into a transaction with a Related Party without the prior written consent of the Agent (such consent not be unreasonably withheld or delayed).

 

(c) The following transactions shall not be a breach of Clause 21.10(a):

 

(i) fees, costs and expenses payable under the Relevant Documents in the amounts set out in the Relevant Documents delivered to the Agent under Clause 4.1 (Initial conditions precedent) or fees, costs and expenses agreed by the Agent;

 

(ii) any Permitted Dividends; and

 

(iii) any Permitted Transaction.

 

21.11 Merger

 

No Transaction Obligor shall, without the prior written consent of the Lenders, enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction other than:

 

(a) a Permitted Transaction; or

 

(b) a merger by Ultimate Parent, which satisfies the Ultimate Parent Merger Conditions and, prior to such merger, the Ultimate Parent shall provide to the Agent a Merger Conditions Certificate, signed by the Chief Financial Officer of the Ultimate Parent, setting out (in reasonable detail) computations as to compliance with the Ultimate Parent Merger Conditions.

 

21.12 Change of business

 

No Obligor shall make any substantial change to the general nature of its business from that carried on at the date of this Agreement.

 

21.13 No other business

 

(a) None of the Vessel Owners shall engage in any business other than the ownership, operation, chartering and management of the relevant Vessel owned by it.

 

(b) The Borrower shall not engage in any business other than the ownership of the shares or limited liability company interests, as applicable, in each Vessel Owner.

 

(c) The Parent shall not engage in any business other than the ownership of the limited liability company interests in the Borrower.

 

21.14 No acquisitions

 

No Transaction Obligor (other than the Ultimate Parent) shall acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or incorporate a company (except for a Permitted Transaction).

 

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21.15 No Joint Ventures

 

No Transaction Obligor (other than the Ultimate Parent) shall:

 

(a) enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or

 

(b) transfer any assets or lend to or guarantee or give an indemnity for or give security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).

 

21.16 No borrowings

 

None of the Borrower, the Parent nor any Vessel Owner shall incur or allow to remain outstanding any Financial Indebtedness (except for the Loan, the Permitted Intercompany Debt and any indebtedness owing under the Senior Secured Notes (provided such indebtedness is repaid in full not later than the date falling one (1) Business Day after the Preposition Date)).

 

21.17 No substantial liabilities

 

Except in the ordinary course of trading, none of the Obligors (other than the Ultimate Parent) shall incur any liability to any third party which is in the Agent’s opinion of a substantial nature (except for the Loan and Permitted Intercompany Debt).

 

21.18 No loans or credit

 

Neither the Borrower, the Parent nor any Vessel Owner shall be a creditor in respect of any Financial Indebtedness (other than pursuant to the Finance Documents and the Permitted Intercompany Debt) unless it is a loan made in the ordinary course of business on arm’s length terms in connection with the chartering, operation or repair of a Vessel or a Permitted Transaction.

 

21.19 No guarantees or indemnities

 

No Transaction Obligor (other than the Ultimate Parent) shall incur or allow to remain outstanding any guarantee in respect of any obligation of any person unless it is a Permitted Transaction or guarantees given in respect of the Senior Secured Notes (provided such guarantees are discharged not later than the date falling one (1) Business Day after the Preposition Date).

 

21.20 No dividends

 

Except for any Permitted Dividend, no Transaction Obligor (other than the Ultimate Parent) shall:

 

(a) declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital or limited liability company interests, as applicable, (or any class of its share capital or limited liability company interests, as applicable);

 

(b) repay or distribute any dividend or share premium reserve; or

 

(c) redeem, repurchase, defease, retire or repay any of its share capital or limited liability company interests, as applicable, or resolve to do so.

 

21.21 Inspection of records

 

Each Transaction Obligor (other than the Ultimate Parent) shall permit the inspection of its respective financial, operating and insurance records and accounts as may be reasonably required from time to time by the Agent or its nominee.

 

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21.22 No change in Relevant Documents

 

(a) No Obligor shall:

 

(i) exercise any discretion under any of the Relevant Documents which are not Finance Documents in a manner which is materially adverse to the interests of the Lenders; or

 

(ii) amend, vary, novate, supplement, supersede, waive or terminate any term of, any of the Relevant Documents which are not Finance Documents, or any other document delivered to the Agent pursuant to Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Utilisation conditions precedent) or Clause 4.4 (Conditions subsequent) in a manner which is or could be expected to be adverse to the interests of the Lenders or which would or could otherwise adversely affect the ability of the Obligors to perform their obligations under the Finance Documents.

 

(b) Each Obligor shall take all reasonable and practical steps to preserve and enforce its rights and pursue any claims and remedies arising under any Relevant Documents which are not Finance Documents.

 

(c) Each Obligor shall (and shall procure that each other Obligor which is a Subsidiary of that Obligor shall) comply with its obligations under the Relevant Documents which are not Finance Documents.

 

21.23 Further assurance

 

(a) Each Obligor shall promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):

 

(i) to perfect any Security created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;

 

(ii) to confer on the Security Agent or confer on the Finance Parties Security over any property and assets of that Borrower (or that other Obligor as the case may be) located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Security Documents; and/or

 

(iii) to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents.

 

(b) Each Obligor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.

