EX-10.59 12 d7689122_ex10-59.htm

Exhibit 10.59

Dated 24 May 2017
as amended and restated on          September 2017

$34,500,000
TERM LOAN FACILITY
PARTNER SHIPPING CO. and
CHAMPION OCEAN NAVIGATION CO.
as joint and several Borrowers
and
SEANERGY MARITIME HOLDINGS CORP.
as Corporate Guarantor
and
AMSTERDAM TRADE BANK N.V.
as Arranger
and
AMSTERDAM TRADE BANK N.V.
as Facility Agent
and
AMSTERDAM TRADE BANK N.V.
as Security Agent
AMENDED AND RESTATED FACILITY AGREEMENT

relating to
(i) the financing of m.v. "PARTNERSHIP" (ex "DONG-A ARTEMIS") and
(ii) the refinancing of part of certain existing indebtedness
secured over m.v. "CHAMPIONSHIP"



Index
Clause
Page
   
Section 1 Interpretation
3
1          Definitions and Interpretation
3
Section 2 The Facility
30
2          The Facility
30
3          Purpose
31
4          Conditions of Utilisation
31
Section 3 Utilisation
33
5          Utilisation
33
Section 4 Repayment, Prepayment and Cancellation
36
6          Repayment
36
7          Prepayment and Cancellation
37
Section 5 Costs of Utilisation
41
8          Interest
41
9          Interest Periods
42
10          Changes to the Calculation of Interest
43
11          Fees
44
Section 6 Additional Payment Obligations
46
12          Tax Gross Up and Indemnities
46
13          Increased Costs
50
14          Other Indemnities
52
15          Mitigation by the Finance Parties
54
16          Costs and Expenses
55
Section 7 Guarantee
56
17          Guarantee and Indemnity - Corporate Guarantor
56
18          Joint and Several Liability of the Borrowers
58
Section 8 Representations, Undertakings and Events of Default
61
19          Representations
61
20          Information Undertakings
67
21          Financial Covenants
70
22          General Undertakings
71
23          Insurance Undertakings
77
24          General Ship Undertakings
82
25          Security Cover
87
26          Accounts and application of Earnings
88
27          Events of Default
90
Section 9 Changes to Parties
95
28          Changes to the Lenders
95
29          Changes to the Transaction Obligors
99
Section 10 The Finance Parties
101
30          The Facility Agent, the Arranger and the Reference Banks
101
31          The Security Agent
111
32          Conduct of Business by the Finance Parties
125
33          Sharing among the Finance Parties
125
Section 11 Administration
128
34          Payment Mechanics
128
35          Set-Off
131
36          Bail-In
131
37          Notices
131
38          Calculations and Certificates
133
39          Partial Invalidity
133
40          Remedies and Waivers
134
41          Settlement or Discharge Conditional
134
42          Irrevocable Payment
134


43          Amendments and Waivers
134
44          Confidential Information
136
45          Confidentiality of Funding Rates and Reference Bank Quotations
140
46          Counterparts
141
Section 12 Governing Law and Enforcement
142
47          Governing Law
142
48          Enforcement
142
   
Schedules
 
   
Schedule 1 The Parties
143
Part A The Obligors
143
Part B The Original Lenders
144
Part C The Servicing Parties
145
Schedule 2 Conditions Precedent
146
Part A Conditions Precedent to Each Utilisation Request
146
Part B Conditions Precedent to the Utilisation of A Tranche
148
Part C Conditions Precedent to the Utilisation of the Second Advance of Tranche A
150
Schedule 3 Requests
151
Part A Utilisation Request
151
Part B Selection Notice
152
Schedule 4 Form of Transfer Certificate
153
Schedule 5 Form of Assignment Agreement
155
Schedule 6 Form of Compliance Certificate
158
Schedule 7 Details of the Ships
159
Schedule 8 Timetables
160
Schedule 9 Vessel Report
161
   
Execution
 
   
Execution Pages
162
 
 

 
THIS AGREEMENT is made on 24 May 2017 as amended and restated by the Deed of Accession, Amendment and Restatement on          September 2017
PARTIES
(1)
PARTNER SHIPPING CO., a corporation incorporated in the Republic of the Marshall Islands whose registered office is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands as a borrower ("Borrower A");
(2)
CHAMPION OCEAN NAVIGATION CO., a corporation incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia as a borrower ("Borrower B" and together with Borrower A, the "Borrowers" and each, a "Borrower");
(3)
SEANERGY MARITIME HOLDINGS CORP., a corporation incorporated in the Republic of the Marshall Islands whose registered office is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands as corporate guarantor (the "Corporate Guarantor");
(4)
AMSTERDAM TRADE BANK N.V. as arranger (the "Arranger");
(5)
THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 (The Parties) as lenders (the "Original Lenders");
(6)
AMSTERDAM TRADE BANK N.V. as agent of the other Finance Parties (the "Facility Agent"); and
(7)
AMSTERDAM TRADE BANK N.V. as security agent for the Secured Parties (the "Security Agent").
BACKGROUND
(A)
By a facility agreement dated 24 May 2017 and made between (i) Borrower A, (ii) the Corporate Guarantor, (iii) the Arranger, (iv) the Original Lenders, (v) the Facility Agent and (vi) the Security Agent, the Lenders agreed to make available to Borrower A a facility of up to $18,000,000 in up to two advances for the purpose of (inter alia) financing Ship A by way of a loan in a principal amount not exceeding:
(i)
if Ship A is employed under a Qualifying Charter, the lower of (a) 60 per cent. of the Market Value of Ship A and (b) $18,000,000; or
(ii)
if Ship A is not employed under a Qualifying Charter, the lower of (a) 45 per cent. of the Market Value of Ship A and (b) $13,250,000.
(B)
By the Deed of Accession, Amendment and Restatement, the Finance Parties agreed to certain amendments to the facility agreement and the other Finance Documents including, without limitation, the following:
(i)
Borrower B adhering to and becoming a party to (inter alia) the Facility Agreement and assuming Borrower A's obligations and liabilities thereunder on a joint and several basis; and
(ii)
increasing the facility amount by making available to the Borrowers a further tranche in a single amount not exceeding the lesser of (a) $16,500,000 and (b) 60 per cent. of the Initial Market Value of Ship B.
(C)
This Agreement sets out the terms and conditions of the facility agreement as amended and restated by the Deed of Accession, Amendment and Restatement.