 

21.24 Sanctions

 

(a) The Obligors shall not, directly or indirectly use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transaction(s) contemplated by this Agreement:

 

(i) to fund either directly or indirectly any trade, business or other activities:

 

(A) involving or for the benefit of any Restricted Person in violation of Sanctions; or

 

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(B) in any country or territory that, at the time of such funding, is a Sanctioned Country in violation of Sanctions; or

 

(C) in any other manner that would reasonably be expected to result in any person or any Finance Party being in violation of any Sanctions or becoming a Restricted Person.

 

(b) No Obligor shall permit or authorise, and each Obligor shall prevent, any Vessel being used directly or indirectly:

 

(i) by or for the benefit of any Restricted Person or in any country, or territory, that is a Sanctioned Country where such use would constitute a violation of Sanctions; and/or

 

(ii) in any trade which will expose a Vessel, any person, an Approved Manager, crew or insurers to Sanctions or any enforcement proceedings or any other negative consequences whatsoever arising therefrom.

 

(c) Each Obligor shall ensure that neither its assets nor the assets subject to the Security Documents shall be used directly or indirectly by or for the benefit of any Restricted Person or otherwise used in any manner which would not be in compliance with Sanctions.

 

(d) Each Obligor shall comply with Sanctions and nothing in this Clause 21.24 shall allow any Obligor to use any Vessel in trade with, to or from the Government of Venezuela, including but not limited to Petróleos de Venezuela S.A.

 

21.25 Use of proceeds

 

The Borrower shall not, and will procure that each other Obligor shall not, and shall not permit or authorise any other person to, directly or indirectly, make available any proceeds of the Loan to fund or facilitate trade, business or other activities (i) involving or for the benefit of any Restricted Person or (ii) in any other manner that could result in any Obligor or a Finance Party not being in compliance with Sanctions or becoming a Restricted Person.

 

22.       Vessel Undertakings 22.1 General

The undertakings in this Clause 22 shall remain in force from the date of this Agreement for so long as any amount is outstanding under any Finance Document.

 

22.2       Vessel Name and Registration

 

Each Vessel Owner shall, in respect of the Vessel owned by it:

 

(a) keep that Vessel registered in its name with the Approved Flag from time to time;

 

(b) not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and

 

(c) not change the name or port of registry of that Vessel without the prior written consent of the Agent (acting with the instruction of the Majority Lenders), such consent not to be unreasonably withheld or delayed.

 

22.3       Repair and Classification

 

Each Vessel Owner shall keep the Vessel owned by it:

 

(a) in a good and safe condition and state of repair;

 

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(b) consistent with first class ship ownership and management practice;

 

(c) in a manner such that they maintain the Classification of that Vessel free of overdue recommendations and conditions; and

 

(d) so as to comply with all laws and regulations applicable to similar vessels registered under the Approved Flag or to similar vessels trading to any jurisdiction to which that Vessel may trade from time to time including but not limited to ISM Code and the ISPS Code.

 

22.4       Modification

 

Each Vessel Owner shall, in respect of the Vessel owned by it, not make or permit to be made, any modification or repairs to, or replacement of, the Vessel owned by it or equipment installed on that Vessel that would or might materially and adversely alter the structure, type or performance characteristics of that Vessel or materially reduce its value except as required by change of law or regulation.

 

22.5       Removal of Parts

 

Each Vessel Owner shall, in respect of the Vessel owned by it, not remove, nor permit the removal, of any material part of the Vessel owned by it, or any item of equipment installed on that Vessel, unless the part or item so removed is replaced as soon as practicable 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 or any right in favour of any person other than the Security Agent and becomes on installation on that Vessel, the property of the relevant Vessel Owner, and subject to the security constituted by the Mortgage relating to that Vessel PROVIDED THAT the relevant Vessel Owner may install equipment owned by a third party if the equipment can be removed without any risk of damage to that Vessel.

 

22.6       Surveys

 

Each Vessel Owner shall, in respect of the Vessel owned by it, submit that Vessel regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Agent, provide the Agent with copies of all survey reports.

 

22.7       Inspection

 

Each Vessel Owner shall permit the Agent and/or the Security Agent (by surveyors or other persons appointed by it for that purpose) to board the Vessel owned by it at all reasonable times provided that the Agent/Security Agent has given two (2) Business Days’ prior written notice and such inspection shall not unduly interfere with the normal operation of the Vessel, in order for the Agent and/or the Security Agent to inspect the Vessel’s condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections, provided that, so long as no Event of Default has occurred and is continuing, the number of inspections of each Vessel shall not exceed one per calendar year. Any costs, fees or expenses relating to such inspections shall be for the account of the Transaction Obligors, provided that, so long as no Event of Default has occurred and is continuing, the Transaction Obligors shall not be required to pay for more than one inspection per Vessel in any calendar year.

 

22.8       Prevention and Release from Arrest

 

Each Vessel Owner shall, in respect of the Vessel owned by it, promptly discharge:

 

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against that Vessel, its Earnings or its Insurances;

 

(b) all Taxes, dues and other amounts charged in respect of that Vessel, its Earnings or its Insurances; and

 

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(c) all other outgoings whatsoever in respect of that Vessel, its Earnings or its Insurances,

 

and, forthwith upon receiving notice of the arrest of that Vessel, or of its detention in exercise or purported exercised of any lien or claim, the relevant Vessel Owner shall procure its release by providing bail or otherwise as the circumstances may require.

 

22.9       Compliance with Laws

 

Each Vessel Owner shall:

 

(a) comply, or procure compliance with all Environmental Laws, the ISM Code, the ISPS Code, Sanctions and all other laws and regulations relating to the Vessel owned by it, its ownership, operation and management or to its business;

 

(b) not employ the Vessel 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, any Environmental Laws and any Sanctions;

 

(c) maintain an ISSC for the Vessel owned by it;

 

(d) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Vessel owned by it to enter or trade to any zone which is declared a war zone by any government or by the war risks insurers of the Vessel owned by it unless the prior written consent of the Agent has been given and the relevant Vessel Owner has (at their expense) effected any special, additional or modified insurance cover which the Agent may require; and

 

(e) in respect of any Vessel whose age exceeds 10 years and if required by law or regulation, obtain a green passport for the Vessel owned by it, promptly after completion of the first dry-dock to occur after the tenth anniversary of the date on which the relevant Vessel was delivered by the relevant builder to its first owner, and shall maintain such green passport throughout the Facility Period.

 

22.10 Classification Society

 

Following a written request by the Agent, the relevant Vessel Owner, the Borrower or the relevant Classification Society shall provide the following information to the Security Agent:

 

(i) notification that a Vessel’s classification society is to be changed;

 

(ii) details of any facts or matters which may result in or have resulted in a change, discontinuance, withdrawal suspension, or expiry of a Vessel’s class under the rules or terms and conditions of such Vessel Owner’s or a Vessel’s membership of the Classification Society;

 

(iii) certified true copies of all original class records held by the Classification Society; and

 

(iv) confirmation that the relevant Vessel Owner is or is not in default of any of its obligations or liabilities to the Classification Society, including confirmation on whether it has paid in full all fees or other charges due and payable to the Classification Society and, if that Vessel Owner is in default, to specify in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Classification Society.

 

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22.11 Provision of Information

 

Each Vessel Owner shall, in respect of the Vessel owned by it, promptly provide the Lenders with any information which they reasonably request regarding:

 

(a) that Vessel, its employment, position and engagements;

 

(b) its Earnings;

 

(c) payments and amounts due to the master and crew of that Vessel;

 

(d) any towages and salvages (other than in the case of towages in the normal course of the Vessel’s operations); and

 

(e) the Vessel Owner’s, the Approved Managers’ or that Vessel’s compliance with the ISM Code and the ISPS Code.

 

22.12 Notification of Certain Events

 

Each Vessel Owner shall, in relation to the Vessel owned by it, immediately notify the Agent by email, confirmed forthwith by letter, of:

 

(a) any casualty relating to that Vessel which is or is likely to be or to become a Major Casualty;

 

(b) any occurrence as a result of which that Vessel 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 the Classification Society or by any competent authority which is not complied with within the period required for compliance or, if no such period for compliance has been specified, as soon as reasonably practical and in any event within twenty (20) Business Days;

 

(d) any arrest or detention of that Vessel, any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of that Vessel for hire;

 

(e) any intended dry docking of that Vessel;

 

(f) any Environmental Claim made against any Vessel Owner or in connection with any Vessel, or any Environmental Incident, where such Environmental Claim is for an amount of or in excess of US$100,000;

 

(g) any claim for breach of the ISM Code or the ISPS Code being made against any Vessel Owner, any Approved Manager or otherwise in connection with that Vessel;

 

(h) any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC; and

 

(i) 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 the Vessel Owners shall keep the Agent advised in writing on a regular basis and in such detail as the Agent shall require of the Vessel Owners’, the Approved Managers’ or any other person’s response to any of those events or matters.

 

22.13 Restrictions on Chartering etc.

 

No Vessel Owner shall, in relation to the Vessel owned by it:

 

(a) let that Vessel on demise charter for any period;

 

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(b) enter into or vary any time charter, consecutive voyage charter or other contract of employment in respect of that Vessel without the prior written consent of the Agent (acting on the instructions of the Majority Lenders), such consent not to be unreasonably withheld or delayed:

 

(i) for a term which exceeds twenty four (24) months; or

 

(ii) for a term which, by virtue of any option of extensions, may exceed twenty four (24) months;

 

(c) enter into or vary any charter in relation to that Vessel under which more than two (2) months’ hire (or the equivalent) is payable in advance;

 

(d) charter that Vessel otherwise than on bona fide arm’s length terms at the time when that Vessel is fixed (and for the avoidance of doubt any charter to the Ultimate Parent, a member of the Group or any of their respective Affiliates shall not be permitted without the Agent’s prior written consent (such consent not to be unreasonably withheld or delayed));

 

(e) pay or agree to pay any fees, commission, or any other compensation, contribution, remuneration, or payment of any kind whatsoever to an Approved Manager other than in accordance with the terms of a Management Agreement;

 

(f) deactivate or lay-up that Vessel; or

 

(g) put that Vessel into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed US$750,000 (or the equivalent in any other currency) unless that person has first given to the Agent in terms satisfactory to it a written undertaking not to exercise any lien on that Vessel or its Earnings for the cost of such work (excluding any Dry Docking Costs that will be paid for exclusively from amounts standing to the credit of the relevant Dry Docking Reserve Account and, subject to evidence satisfactory to the Agent that the relevant insurers have approved the relevant claim, any work which will be paid for from the proceeds of the Insurances).