OPERATIVE PROVISIONS


SECTION 1


INTERPRETATION
1
DEFINITIONS AND INTERPRETATION
1.1
Definitions
In this Agreement:
"Account Bank" means Amsterdam Trade Bank N.V. acting through its office at Herengracht 469, Amsterdam, 1017 BS, The Netherlands or any replacement bank or other financial institution as may be approved by the Facility Agent acting with the authorisation of the Majority Lenders.
"Accounts" means, together, the Operating Accounts and the DD Reserve Accounts.
"Account Security" means:
(a)
in relation to Borrower A:
(i)
the document creating Security over the Operating Account and the DD Reserve Account of Borrower A dated 24 May 2017 and made between (i) Borrower A and (ii) the Security Agent as amended and/or supplemented by the Deed of Accession, Amendment and Restatement; and
(ii)
any other document creating Security over any Account of Borrower A made or to be made between (i) Borrower A and (ii) the Security Agent; and
(b)
in relation to Borrower B, a document creating Security over any Account of Borrower B, in agreed form
and, in the plural, means any or all of them.
"Accounting Period" means each consecutive 3-month period, during the Security Period ending on 31 December, 31 March, 30 June and 30 September of each financial year;
"Additional Repayment" means an additional repayment made pursuant to Clause 6.3 (Additional Repayments).
"Additional Unacceptable Country" means a country or territory listed in the Facility Agent's Unacceptable Countries List which is not considered a Prohibited Person for the purposes of Sanctions.
"Advance" means a borrowing of all or part of a Tranche under this Agreement.
"Advisory Fee" means the fee referred to in Clause 11.3 (Advisory fee).
"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.
"Applicable Financing Amount A" means the aggregate amount of Tranche A actually advanced to the Borrowers pursuant to this Agreement after deducting an amount of $1,000,000 (representing the amounts referred to in sub-paragraphs (ii) and (iii) of paragraph (a) of Clause 3.1 (Purpose)).


"Approved Brokers" means Clarksons Valuations Limited, Braemar ACM Valuations Limited, Simpson Spence & Young Valuations Services Ltd, Arrow Research Limited, Fearnleys Shipbrokers A/S (or any Affiliate of such person through which valuations are commonly issued) and any other firm or firms of independent sale and purchase shipbrokers approved in writing by the Facility Agent, acting with the authorisation of the Majority Lenders.
"Approved Classification" means, in relation to a Ship, as at the date of this Agreement, the classification in relation to that Ship specified in Schedule 7 (Details of the Ships) with the Approved Classification Society in relation to that Ship specified in Schedule 7 (Details of the Ships) or the equivalent classification with another Approved Classification Society.
"Approved Classification Society" means, in relation to a Ship, as at the date of this Agreement, the classification society in relation to that Ship specified in Schedule 7 (Details of the Ships) or any other classification society approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders.
"Approved Commercial Manager" means, in relation to a Ship, as at the date of this Agreement, the manager specified as the approved commercial manager in relation to that Ship in Schedule 7 (Details of the Ships) or any other person approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders as the commercial manager of that Ship.
"Approved Insurance Brokers" means Bankserve Insurance Services Ltd and any other firm or firms of insurance brokers approved in writing by the Facility Agent, acting with the authorisation of the Majority Lenders.
"Approved Flag" means, in relation to a Ship, as at the date of this Agreement, the flag in relation to that Ship specified in Schedule 7 (Details of the Ships) or such other flag approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders.
"Approved Manager" means, in relation to a Ship, the Approved Commercial Manager or the Approved Technical Manager of that Ship.
"Approved Technical Manager" in relation to a Ship, as at the date of this Agreement, the manager specified as the approved technical manager in relation to that Ship in Schedule 7 (Details of the Ships) or any other person approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders as the technical manager of that Ship.
"Arrangement Fee" means the fee referred to in Clause 11.2 (Arrangement fee).
"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.
"Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, legalisation or registration.
"Availability Period" means:
(a)
in relation to Tranche A, the period from and including the date of this Agreement to and including 11 August 2017; and
(b)
in relation to Tranche B, the period from and including the date of the Deed of Accession, Amendment and Restatement  to and including 15 October 2017.
"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 any Advance 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.
"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; and
(b)
in relation to any other state, 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.
"Balloon Instalment" has the meaning given to it in Clause 6.1 (Repayment of Loan).
"Break Costs" means the amount (if any) by which:
(a)
the interest 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 an Unpaid Sum to the last day of the current Interest Period in relation to the Loan, the relevant part of the Loan or that 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.
"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in Amsterdam, London, Athens and New York.
"Cash" shall have the meaning given to such term in the Latest Financial Statements.
"Charter" means, in relation to a Ship, any charter relating to that Ship, or other contract for its employment, whether or not already in existence.
"Charter Assignment" means:
(a)
in relation to Ship A:
(i)
the assignment dated 22 June 2017 creating Security over the Qualifying Charter related to Ship A as amended and/or supplemented pursuant to the Deed of Accession Amendment and Restatement; or
(ii)
any other assignment creating Security over any Charter related to Ship A which exceeds 13 Months (without taking into account any optimal extensions), in agreed form;



(b)
in relation to Ship B, the assignment creating Security over any Charter related to Ship B which is for a term which exceeds 13 Months (without taking into account any optional extensions), in agreed form,
and, in the plural, means any or all of them.
"Charter Guarantee" means any guarantee, bond, letter of credit or other instrument (whether or not already issued) supporting a Charter.
"Code" means the US Internal Revenue Code of 1986.
"Commercial Management Agreement" means the agreement entered into between a Borrower and the Approved Commercial Manager regarding the commercial management of a Ship.
"Commitment" means:
(a)
in relation to an Original Lender, the amount set opposite its name under the heading "Commitment" in Part B of Schedule 1 (The Parties) and the amount of any other Commitment transferred to it under this Agreement; and
(b)
in relation to any other Lender, the amount of any Commitment transferred 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 in any other form agreed between the Borrowers and the Facility Agent.
"Confidential Information" means all information relating to any Transaction Obligor, the Finance Documents or the Facility of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or 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 Facility from either:
(a)
any Transaction 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 Transaction 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:
(i)
information that:
(A)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 44 (Confidential Information); or
(B)
is identified in writing at the time of delivery as non-confidential by any Transaction Obligor or any of its advisers; or
(C)
is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above 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 a Transaction 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; and
(ii)
any Funding Rate or Reference Bank Quotation.
"Confidentiality Undertaking" means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrowers and the Facility Agent.
"Corresponding Debt" means any amount, other than any Parallel Debt, which an Obligor owes to a Secured Party under or in connection with the Finance Documents.
"Deed of Accession, Amendment and Restatement" means the deed of accession, amendment and restatement in respect of the Original Facility Agreement dated 25 September 2017 and made between (inter alios) (i) the Borrowers, (ii) the Corporate Guarantor, (iii) the Arranger, (iv) the Lenders, (v) the Facility Agent and (vi) the Security Agent.
"DD Reserve Account" means, in relation to a Borrower:
(a)
an account in the name of that Borrower with the Account Bank designated "[name of Borrower] - DD Reserve Account"; or
(b)
any other account in the name of that Borrower with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or
(c)
any sub-account of any account referred to in paragraphs (a) or (b) above.
"Deed of Release" means a deed releasing the Existing Security under the Existing Facility Agreement in a form acceptable to the Facility Agent.
"Default" means an Event of Default or a Potential Event of Default.
"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, if applicable, any Transaction Obligor; 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 or, if applicable, any Transaction Obligor preventing that, or any other, Party or, if applicable, any Transaction Obligor:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other Parties or, if applicable, any Transaction Obligor 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 or, if applicable, any Transaction Obligor whose operations are disrupted.
"Document of Compliance" has the meaning given to it in the ISM Code.
"dollars" and "$" mean the lawful currency, for the time being, of the United States of America.
"Earnings" means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to a Borrower or the Security Agent and which arise out of or in connection with or relate to the use or operation of that Ship, including (but not limited to):
(a)
the following, save to the extent that any of them is, with the prior written consent of the Facility Agent, pooled or shared with any other person:
(i)
all freight, hire and passage moneys including, without limitation, all moneys payable under, arising out of or in connection with a Charter or a Charter Guarantee;
(ii)
the proceeds of the exercise of any lien on sub-freights;
(iii)
compensation payable to a Borrower or the Security Agent in the event of requisition of that Ship for hire or use;
(iv)
remuneration for salvage and towage services;
(v)
demurrage and detention moneys;
(vi)
without prejudice to the generality of sub-paragraph (i) above, damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship;
(vii)
all moneys which are at any time payable under any Insurances in relation to loss of hire;
(viii)
all monies which are at any time payable to a Borrower in relation to general average contribution; and
(b)
if and whenever that Ship is employed on terms whereby any moneys falling within sub-paragraphs (i) to (viii) of paragraph (a) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship.
"EBITDA" means, as of the last day of an Accounting Period or on any other day, the consolidated net pre-taxation profits of the Group in respect of the relevant Rolling Period, as stated in the then most recent and relevant Applicable Accounts, and all as adjusted by:
(a)
adding back Net Interest Expense;
(b)
adding back depreciation and amortisation;
(c)
adding back any non-cash expenses and non-cash losses;
(d)
deducting any non-cash income and non-cash gains;
(e)
taking no account of any exceptional or extraordinary item;