 

22.14 Approval of charters

 

For charters where the prior written consent of the Agent is required in accordance with Clause 22.13 (Restrictions on Chartering etc.) above, the Borrower will provide a summary of the key terms of the time charter (or, in the case of a renewal, its renewal terms) agreed between the relevant Vessel Owner and the relevant charterer to the Agent for its approval (such approval not to be unreasonably withheld) and the Agent (acting promptly) shall either give its approval to the charter or decline to do so (and inform the Borrower of any amendments to the charter which are required by it in order to give its approval).

 

22.15 Notice of Mortgage

 

Each Vessel Owner shall keep the Mortgage registered against the Vessel owned by it as a valid first priority or first preferred mortgage (as the case may be), carry on board that Vessel a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Vessel a framed printed notice stating that the Vessel is mortgaged by the relevant Vessel Owner to the Security Agent.

 

22.16 Sharing of Earnings

 

No Vessel Owner shall enter into any agreement or arrangement for the sharing of any Earnings relating to any Vessel, other than with the prior written consent of the Agent (acting on the instructions of all Lenders), which consent the Agent shall have full power to withhold.

 

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22.17 Manager

 

A manager of a Vessel shall not be appointed unless that manager is, in the case of the technical management of a Vessel, an Approved Technical Manager or, in the case of the commercial management of a Vessel, an Approved Commercial Manager, the appointment is on arms’ length terms and, in advance of any appointment:

 

(a) the terms of its appointment are approved in writing by the Agent (such approval not be unreasonably withheld or delayed); and

 

(b) the relevant Approved Manager has delivered a duly executed Manager’s Undertaking to the Security Agent (together with evidence reasonably satisfactory to the Agent of the due authority of the signatory thereto).

 

22.18 Management Agreement

 

No Vessel Owner will agree to any alteration to the terms of an Approved Manager’s appointment, nor permit or authorise an Approved Manager to transfer or delegate any of its obligations under the relevant management agreement (unless permitted to do so under the terms of the relevant Management Agreement), without the prior consent of the Agent (which consent the Agent shall have full power to withhold) and subject to any Approved Sub- Manager providing a duly executed Manager’s Undertaking to the Security Agent.

 

22.19 Quiet Enjoyment

 

(a) If required by the relevant charterer in respect of a Charter, the Security Agent shall promptly consider in good faith, and not unreasonably withhold its consent to, any request to agree (on behalf of the other Finance Parties) quiet enjoyment arrangements with such charterer.

 

(b) In respect of a time charter or other contract of employment where the charter period is less than twenty four (24) months (including by virtue of optional extensions), if required by the relevant charterer the Security Agent shall promptly consider in good faith, but be under no obligation to accept, any request to agree (on behalf of the other Finance Parties) quiet enjoyment arrangements with such charterer.

 

23. Insurance Undertakings

 

23.1       General

 

Each Vessel Owner undertakes to comply with the following provisions of this Clause 23 for so long as any amount is outstanding under the Finance Documents or except as the Security Agent may otherwise permit (acting on the instructions of all Lenders).

 

23.2       Maintenance of Obligatory Insurances

 

Each Vessel Owner will keep the Vessel owned by it at all times insured at its own cost and expense against:

 

(a) fire and usual marine risks (including hull and machinery, excess risks and increased value) and war risks (including the London blocking and trapping addendum or equivalent coverage, including terrorism and piracy risks where excluded under the fire and usual marine risks insurance and including, without limitation, protection and indemnity war risks with a separate limit not less than hull value) for an amount on an agreed value basis at least the greater of:

 

(i) an amount equal to 120% of the Notional Vessel Tranche in respect of that Vessel (and, when aggregated with such insurances in respect of each Vessel other than that Vessel, 120% of the Loan); and

 

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(ii) the Market Value of that Vessel;

 

(b) 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 and in respect of the full value and tonnage of that Vessel), on “full entry terms” for the highest available amount in the insurance market for vessels of a similar age and type as that Vessel (but, in relation to liability for oil pollution, for an amount not less than US$1,000,000,000); and

 

(c) any other risks against which the Agent considers, having regard to practices and other circumstances prevailing at the relevant time which are relevant in the context of the age and type of the relevant Vessel and her trading pattern and the generally acknowledged practice of shipping companies of similar size and standing as the Ultimate Parent, it would in the opinion of the Agent be reasonable for that Vessel Owner to insure and which are specified by the Agent by notice to the Borrower and/or that Vessel Owner.

 

23.3       Terms of Obligatory Insurances

 

The obligatory insurances shall:

 

(a) be in Dollars;

 

(b) be on terms approved by the Agent (acting reasonably) in writing;

 

(c) be 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, and have Standard & Poor’s rating of at least A or such other comparable rating by any other rating agency acceptable to the Agent (acting on the instructions of all Lenders) or such other rating as the Agent (acting on the instructions of all Lenders) may approve, such approval not to be unreasonably withheld or delayed;

 

(d) whenever required by the Agent, name (or be amended to name) the Security Agent as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Agent (as the case may be), but without the Security Agent thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

(e) name the Security Agent as loss payee with such directions for payment as the Security Agent may specify (such loss payable clauses to be in the form determined pursuant to the provisions of the General Assignments);

 

(f) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever;

 

(g) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Agent and/or the Agent; and

 

(h) provide that the Security Agent may make proof of loss if the relevant Vessel Owner fails to do so.

 

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23.4 Renewal

 

Each Vessel Owner shall:

 

(a) at least fourteen (14) days before the expiry of any obligatory insurance relating to a Vessel;

 

(i) notify the Agent of the approved brokers (or other insurers) and any protection and indemnity or war risks association through or with whom a Borrower proposes to renew that obligatory insurance and of the proposed terms of renewal; and

 

(ii) obtain the Agent’s approval to the matters referred to in paragraph 23.4(a)(i), such approval not to be unreasonably withheld or delayed;

 

(b) at least seven (7) days before the expiry of any obligatory insurance relating to a Vessel, renew that obligatory insurance in accordance with the Agent’s approval pursuant to paragraph (a); and

 

(c) not add any (other) assured to any obligatory insurance without the prior written consent of the Agent.

 

23.5       Copies of Policies

 

Each Vessel Owner shall provide to the Agent pro forma copies of all insurance policies and other documentation issued by brokers, insurance and protection and indemnity associations as soon as they are available after they have been placed or renewed.

 

23.6       Copies of Certificates of Entry

 

Each Vessel Owner shall ensure that any protection and indemnity and/or war risks association in which a Vessel is entered provides the Agent with:

 

(a) a certified copy of the certificate of entry for the Vessel owned by it;

 

(b) a letter or letters of undertaking in such form as may be required by the Security Agent (but having regard to the market practice of such association and law at the time of issue of such letter of undertaking); and

 

(c) where required to be issued under the terms of insurance or indemnity provided by the relevant Vessel Owner’s protection and indemnity association, a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel owned by it.

 

23.7       Letters of Undertaking

 

Each Vessel Owner shall ensure that all approved brokers provide the Security Agent a letter or letters or undertaking in a form required by the

 

Security Agent 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 in the agreed form or in such other forms as the Security Agent may require;

 

(b) they will hold such policies, and the benefit of such insurances, to the order of the Security Agent in accordance with the said loss payable clause;

 

(c) they will advise the Security Agent immediately of any material change to the terms of the obligatory insurances;

 

(d) they will notify the Security Agent, not less than seven (7) days before the expiry of the relevant obligatory insurances, in the event of their not having received notice of renewal instructions from the relevant Vessel Owner or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Agent of the terms of the instructions; and

 

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(e) they will not set off against any sum recoverable in respect of a claim relating to the Vessel owned by that Vessel Owner under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Vessel 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 Vessel forthwith upon being so requested by the Security Agent, but in all cases having regard to general insurance market practice and law at the time of issue of such letter of undertaking.

 

23.8       Deposit Original Policies

 

Unless the policies are only in electronic format, each Vessel Owner shall ensure that the originals of all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

 

23.9       Payment of Premiums

 

Each Vessel Owner 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 Agent.

 

23.10 P&I Guarantees

 

Each Vessel Owner 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.

 

23.11 Compliance with Terms of Obligatory Insurances

 

No Vessel Owner shall 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 under an obligatory insurance repayable in whole or in part; and, in particular:

 

(a) each Vessel Owner 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 23.6 (Copies of Certificates of Entry) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Agent has not given its prior written approval;

 

(b) no Vessel Owner shall make any changes relating to the Classification or Classification Society or manager or operator of the Vessel owned by it unless approved by the underwriters of the obligatory insurances; and

 

(c) no Vessel Owner shall employ the Vessel owned by it, or allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the Agent and the insurers and complying with any requirements (as to extra premium or otherwise) which the Agent and the insurers specify.

 

23.12 Alteration to Terms of Obligatory Insurances

 

No Vessel Owner shall make nor agree to any alteration to the terms of any obligatory insurance (other than a change relating to the insurance premiums to be paid) or waive any right relating to any obligatory insurance without the prior written consent of the Security Agent (acting on the instructions of all the Lenders), such consent not to be unreasonably withheld or delayed.

 

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23.13 Settlement of Claims

 

No Vessel Owner shall settle, compromise or abandon any claim under any obligatory insurance for a Total Loss or for a Major Casualty without the prior written consent of the Security Agent (such consent not to be unreasonably withheld or delayed), and shall do all things necessary and provide all documents, evidence and information reasonably required to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

 

23.14 Application of recoveries

 

Any sums paid under the obligatory insurances other than to the Security Agent shall be applied in repairing the damage and/or discharging the liability in respect of which they have been paid, save to the extent that the repairs have already been completed and paid for and/or the liability has already been fully discharged.

 

23.15 Provision of Copies of Communications

 

Each Vessel Owner shall provide the Agent, at the time of each such communication, copies of all material written communications between such Vessel Owner and each of the following:

 

(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 Vessel 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 Vessel 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.

 

23.16 Provision of Information

 

In addition, each Vessel Owner shall promptly provide the Agent (or any persons which the Agent may designate) with any information which the Agent (or any such designated person) reasonably requests for the purpose of:

 

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected, provided that, unless an Event of Default has occurred and is continuing or there is a change to the terms of the insurance cover, that Vessel Owner shall not bear the costs of more than one such report per calendar year; and/or

 

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 23.17 (Mortgagee’s Interest and Additional Perils) or dealing with or considering any matters relating to any such insurances,

 

and each Vessel Owner shall, within three (3) Business Days of demand, indemnify the Agent in respect of all fees and other expenses incurred by or for the account of the Agent in connection with any such report as is referred to in paragraph (a).