(f)
taking no account of any revaluation of an asset or any loss or gain over book value arising on the disposal of an asset by a member of the Group during that Rolling Period; and
(g)
adding back the expenses of the special and intermediate surveys, in case these expenses are not capitalized,
in each case, in respect of the relevant Rolling Period.
"EBITDA to Net Interest Expense Ratio" means, as at the date of calculation, the ratio of EBITDA to Net Interest Expense.
"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway.
"Environmental Approval" means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.
"Environmental Claim" means any claim 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 Ship or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from that Ship; 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 either Ship and which involves a collision between either Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship and/or any Transaction Obligor and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
(c)
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where any Transaction Obligor and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action.
"Environmental Law" means any present or future law 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 27 (Events of Default).
"Excess Cash" means, in relation to each Operating Account, at any relevant time, the amount (if any) by which the credit balance on that Operating Account exceeds the aggregate of:
(a)
the respective Minimum Liquidity Amount; and
(b)
$500,000.
"Existing Facility Agreement" means the facility agreement dated 2 December 2015 (as amended and/or supplemented from time to time) and entered into between Borrower B as borrower and the Existing Lender as lender to part-finance the acquisition cost of Ship B.
"Existing Indebtedness" means, at any date, the outstanding Financial Indebtedness of Borrower B on that date under the Existing Facility Agreement amounting to $35,412,000 at the date of this Agreement.
"Existing Lender" means Natixis, a "société anonyme", located at 30, Avenue Pierre Mendès-France, F-75013 Paris, France with a share capital of 5,019,319,328, registered in Paris, France under number 542044524.
"Existing Security" means any Security created to secure the Existing Indebtedness.
"Facility" means the term loan facility made available under this Agreement as described in Clause 2 (The Facility).
"Facility Agent's Unacceptable Countries List" means the list issued by the Facility Agent named "Unacceptable Countries List" and notified to the Borrowers on or prior to the date of this Agreement as such list may be amended and notified to the Borrowers from time to time.
"Facility Office" means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than 5 Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.
"FATCA" means:
(a)
sections 1471 to 1474 of the Code or any associated regulations;
(b)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
(c)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.


"FATCA 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 "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2019; or
(c)
in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2019,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
"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 and/or on about the date of the Deed of Accession, Amendment and Restatement between any of the Arranger, the Facility Agent and the Security Agent and any Obligor setting out any of the fees referred to in Clause 11 (Fees).
"Fidelity Marine" means Fidelity Marine Inc., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered office is at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960 Marshall Islands.
"Finance Document" means:
(a)
this Agreement;
(b)
the Deed of Accession, Amendment and Restatement;
(c)
any Fee Letter;
(d)
each Utilisation Request;
(e)
any Security Document;
(f)
the Intercreditor Agreement;
(g)
the Intercreditor Deed of Accession, Amendment and Restatement;
(h)
any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities; or
(i)
any other document designated as such by the Facility Agent and the Borrowers.
"Finance Party" means the Facility Agent, the Security Agent, the Arranger or a Lender.
"Financial Indebtedness" means any indebtedness for or in relation to:
(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)
the amount of any liability in relation to any lease or hire purchase contract which would, in accordance with GAAP, be treated as a balance sheet liability;
(e)
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f)
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;
(g)
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);
(h)
any counter-indemnity obligation in relation to a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and
(i)
the amount of any liability in relation to any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above.
"Fleet Market Value" means, in relation to the Fleet Vessels, as at the date of calculation, the aggregate Market Value thereof as most recently determined pursuant to Clause 25.7 (Provision of valuations).
"Fleet Vessels" means the vessels from time to time owned by the members of the Group and "Fleet Vessel" means any of them.
"Funding Rate" means any individual rate notified by a Lender to the Facility Agent pursuant to sub-paragraph (ii) of paragraph (a) of Clause 10.4 (Cost of funds).
"GAAP" means generally accepted accounting principles in the United States of America and including IFRS.
"General Assignment" means:
(a)
in relation to Ship A, the general assignment creating Security over Ship A's Earnings, its Insurances and any Requisition Compensation dated 31 May 2017 as amended and/or supplemented pursuant to the Deed of Accession, Amendment and Restatement;
(b)
in relation to Ship B, the general assignment creating Security over Ship B's Earnings, its Insurances and any Requisition Compensation in agreed form,
and, in the plural, means both of them.
"Group" means the Corporate Guarantor and its Subsidiaries (that are consolidated for the purposes of its Financial Statements) and "member of the Group" shall be construed accordingly.


"Holding Company" means, in relation to a person, any other person in relation to which it is a Subsidiary.
"IFRS" means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.
"Indemnified Person" has the meaning given to it in Clause 14.2 (Other indemnities).
"Initial Market Value" means the Market Value of Ship B determined by taking the arithmetic mean of the valuations delivered to the Facility Agent pursuant to paragraph 4.5 of Schedule 2, Part B.
"Insurances" means, in relation to a Ship:
(a)
all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in relation to that Ship, that Ship's Earnings or otherwise in relation to that Ship whether before, on or after the date of this Agreement; and
(b)
all rights and other assets relating to, or derived from, any of such policies, contracts or entries, including any rights to a return of premium and any rights in relation to any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement.
"Intercreditor Agreement" means the Original Intercreditor Agreement as amended and restated by the Intercreditor Deed of Accession, Amendment and Restatement.
"Intercreditor Deed of Accession, Amendment and Restatement" means the deed of accession, amendment and restatement amending and restating the Original Intercreditor Agreement made or to be made between (inter alios) (i) the Borrowers, (ii) the Corporate Guarantor, (iii) the Shareholder, (iv) the Lenders, (v) the Facility Agent and (vi) the Security Agent.
"Interest Payment Date" has the meaning given to it in paragraph (a) of Clause 8.2 (Payment of interest).
"Interest Period" means, in relation to the Loan or any part of 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 or any part of 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 or that part 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 or that part of the Loan,
each as of the Specified Time for dollars.
"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.