 

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23.17 Mortgagee’s Interest and Additional Perils

 

The Security Agent shall be entitled, at the cost and expense of the Transaction Obligors, from time to time to effect, maintain and renew:

 

(a) a Mortgagee’s Interest Additional Perils (Pollution) Insurance and a Mortgagee’s Interest Marine Insurance in each case in an amount equal to 120% of the Loan and otherwise on such terms, through such insurers and generally in such manner, as the Security Agent may from time to time consider appropriate; and

 

(b) any other insurance cover which the Security Agent reasonably requires in respect of a Finance Party’s interests and potential liabilities (whether as mortgagee of a Vessel or beneficiary of the Security Documents) in line with prevailing market practice for financing transactions of this nature (following confirmation of the recommendation for such insurance cover from the Security Agent’s independent marine insurance advisers) and the Obligors shall upon demand fully indemnify the Security Agent in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any insurance referred to in this Clause 23.17 or dealing with, or considering, any matter arising out of such insurance,

 

and the Transaction Obligors shall supply, or procure that there is supplied, to the Security Agent such information as the Security Agent may require in connection with the matters referred to in this Clause 23.17.

 

23.18 Change in insurance requirements

 

The Agent shall have the right, by giving notice to the Borrower and/or the Vessel Owners, to change the terms and requirements of this Clause 23.18 in such manner as it considers appropriate as a result of a change of circumstances or practice after the date of this Agreement (provided that such a change has been recommended by the Security Agent’s independent marine insurance advisers), in which case, from the date being fourteen (14) days after such notice is provided, this Clause 23.18 shall be automatically be deemed modified in accordance with the terms of that notice.

 

24. Accounts

 

24.1 Maintenance

 

(a) Other than with the consent of the Agent (acting on the instructions of all Lenders), no Transaction Obligor (except for the Ultimate Parent) shall open or maintain any bank accounts other than the Accounts required in connection with this Agreement or the other Finance Documents.

 

(b) Each Account Holder shall maintain the relevant Accounts with the Account Bank, free of Security and rights of set-off (other than as created under the Accounts Security), until no amount remains outstanding from them under this Agreement or any other Finance Documents.

 

24.2       Location of Accounts

 

Each Account Holder shall promptly execute any documents which the Agent specifies to create or maintain in favour of the Security Agent Security over (and/or rights of set-off, consolidation or other rights in relation to) each Account.

 

24.3       Application of Account

 

(a) Each Account Holder shall procure that transfers are made from each Account in order to facilitate the payment of amounts required and/or contemplated by this Agreement and the other Finance Documents.

 

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(b) Each Account Holder shall only be permitted to withdraw sums from the Accounts in accordance with the provisions of the Finance Documents or as otherwise permitted by the Agent (acting on the instructions of the Majority Lenders).

 

(c) Without prejudice to its other rights under the Transaction Security and without obligation to do so, each Account Holder irrevocably authorises the Agent after the occurrence of an Event of Default (and whilst it is continuing) to instruct an Account Bank to make any transfer from any Account in order to facilitate the payment of amounts required and/or contemplated by this Agreement and the other Finance Documents.

 

24.4       Earnings and Requisition Compensation

 

(a) Each Transaction Obligor shall procure that all Earnings and Requisition Compensation in relation to a Vessel are credited to the relevant Earnings Account, unless and until the Agent shall otherwise direct

 

(b) Provided there is no continuing Event of Default, the Account Holders may withdraw from the Earnings Accounts at any time:

 

(i) any amounts payable under the Finance Documents and any unpaid fees, costs and expenses of, and any other amounts owing to the Agent, the Security Agent, any Receiver and any Delegate;

 

(ii) payments in respect of Operating Expenses then due and payable relating to the Mortgaged Vessels, provided that the aggregate amount of Operating Expenses withdrawn from the Earnings Accounts in any calendar year shall not exceed 110% of the aggregate amount of permitted Operating Expenses for the Mortgaged Vessels for that calendar year as determined in accordance with Clause 19.5 (Permitted Operating Expenses); and

 

(iii) any other amounts or payments permitted by the Finance Documents.

 

24.5       Retention and repayment

 

(a) On each Quarter Date, the Account Holders in respect of the Earnings Accounts shall procure that amounts standing to the credit of the Earnings Accounts are as applied as follows:

 

(i) FIRST, in payment pro rata of any unpaid fees, costs and expenses of, and any other amounts owing to, the Agent, the Security Agent, any Receiver and any Delegate under the Finance Documents;

 

(ii) SECOND, in payment of any interest due under the Finance Documents on that date; and

 

(iii) THIRD, in payment of any other amount due under the Finance Documents on that date.

 

(b) Any surplus amounts standing to the credit of the Earnings Accounts following application in accordance with paragraph (a) above shall be available to the Vessel Owners for the payment of Permitted Dividends.

 

24.6       Minimum Liquidity Account

 

(a) The Borrower shall procure that at all times the minimum amount standing to the credit of the Minimum Liquidity Account shall be an amount equal to US$350,000 per Mortgaged Vessel (the “Minimum Liquidity Amount”).

 

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(b) For the avoidance of doubt, following sale or total loss of a Vessel, any amount standing to the credit of the Minimum Liquidity Account in respect of that Vessel may be withdrawn, provided that all payments required pursuant to Clause 7 (Prepayment and cancellation) have been made in full.

 

24.7       Dry Docking Reserve Account

 

(a) Each Dry Docking Reserve Account shall be a blocked account holding the Dry Docking Reserve in respect of the relevant Vessel.

 

(b) Funds that have accumulated in a Dry Docking Reserve Account may only be applied in respect of the Dry Docking Costs of the relevant Vessel in accordance with Clause 24.8 (Dry Docking Reserve).

 

(a) For the avoidance of doubt, following sale or total loss of a Vessel, any amounts standing to the credit of the Dry Docking Reserve Account for that Vessel may be withdrawn, provided that all payments required pursuant to Clause 7 (Prepayment and cancellation) have been made in full.

 

24.8 Dry Docking Reserve

 

The Borrower shall procure that on 31 January 2021 and thereafter on 1 April, 1 July, 1 October and 1 January of each year (or if any such day is not a Business Day, the immediately following Business Day), and in respect of each Mortgaged Vessel for which there are scheduled Dry Docking Costs, an amount is deposited in the relevant Dry Docking Reserve Account for that Vessel in accordance with the amounts set out in Schedule 12 (Quarterly DD Contributions).

 

25.       Security Shortfall 25.1 Additional security

(a) Clause 25.1(b) applies if, at any time during the Facility Period, the Agent notifies the Borrower that the ratio (expressed as a percentage) of: (x) the aggregate of the Market Value of the Vessels subject to a Mortgage plus the aggregate value of any additional security provided pursuant to this Clause 25; to (y) the aggregate amount of the Loan then outstanding (the “VTL Coverage”), is less than 120% (which notification the Agent may provide at any time).

 

(b) If the Agent gives the notification described in Clause 25.1(a) that the VTL Coverage is less than 120%, the Borrower shall, within thirty (30) days of such notification, at the Borrower’s option:

 

(i) give to the Security Agent other additional security in form and substance satisfactory to the Security Agent in favour of the Finance Parties for the payment of the Secured Liabilities which is either Cash held in a blocked account subject to a pledge or charge in form and substance required by the Security Agent or, if such additional security is not Cash, then (in the opinion of the Security Agent acting in its sole discretion):

 

(A) has a net realisable value (on an aggregate basis) equal to or greater than the applicable shortfall; and

 

(B) is of a type which is in form and substance satisfactory to it; or

 

(ii) prepay the Loan but only to the extent required to eliminate the shortfall,

 

and provided always that any breach of this Clause 25.1 may not be remedied by the Borrower other than in accordance with sub-clauses (b)(i) and (ii).

 

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(c) For the avoidance of doubt, any prepayment made or Cash collateral provided under paragraph (b) above may be (but is not required be) funded with a Fresh Equity Injection or Permitted Intercompany Debt provided by the Ultimate Parent to the Parent and then down-streamed by the Parent to the Borrower pursuant to a Fresh Equity Injection and/or Permitted Intercompany Debt.

 

(d) Clause 7 (Prepayment and cancellation) shall apply to prepayments under paragraph (b) above, but provided that no Prepayment Fee is payable in respect of such prepayment.

 

(e) The value of any additional security provided shall in the case of Cash be the face amount of the deposit, in the case of a vessel be determined in the same manner as the Market Value of the Vessels and in the case of other security shall be determined by the Agent in its absolute discretion.

 

25.2       Release of additional security

 

(a) If at any time the Security Agent holds additional security provided under this Clause 25 and the VTL Coverage, disregarding the value of that additional security, is equal to or exceeds 140%, the Borrower may, by notice to the Agent, request the release and discharge of that additional security, provided that such request shall be accompanied by Valuations (obtained at the Borrower’s cost) evidencing that the VTL Coverage is equal to or has exceeded 140% for at least 6 months.

 

(b) Upon receipt by the Agent of a Borrower’s request and satisfactory Valuations in accordance with paragraph (a) above, the Agent shall promptly direct the Security Agent to release and discharge the relevant additional security if no Event of Default is continuing or will result from the release and discharge of that additional security. Upon such release and discharge and, if so required by the Agent, the Borrower shall reimburse to the Agent and the Security Agent any costs and expenses payable under Clause 16.1 (Transaction expenses) in relation to that release and discharge.

 

25.3       Valuation of Vessels

 

The Market Value of a Vessel at any time is that shown by the average of two Valuations in respect of that Vessel.

 

25.4       Delivery of Valuations

 

(a) The Borrower will, at its own cost, within 5 Business Days of 31 March and 30 September each year procure (and otherwise to demonstrate compliance with the Dividend / Loan Payment Criteria) and promptly deliver to the Agent for distribution to each Lender at least two Valuations relating to each Vessel, such Valuations to be provided by Approved Brokers, one such Approved Broker nominated by the Agent and the other nominated by the Borrower.

 

(b) The Agent is at liberty (at the cost of the Lenders) to assess the Market Value of the Vessels at any time and at such frequency as the Agent considers necessary or desirable in its absolute discretion.

 

(c) If an Event of Default is continuing or the Agent reasonably suspects that an Event of Default has occurred and is continuing, the Agent is at liberty to assess the Market Value of the Vessels at any time, and any such Valuations requested by the Agent following an Event of Default that is continuing will be at the Borrower’s cost.