"ISPS Code" means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization's (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.
"ISSC" means an International Ship Security Certificate issued under the ISPS Code.
"Junior Agreement" means each of the Junior Amended and Restated Loan Agreement or the Junior Convertible Promissory Note and, in the plural means, both of them.
"Junior Deed of Amendment and Restatement"  means the deed of amendment and restatement in respect of the Junior Existing Loan Agreement dated on or about the date of the Deed of Accession, Amendment and Restatement and made between (inter alios) (i) the Corporate Guarantor as borrower, (ii) Borrower A as guarantor and (iii) the Shareholder as lender.
"Junior Amended and Restated Loan Agreement" means the Junior Existing Loan Agreement as amended and restated pursuant to the Junior Deed of Amendment and Restatement.
"Junior Existing Loan Agreement" means a junior loan agreement dated 24 May 2017 and made between the Corporate Guarantor as borrower and the Shareholder as lender in respect of a loan up to US$16,200,000 secured on (inter alia) Ship A.
"Junior Finance Documents" means:
(a)
the guarantee dated 24 May 2017 and executed by Borrower A in favour of the Shareholder as amended and restated or to be amended and restated by the Junior Deed of Amendment and Restatement in respect of the Corporate Guarantor's obligations under the Junior Amended and Restated Loan Agreement;
(b)
the second priority mortgage on Ship A dated 31 May 2017 and executed by Borrower A in favour of the Shareholder as amended and supplemented or to be amended and supplemented by an addendum No. 1 thereto made or to be made between Borrower A and the Shareholder;
(c)
the second priority general assignment of the Earnings, Insurances and any Requisition Compensation in respect of Ship A dated 31 May 2017 and executed by Borrower A in favour of the Shareholder as amended and restated or to be amended and restated by the Junior Deed of Amendment and Restatement;
(d)
the guarantee executed or to be executed by Borrower B in favour of the Shareholder in respect of the Corporate Guarantor's obligations under the Junior Amended and Restated Loan Agreement;
(e)
the second priority mortgage on Ship B executed or to be executed by Borrower B owning that Ship in favour of the Shareholder; and
(f)
the second priority general assignment of the Earnings, Insurances and any Requisition Compensation in respect of Ship B executed or to be executed by Borrower B in favour of the Shareholder.
"Junior Convertible Promissory Note" means the secured convertible promissory note made or to be made available by the Shareholder to the Corporate Guarantor in the principal amount of $13,750,000 for the purpose of refinancing (i) part of the Existing Indebtedness, (ii) the mandatory prepayment in the amount of $4,750,000 pursuant to clause 5.3(b) of the Junior Amended and Restated Loan Agreement and (iii) general corporate purposes.


"Latest Financial Statements" means, as at the date of calculation or, as the case may be, in respect of an Accounting Period, the annual audited or quarterly unaudited (as the case may be), consolidated financial statements the Corporate Guarantor is obliged to deliver to the Facility Agent pursuant to Clause 20.2 (Financial statements) paragraphs (a) and (b).
"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 28 (Changes to the Lenders),
which in each case has not ceased to be a Party in accordance with this Agreement.
"Leverage Ratio" means, as at the date of calculation, the ratio (expressed as a percentage) of Net Debt to Market Value Adjusted Total Assets.
"LIBOR" means, in relation to the Loan or any part of the Loan:
(a)
the applicable Screen Rate as of the Specified Time for dollars and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or
(b)
as otherwise determined pursuant to Clause 10.1 (Unavailability of Screen Rate),
and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero.
"LMA" means the Loan Market Association.
"Loan" means the loan to be made available under the Facility or the aggregate principal amount outstanding for the time being of the borrowings under the Facility and a "part of the Loan" means an Advance, a Tranche or any other part of the Loan as the context may require.
"Major Casualty" means, in relation to a Ship, any casualty to that Ship in relation to which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency.
"Majority Lenders" means:
(a)
if no Advance has yet been made, a Lender or Lenders whose Commitments aggregate more than 66⅔ per cent. of the Total Commitments; or
(b)
at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 66⅔ per cent. of the amount of the Loan then outstanding or, if the Loan has been repaid or prepaid in full, a Lender or Lenders whose participations in the Loan immediately before repayment or prepayment in full aggregate more than 66⅔ per cent. of the Loan immediately before such repayment.
"Management Agreement" means, in relation to a Ship, the Technical Management Agreement or the Commercial Management Agreement relating to that Ship.
"Manager's Undertaking" means, in relation to a Ship, the letter of undertaking and assignment of insurances from its Approved Technical Manager and the letter of undertaking and assignment of insurances from its Approved Commercial Manager subordinating the rights of such Approved Technical Manager and such Approved Commercial Manager respectively against that Ship and the Borrower owning that Ship to the rights of the Finance Parties in agreed form (including, for the avoidance of doubt, the


Manager's Undertakings in respect of Ship A dated 31 May 2017 as amended and/or supplemented pursuant to the Deed of Accession, Amendment and Restatement),
and, in the plural, means any or all of them.
"Margin" means 4.65 per cent. per annum.
"Market Value Adjusted Other Assets" means, as at the date of calculation, the Fleet Market Value plus the book value (less depreciation and amortization computed in accordance with the Latest Financial Statements on a consolidated basis of all non-current assets of the Group (which, without limitation, shall exclude all Fleet Vessels), as stated in the Latest Financial Statements.
"Market Value Adjusted Total Assets" means, as at the date of calculation, the aggregate of the Market Value Adjusted Other Assets and the Total Current Assets.
"Market Value" means, in relation to a Ship or any other vessel, at any date, the market value of that Ship or vessel shown by the average of 2 valuations (each at the cost of the Borrowers) each prepared:
(a)
as at a date not more than 14 days previously;
(b)
by an Approved Broker (one of which is appointed by the Facility Agent);
(c)
with or without physical inspection of that Ship or vessel (as the Facility Agent may require); and
(d)
on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer, free of any charter,
(e)
after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale,
Provided that if the higher of the two values is more than 120 per cent. of the other value, the Facility Agent shall (at the cost of the Borrowers) obtain a third valuation from an Approved Broker in which case the Market Value shall be the average of all 3 such valuations.
"Material Adverse Effect" means in the reasonable opinion of the Majority Lenders a material adverse effect on:
(a)
the business, operations, property, condition (financial or otherwise) or prospects of any Obligor or the Obligors as a whole; or
(b)
the ability of any Obligor to perform its obligations under any Finance Document; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Security granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.
"Minimum Liquidity Amount" has the meaning given to it in Clause 21.1 (Minimum Liquidity).
"MOA" means the memorandum of agreement in respect of Ship A dated 28 March 2017 as amended by addendum No. 1 dated 25 April 2017, by addendum No. 2 dated 15 May 2017 and by addendum No. 3 dated 30 May 2017 made between (i) the Seller, the Corporate Guarantor or and Borrower A as its guaranteed nominee.