 

25.5       Valuations Binding

 

Any Valuation under Clause 25.3 (Valuation of Vessels) shall be binding and conclusive as regards the Borrower, as shall any valuation which the Agent makes of any additional security pursuant to Clause 25.1(e).

 

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25.6 Provision of Information

 

Each Vessel Owner shall promptly provide (or procure the provision to, as the case may be) the Agent and any shipbroker acting under Clause 25.3 (Valuation of Vessels)or in relation to a Valuation with any information which the Agent or the shipbroker may reasonably require for the purposes of such Valuation; and, if that Vessel Owner fails to provide the information by the dates specified in the request, such Valuation will be made on any basis and assumptions which the Agent (or the shipbroker or expert appointed by it) considers prudent.

 

25.7       Payment of Valuation Expenses

 

Except as otherwise provided in Clause 25.4, the Transaction Obligors shall, on demand, as a joint and several obligation, pay the Agent the amount of the fees and expenses of any shipbroker or expert instructed by the Agent under this Clause 25 (Security Shortfall) and all legal and other expenses incurred by the Agent in connection with any matter arising out of this Clause 25 (Security Shortfall).

 

26. Events of Default

 

Each of the events or circumstances set out in this Clause 26 is an Event of Default (save for Clause 26.28 (Acceleration) and Clause 26.29 (Approved Managers).

 

26.1       Non-payment

 

An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place and in the currency in which it is expressed to be payable unless its failure to pay is caused by either (i) an administrative or technical error or (ii) a Disruption Event, and, in either event, is paid within four (4) Business Days of its due date.

 

26.2       Other Specific Obligations

 

(a) Any requirement of Clause 20 (Financial covenants) is not satisfied.

 

(b) An Obligor does not comply with Clause 25.1 (Additional security).

 

(c) The obligatory insurances of a Vessel are not placed and kept in full force and effect in accordance with Clause 23 (Insurance Undertakings), provided that no Event of Default under this paragraph (c) will occur if the failure to comply is capable of remedy and is remedied within ten (10) Business Days of the earlier of (i) the Agent giving notice to the Borrower and (ii) any Obligor becoming aware of the failure to comply.

 

(d) Any budget is not approved by the Agent in accordance with the provisions of Clause 19.4(a) (Budgets and Report on Operating Expenses).

 

(e) An Obligor does not comply with Clause 19.6 (Information on Parent Group).

 

(f) The Ultimate Parent does not comply with the undertaking contained in Clause 5.6(b) (Prepositioning of funds).

 

26.3       Other Obligations

 

(a) An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 26.1 (Non-payment), Clause 26.2, (Other Specific Obligations), Clause 26.24 (Sanctions) and Clause 19.6 (Information on Parent Group)).

 

(b) No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within ten

 

(10) Business Days (or, in the case of any failure to comply with Clauses 19.1 (Financial statements), 19.2 (Compliance Certificatess) or 19.3 (Requirements as to financial statements), five (5) Business Days) of the earlier of (i) the Agent giving notice to the Borrower and (ii) any Obligor becoming aware of the failure to comply.

 

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26.4 Misrepresentation

 

(a) Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.

 

(b) Only with respect to any Repeating Representations repeated on the first day of each Interest Period pursuant to Clause 18.32(b) (Times when representations are made), no Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and the circumstance giving rise to such Event of Default are remedied within ten (10) Business Days of the earlier of (i) the Agent giving notice to the Borrower and (ii) any Obligor becoming aware of the failure to comply.

 

26.5       Cross default

 

(a) Any Financial Indebtedness of any member of the Group (excluding GSLS) or the Ultimate Parent:

 

(i) is not paid when due nor within any originally applicable grace period; or

 

(ii) is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described);

 

(iii) is capable of being declared by a creditor to be due and payable prior to its specified maturity as a result of such an event.

 

(b) In respect of the Ultimate Parent, no Event of Default shall occur under paragraph (a) above unless the aggregate amount of Financial Indebtedness is more than US$25,000,000 or its equivalent in any other currency.

 

26.6       Insolvency

 

(a) Any Obligor is unable or admits inability to pay its debts as they fall due, is deemed to, or is declared to, be unable to pay its debts under applicable law, ceases or suspends or threatens to cease or suspend making payments on any of its debts, or any Obligor (other than the Ultimate Parent), by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (other than the Finance Parties) with a view to rescheduling any of its indebtedness.

 

(b) The value of the assets of any Obligor is less than its liabilities (taking into account contingent and prospective liabilities).

 

(c) A moratorium is declared in respect of any indebtedness of any Obligor. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default covered by that moratorium.

 

(d) Paragraphs (a) to (c) above shall not apply to in relation to any Approved Manager which is a Subsidiary of the Ultimate Parent, provided that a replacement third party Approved Manager is appointed in accordance with this Agreement within ten (10) Business Days of the relevant insolvency event.

 

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26.7 Insolvency proceedings

 

(a) Any corporate action, legal proceedings or other procedure or step is taken in relation to:

 

(i) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor;

 

(ii) a composition, compromise, assignment or arrangement with any creditor of any Obligor;

 

(iii) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, provisional supervisor or other similar officer in respect of any Obligor or any of its assets; or