"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)
(subject to paragraph (c) below) 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)
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.
The above rules will only apply to the last Month of any period.
"Mortgage" means:
(a)
in relation to Ship A, the first preferred Marshall Islands mortgage on that Ship dated 31 May 2017 executed by Borrower A in favour of the Security Agent (the "Original Mortgage"), as amended and supplemented by the Mortgage Addendum;
(b)
in relation to Ship B, a first priority, or as the case may be, preferred ship mortgage on that Ship to be executed by Borrower B in favour of the Security Agent and, if required by the laws of the relevant Approved Flag, the deed of covenant collateral to the mortgage in agreed form,
and, in the plural, means both of them;
"Mortgage Addendum" means the mortgage addendum to the Original Mortgage in relation to Ship A executed or to be executed between Borrower A and the Security Agent.
"Net Debt" means, as at the date of calculation, the Total Debt less any drawn amounts of the Notes less any cash, restricted cash and cash equivalents, in each case as stated in the Latest Financial Statements.
"Net Interest Expense" means, as at the date of calculation, all interest paid by the Group minus all interest income received by the Group in respect of the relevant calculation Rolling Period, as stated in the Latest Financial Statements.
"Notes" means, as at the date of calculation, the aggregate outstanding amount of certain notes (including, without limitation, the notes/loans forming part of the Junior Agreement) issued or to be issued by the Corporate Guarantor to its shareholders and held or to be held by those shareholders in exchange for loan made by those shareholders to the Corporate Guarantor which have been or are to be, on-lent to the Borrowers and other members of the Group to assist them with their working capital requirements.
"Obligor" means a Borrower or the Corporate Guarantor.
"Operating Account" means, in relation to a Borrower:
(a)
an account in the name of that Borrower with the Account Bank designated "[name of Borrower] -Operating Account";
(b)
any other account in the name of that Borrower with the Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the


account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or
(c)
any sub-account of any account referred to in paragraphs (a) or (b) above.
"Original Facility Agreement" means the facility agreement dated 24 May 2017 (prior to its amendment and restatement pursuant to the Deed of Accession, Amendment and Restatement) and made between (i) Borrower A as borrower, (ii) the Corporate Guarantor, (iii) the Arranger, (iv) the Lenders, (v) the Facility Agent and (vi) the Security Agent.
"Original Financial Statements" means in relation to the Corporate Guarantor, its audited consolidated financial statements for the financial year ended 31 December 2016.
"Original Intercreditor Agreement" means the intercreditor agreement dated 26 May 2017 and entered into between, inter alios, Borrower A, the Corporate Guarantor, the Shareholder, the Lenders, the Facility Agent and the Security Agent.
"Overseas Regulations" means the Overseas Companies Regulations 2009 (SI 2009/1801).
"Parallel Debt" means any amount which an Obligor owes to the Security Agent under Clause 31.2 (Parallel Debt (Covenant to pay the Security Agent)) or under that clause as incorporated by reference or in full in any other Finance Document.
"Participating Member State" means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
"Party" means a party to this Agreement.
"Perfection Requirements" means the making or procuring of filings, stampings, registrations, notarisations, endorsements, translations and/or notifications of any Finance Document (and/or any Security created under it) necessary for the validity, enforceability (as against the relevant Obligor or any relevant third party) and/or perfection of that Finance Document.
"Permitted Charter" means:
(a)
a Qualifying Charter; or
(b)
any other Charter:
(i)
which is a time, voyage or consecutive voyage charter;
(ii)
the duration of which does not exceed 13 Months plus a redelivery allowance of not more than 30 days;
(iii)
which is entered into on bona fide arm's length terms at the time at which that Ship is fixed; and
(iv)
in relation to which not more than two Months' hire is payable in advance,
and any other Charter which is approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders.
"Permitted Financial Indebtedness" means:
(a)
any Financial Indebtedness incurred under the Finance Documents;



(b)
in respect of Borrower B, until the Utilisation Date of Tranche B, the Existing Indebtedness;
(c)
any Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under the Finance Documents pursuant to the Intercreditor Agreement.
"Permitted Security" means:
(a)
until the Utilisation Date of Tranche B, any Existing Security in respect of the Existing Indebtedness;
(b)
Security created by the Finance Documents;
(c)
Security created by the Junior Finance Documents and subordinated pursuant to the Intercreditor Agreement;
(d)
any netting or set-off arrangement entered into by any Transaction Obligor in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
(e)
liens for unpaid master's and crew's wages in accordance with first class ship ownership and management practice;
(f)
liens for salvage;
(g)
liens for master's disbursements incurred in the ordinary course of trading;
(h)
any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of either Ship and not as a result of any default or omission by either Borrower, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 24.15 (Restrictions on chartering, appointment of managers etc.);
(i)
Security  arising by operation of law in respect of Taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;
(j)
any Security created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses where a Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and
(k)
any Security arising under Article 24 or 26 of the general terms and conditions (Algemene Bank Voorwaarden) of any member of the Dutch Bankers' Association (Nederlandse Vereniging van Banken) or any similar term applied by a financial institution in the Netherlands pursuant to its general terms and conditions.
"Potential Event of Default" means any event or circumstance specified in Clause 27 (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.
"Prohibited Person" means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.
"Protected Party" has the meaning given to it in Clause 12.1 (Definitions).


"Qualifying Charter" means a time or consecutive voyage charter for Ship A having a minimum net daily rate of $14,841 (representing a minimum gross daily rate of $15,500) with a duration (without taking account of any optional extension periods) of at least 12 Months, with a charterer and otherwise on such terms and conditions as may be approved in writing by the Facility Agent, acting with the authorisation of the Majority Lenders.
"Quarterly Increases" means the transfers made into each DD Reserve Account pursuant to Clause 26.4 (Transfers to the DD Reserve Accounts).
"Quotation Day" means, in relation to any period for which an interest rate is to be determined, two 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 Facility 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 Assets.
"Reference Bank Quotation" means any quotation supplied to the Facility Agent by a Reference Bank.
"Reference Bank Rate" means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility Agent at its request by the Reference Banks:
(a)
(other than where paragraph (b) below applies) as the rate at which the relevant Reference Bank could borrow funds in the London 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; or,
(b)
if different, as the rate (if any and applied to the relevant Reference Bank and the relevant currency and period) which contributors to the Screen Rate are asked to submit to the relevant administrator.
"Reference Banks" means the principal London offices of HSBC Bank Plc, London Branch, Deutsche Bank AG, London Branch, UBS AG, Zurich Branch, Citigroup Global Markets Ltd, London Branch, Credit Suisse International, London Branch, Barclays Bank Plc, London Branch, and JP Morgan Chase Bank NA, London Branch or such other entities as may be appointed by the Facility Agent in consultation with the Borrowers.
"Related Fund" in relation to a fund (the "first fund"), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
"Relevant Interbank Market" means the London interbank market.
"Relevant Jurisdiction" means, in relation to a Transaction Obligor:
(a)
its jurisdiction of incorporation;
(b)
any jurisdiction where any asset subject to, or intended to be subject to, any of the Transaction Security created, or intended to be created, by it is situated;
(c)
any jurisdiction where it conducts its business; and



(d)
the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.
"Repayment Date" means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).
"Repayment Instalment" has the meaning given to it in Clause 6.1 (Repayment of Loan ).
"Repeating Representation" means each of the representations set out in Clause 19 (Representations) except Clause 19.10 (Insolvency), Clause 19.11 (No filing or stamp taxes) and Clause 19.12 (Deduction of Tax) and any representation of any Transaction Obligor made in any other Finance Document that is expressed to be a "Repeating Representation" or is otherwise expressed to be repeated.
"Representative" means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
"Requisition" means in relation to a Ship:
(a)
any expropriation, confiscation, requisition (excluding a requisition for hire or use which does not involve a requisition for title) or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected (whether de jure or de facto) by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; and
(b)
any capture or seizure of that Ship (including any hijacking or theft) by any person whatsoever.
"Requisition Compensation" includes all compensation or other moneys payable to a Borrower by reason of any Requisition or any arrest or detention of a Ship in the exercise or purported exercise of any lien or claim.
"Resolution Authority" means any body which has authority to exercise any Write-down and Conversion Powers.
"Rolling Period" means, as of the last day of an Accounting Period, the immediately prior twelve-month period ending on such day.
"Safety Management Certificate" has the meaning given to it in the ISM Code.
"Safety Management System" has the meaning given to it in the ISM Code.
"Sanctions" means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
(a)
imposed by law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America regardless of whether the same is or is not binding on any Transaction Obligor;  or
(b)
otherwise imposed by any law or regulation binding on a Transaction Obligor or to which a Transaction Obligor is subject (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America).
"Seanergy Management" means Seanergy Management Corp., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered office is


at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960 Marshall Islands.
"Screen Rate" means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Facility Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.
"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 Transaction Obligor to any Secured Party under or in connection with each Finance Document.
"Secured Party" means each Finance Party from time to time party to this Agreement, a Receiver or any Delegate.
"Security" means a mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring security.
"Security Assets" means all of the assets of the Transaction Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security.
"Security Cover Ratio" means at any time, the aggregate of the items referred to in paragraphs (a) and (b) of Clause 25.1 (Minimum required security cover) expressed as a percentage of the Loan.
"Security Document" means:
(a)
any Share Security;
(b)
any Mortgage;
(c)
any General Assignment;
(d)
any Charter Assignment;
(e)
any Account Security;
(f)
any Manager's Undertaking;
(g)
any other document (whether or not it creates Security) which is executed by the Borrowers (or either of them) and/or the Corporate Guarantor as security for the Secured Liabilities; or
(h)
any other document agreed to be designated as such by the Facility Agent and the Borrowers.
"Security Period" means the period starting on the date of this Agreement and ending on the date on which the Facility Agent is satisfied that there is no outstanding Commitment in force and that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.


"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 a Transaction Obligor to pay amounts in relation to the Secured Liabilities to the Security Agent as trustee for the Secured Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by a Transaction Obligor or any other person in favour of the Security Agent as trustee for the Secured Parties;
(c)
the Security Agent's interest in any turnover trust created under the Finance Documents;
(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,
except:
(i)
rights intended for the sole benefit of the Security Agent; and
(ii)
any moneys or other assets which the Security Agent has transferred to the Facility Agent or (being entitled to do so) has retained in accordance with the provisions of this Agreement.
"Selection Notice" means a notice substantially in the form set out in Part B of Schedule 3 (Requests) given in accordance with Clause 9 (Interest Periods).
"Seller" means DA Pacific Maritime S.A. a company organised and existing under the laws of Panama having its registered office at 19th Floor, Banco General Tower, Aquilino De La Guardia Street, Marbella, Panama City, Republic of Panama.
"Servicing Party" means the Facility Agent or the Security Agent.
"Shares Security" means:
(a)
in relation to Borrower A, the document creating Security over the share capital of that Borrower dated 24 May 2017 as from time to time amended and/or supplemented or any other document creating Security over the share capital of that Borrower, in agreed form;
(b)
in relation to Borrower B, a document creating Security over the share capital of that Borrower in agreed form; and
and, in the plural, means any or all of them.
"Shareholder" means Jelco Delta Holding Corp., a corporation incorporated in the Marshall Islands having its registered office at the Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH 96960, Marshall Islands.
"Ship" means each of Ship A and Ship B and, in the plural, means both of them.
"Ship A" means the Capesize dry bulk carrier type vessel of a maximum of 179,213 DWT named "PARTNERSHIP" (ex "DONG-A ARTEMIS"), having IMO Number 9597848, registered in the name of Borrower A under an Approved Flag (currently being the Marshall Islands flag).


"Ship B" means the Capesize dry bulk carrier type vessel of a maximum of 179,238 DWT named "CHAMPIONSHIP", having IMO Number 9403516, registered in the name of Borrower B under an Approved Flag (currently being the Liberian flag).
"Specified Time" means a day or time determined in accordance with Schedule 8 (Timetables).
"Subsidiary" means a subsidiary within the meaning of section 1159 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).
"Tax Credit" has the meaning given to it in Clause 12.1 (Definitions).
"Tax Deduction" has the meaning given to it in Clause 12.1 (Definitions).
"Tax Payment" has the meaning given to it in Clause 12.1 (Definitions).
"Technical Management Agreement" means, in relation to each Ship, the agreement entered into between the Borrower owning that Ship and the Approved Technical Manager regarding the technical management of that Ship.
"Termination Date" means, in respect of each Tranche, 26 May 2022.
"Third Parties Act" has the meaning given to it in Clause 1.5 (Third party rights).
"Total Commitments" means the aggregate of the Commitments, being $34,500,000 at the date of the Deed of Accession, Amendment and Restatement.
"Total Current Assets" means, the aggregate of the cash and marketable securities, trade and other receivables from persons (other than persons being members of the Group) realisable within 1 year such amount to be determined on a consolidated basis less any discounts, allowances and activated goodwill, in each case as shown in the Latest Financial Statements.
"Total Debt" means, as at the date of calculation, the current portion of long-term debt, net of deferred finance costs and the long-term debt, net of current portion and deferred finance costs of the Group as shown in the Latest Financial Statements.
"Total Loss" means, in relation to a Ship:
(a)
actual, constructive, compromised, agreed or arranged total loss of that Ship; or
(b)
any Requisition of that Ship unless that Ship is returned to the full control of the Borrower owning that Ship within 30 days of such Requisition.
"Total Loss Date" means, in relation to the Total Loss of a Ship:
(a)
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
(b)
in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earlier of:
(i)
the date on which a notice of abandonment is given to the insurers; and



(ii)
the date of any compromise, arrangement or agreement made by or on behalf of the relevant Borrower with that Ship's insurers in which the insurers agree to treat that Ship as a total loss; and
(c)
in the case of any other type of Total Loss, the date (or the most likely date) on which it appears to the Facility Agent that the event constituting the total loss occurred.
"Tranche" means each of Tranche A and Tranche B and, in the plural means, both of them.
"Tranche A" means that part of the Loan in the amount of $18,000,000 (of which $13,250,000 was made available to Borrower A on 26 May 2017 and $4,750,000 was made available to Borrower A on 22 June 2017) to part-finance Ship A, the outstanding amount of which as at the date of the Deed of Accession, Amendment and Restatement is $17,420,000 or, as the context may require, the outstanding amount thereunder at any relevant time;
"Tranche B" means that part of the Loan not exceeding the lesser of (i) $16,500,000 and (ii) 60 per cent. of the Initial Market Value of Ship B made or to be made available to the Borrowers to refinance part of the Existing Indebtedness secured over Ship B or, as the context may require, the outstanding amount thereunder at any relevant time.
"Transaction Document" means:
(a)
a Finance Document;
(b)
the MOA;
(c)
any Charter exceeding 13 Months without taking into account optional extensions (including, without limitation, the Qualifying Charter in relation to Ship A); or
(d)
any other document designated as such by the Facility Agent and a Borrower.
"Transaction Obligor" means an Obligor or any Approved Manager (except for an Approved Manager which is not a member of the Group).
"Transaction Security" means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
"Transfer Certificate" means a certificate in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Facility Agent and the Borrowers.
"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 Facility Agent executes the relevant Assignment Agreement or Transfer Certificate.
"UK Establishment" means a UK establishment as defined in the Overseas Regulations.
"Unpaid Sum" means any sum due and payable but unpaid by a Transaction Obligor under the Finance Documents.
"US" means the United States of America.


"US Tax Obligor" means:
(a)
a person which is resident for tax purposes in the US; or
(b)
a person some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
"Utilisation" means a utilisation of the Facility.
"Utilisation Date" means the date of a Utilisation, being the date on which the relevant Advance is to be made.
"Utilisation Request" means a notice substantially in the form set out in Part A of Schedule 3 (Requests).
"VAT" means:
(a)
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
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (a) above, or imposed elsewhere.
"V. Ships" means V. Ships Limited, a corporation incorporated and existing under the laws of Cyprus whose registered office is at Zenas Gunther, 16-18, Agia Triada, 3035 Limassol, Cyprus.
"Write-down and Conversion Powers" means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable 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.
1.2
Construction
(a)
Unless a contrary indication appears, a reference in this Agreement to:
(i)
the "Account Bank", the "Arranger", the "Facility Agent", any "Finance Party", any "Lender", any "Obligor", any "Party", any "Secured Party", the "Security Agent", any "Transaction Obligor" 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;



(ii)
"assets" includes present and future properties, revenues and rights of every description;
(iii)
a liability which is "contingent" means a liability which is not certain to arise and/or the amount of which remains unascertained;
(iv)
"document" includes a deed and also a letter;
(v)
"expense" means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable Tax including VAT;
(vi)
a "Finance Document", a "Security Document" or "Transaction Document" or any other agreement or instrument is a reference to that Finance Document, Security Document or Transaction Document or other agreement or instrument as amended, novated, supplemented, extended or restated;
(vii)
"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;
(viii)
"law" includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
(ix)
"proceedings" means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure;
(x)
a "person" includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality);
(xi)
a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
(xii)
a provision of law is a reference to that provision as amended or re-enacted;
(xiii)
a time of day is a reference to London time;
(xiv)
any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction other than England, be deemed to include that which most nearly approximates in that jurisdiction to the English legal term;
(xv)
words denoting the singular number shall include the plural and vice versa; and
(xvi)
"including" and "in particular" (and other similar expressions) shall be construed as not limiting any general words or expressions in connection with which they are used.
(b)
The determination of the extent to which a rate is "for a period equal in length" to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.



(c)
Section, Clause and Schedule headings are for ease of reference only and are not to be used for the purposes of construction or interpretation of the Finance Documents.
(d)
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.
(e)
A Potential Event of Default is "continuing" if it has not been remedied or waived and an Event of Default is "continuing" if it has not been waived.
1.3
Construction of insurance terms
In this Agreement:
"approved" means, for the purposes of Clause 23 (Insurance Undertakings), approved in writing by the Facility Agent.
"excess risks" means, in respect of a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims.
"obligatory insurances" means all insurances effected, or which a Borrower is obliged to effect, under Clause 23 (Insurance Undertakings) or any other provision of this Agreement or of another Finance Document.
"policy" includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
"protection and indemnity risks" means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision.
"war risks" includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls) (1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
1.4
Agreed forms of Finance Documents
References in Clause 1.1 (Definitions) to any Finance Document being in "agreed form" are to that Finance Document:
(a)
in a form attached to a certificate dated the same date as this Agreement (and signed by each Borrower and the Facility Agent); or
(b)
in any other form agreed in writing between each Borrower and the Facility Agent acting with the authorisation of the Majority Lenders or, where Clause 43.2 (All Lender matters) applies, all the Lenders.
1.5
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)
Subject to Clause 43.3 (Other exceptions) but otherwise 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 Affiliate, Receiver, Delegate or any other person described in paragraph (d) of Clause 14.2 (Other indemnities) , paragraph (b) of Clause 30.11 (Exclusion of liability), Clause 30.21 (Role of Reference Banks), Clause 30.22 (Third Party Reference Banks) or paragraph (b) of Clause 31.11 (Exclusion of liability) may, subject to this Clause 1.5 (Third party rights) and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it.


SECTION 2


THE FACILITY
2
THE FACILITY
2.1
The Facility
Subject to the terms of this Agreement, the Lenders make available to the Borrowers a dollar term loan facility in two Tranches in an aggregate amount not exceeding the Total Commitments.
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 a Transaction Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below.  The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by a Transaction Obligor which relates to a Finance Party's participation in the Facility or its role under a Finance Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Transaction Obligor.
(c)
A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents.
2.3
Borrowers' Agent
(a)
Each Borrower by its execution of this Agreement irrevocably appoints the Corporate Guarantor to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:
(i)
the Corporate Guarantor on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including each Utilisation Request), to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by either Borrower notwithstanding that they may affect that Borrower, without further reference to or the consent of that Borrower; and
(ii)
each Finance Party to give any notice, demand or other communication to that Borrower pursuant to the Finance Documents to the Corporate Guarantor,
and in each case each Borrower shall be bound as though that Borrower itself had given the notices and instructions (including, without limitation, each Utilisation Request) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
(b)
Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Corporate Guarantor or given to the Corporate Guarantor under any Finance Document on behalf of a Borrower or in connection with any Finance Document (whether or not known to either Borrower) shall


be binding for all purposes on that Borrower as if that Borrower had expressly made, given or concurred with it.  In the event of any conflict between any notices or other communications of the Corporate Guarantor and either Borrower, those of the Corporate Guarantor shall prevail.
3
PURPOSE
3.1
Purpose
The Borrowers shall apply all amounts borrowed by them under the Facility only for the following purposes:
(a)
in the case of Tranche A:
(i)
first, the Applicable Financing Amount A shall be applied towards part-financing the acquisition of Ship A;
(ii)
secondly, an amount of $500,000 shall be credited to the Operating Account of Borrower A to assist the Borrowers in complying with the requirements of Clause 21 (Financial Covenants); and
(iii)
thirdly, a further amount of $500,000 shall be credited to the Operating Account of Borrower A to be applied towards payment of (i) expenses reasonably incurred (and evidenced, if required by the Lenders, to the satisfaction of the Lenders) in the day-to-day running of Ship A and (ii) amounts payable by the Borrowers pursuant to Clauses 6.1 (Repayment of Loan) and 8 (Interest); and
(b)
in the case of Tranche B towards refinancing part of the Existing Indebtedness;
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 Borrowers may not deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent.
4.2
Further conditions precedent
The Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) if:
(a)
on the date of each Utilisation Request and on each proposed Utilisation Date and before the relevant Advance is made available:
(i)
no Default is continuing or would result from the utilisation of the proposed Advance;
(ii)
the representations made by each Transaction Obligor in Clause 19 (Representations) are true;
(iii)
neither Ship has been sold or become a Total Loss; and



(b)
in the case each Advance, the Facility Agent has received on or before the relevant Utilisation Date, or is satisfied it will receive when that Advance is made available, all of the documents and other evidence listed in Part B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent;
4.3
Notification of satisfaction of conditions precedent
(a)
The Facility Agent shall notify the Borrowers and the Lenders promptly upon being satisfied as to the satisfaction of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) and Clause 4.2 (Further conditions precedent).
(b)
Other than to the extent that the Majority Lenders notify the Facility Agent in writing to the contrary before the Facility Agent gives the notification described in paragraph (a) above, the Lenders authorise (but do not require) the Facility Agent to give that notification.  The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.
4.4
Waiver of conditions precedent
If the Lenders, at their discretion, permit an Advance to be borrowed before any of the conditions precedent referred to in Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) has been satisfied, the Borrowers shall ensure that that condition is satisfied within five Business Days after the relevant Utilisation Date or such later date as the Facility Agent, acting with the authorisation of the Majority Lenders, may agree in writing with the Borrowers.



SECTION 3


UTILISATION
5
UTILISATION
5.1
Delivery of a Utilisation Request
(a)
The Borrowers may utilise the Facility by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time.
(b)
The Borrowers may not deliver more than:
(i)
two Utilisation Requests in respect of Tranche A; and
(ii)
one Utilisation Request in respect of Tranche B; and
(c)
The Borrowers may not deliver a Utilisation Request if, as a result of the proposed Utilisation, more than, in the case of Tranche A, 2 Advances and, in the case of Tranche B, 1 Advance would have been made.
For the avoidance of doubt, Tranche A has been utilised in two Advances, the first of which was utilised on 26 May 2017 and the second on 22 June 2017.
5.2
Completion of a Utilisation Request
(a)
Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
(i)
the proposed Utilisation Date is a Business Day within the Availability Period;
(ii)
the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);
(iii)
all applicable deductible items have been completed; and
(iv)
the proposed Interest Period complies with Clause 9 (Interest Periods).
(b)
Only one Advance may be requested in each Utilisation Request.
5.3
Currency and amount
(a)
The currency specified in each Utilisation Request must be dollars.
(b)
The amount of Tranche A must be an amount which is no more than:
(i)
if on the Utilisation Date in respect of Tranche A the Ship is subject to a Qualifying Charter, the lower of (i) 60 per cent. of the Initial Market Value of the Ship and (ii) $18,000,000; or
(ii)
if on the Utilisation Date in respect of Tranche A the Ship is not subject to a Qualifying Charter, the lower of (i) 45 per cent. of the Initial Market Value of the Ship and (ii) $13,250,000.
(c)
If the circumstances referred to in Clause 5.3(b)(ii) apply on the Utilisation Date in respect of Tranche A, the Borrower shall be entitled to draw down, subject to, inter alia, the satisfaction of the conditions precedent referred to in Schedule 2, Part C


(Conditions Precedent to the Utilisation of the second Advance in respect of Tranche A) part of Tranche A in an amount not exceeding $4,750,000.
(d)
The amount of Tranche B must be in an amount of up to the lesser of (i) $16,500,000 and (ii) 60 per cent. of the Initial Market Value of Ship B.
(e)
The amount of the proposed Advance must be an amount which is not more than the Available Facility.
5.4
Lenders' participation
(a)
If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Advance available by the relevant Utilisation Date through its Facility Office.
(b)
The amount of each Lender's participation in each Advance will be equal to the proportion borne by its Available Commitment to the Available Facility immediately before making that Advance.
(c)
The Facility Agent shall notify each Lender of the amount of each Advance and the amount of its participation in that Advance by the Specified Time.
5.5
Cancellation of Commitments
The Commitments in respect of Tranche B which are unutilised at the end of the Availability Period for such Tranche shall then be cancelled.
5.6
Retentions and payment to third parties
The Borrowers irrevocably authorise the Facility Agent:
(a)
to deduct from the proceeds of any Advance any fees then payable to the Finance Parties in accordance with Clause 11 (Fees), any solicitors fees and disbursements together with any applicable VAT and any other items listed as deductible items in the relevant Utilisation Request and to apply them in payment of the items to which they relate; and
(b)
on each Utilisation Date, to pay to, or for the account of, the Borrowers the balance (after any deduction made in accordance with paragraph (a) above) of the amounts which the Facility Agent receives from the Lenders in respect of the relevant Advance.  That payment shall be made in like funds as the Facility Agent received from the Lenders in respect of the relevant Advance.
5.7
Disbursement of Advance to third party
Payment by the Facility Agent under Clause 5.6 (Retentions and payment to third parties) to a person other than a Borrower shall constitute the making of the relevant Advance and the Borrowers shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender's participation in that Advance.
5.8
Prepositioning of funds
If, in respect of the Utilisation of any Advance, the Lenders, at the request of the Borrowers and on terms acceptable to all the Lenders and in their absolute discretion, preposition funds with any bank, each Borrower and the Corporate Guarantor:
(a)
agree 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 such Advance


after the Utilisation Date in respect of it or, if such Utilisation Date does not occur, within three Business Days of demand by the Facility Agent; and
(b)
shall, without duplication, indemnify each Finance Party against any costs, loss or liability it may incur in connection with such arrangement.


SECTION 4


REPAYMENT, PREPAYMENT AND CANCELLATION
6
REPAYMENT
6.1
Repayment of Loan
The Borrowers shall repay the Loan as follows:
(a)
Save as otherwise repaid or prepaid prior to the date of the Deed of Accession, Amendment and Restatement as stated in paragraph (c) below, Tranche A, by 19 equal consecutive quarterly instalments, each in an amount of $200,000, and, together with the nineteenth final instalment, a balloon instalment in an amount of $13,620,000 (the "Tranche A Balloon Instalment"), the first of which shall be repaid on 27 November 2017 and the final instalment, together with the Tranche A Balloon Instalment, on the Termination Date; and
(b)
Tranche B, by 19 equal consecutive quarterly instalments, of which the first to fourth instalments (inclusive) shall be in the amount of $200,000 each, the fifth to eighth instalments (inclusive) shall be in the amount of $300,000 each, the ninth to nineteenth instalments (inclusive) shall be in the amount of $400,000 each, and, together with the nineteenth final instalment, a balloon instalment in an amount of $10,100,000 (the "Tranche B Balloon Instalment" and together with the Tranche A Balloon Instalment, the "Balloon Instalments" and each, a "Balloon Instalment"), the first of which shall be repaid on 27 November 2017 and the final instalment, together with the Tranche B Balloon Instalment, on the Termination Date,
and each such quarterly instalment shall be a "Repayment Instalment".
(c)
As at the date of the Deed of Accession, Amendment and Restatement, the first instalment of Tranche A in the amount of $200,000 due on 28 August 2017 and an Excess Cash in the amount of $380,000 have already been paid by Borrower A, each on 28 August 2017.
6.2
Effect of cancellation and prepayment on scheduled repayments
(a)
If a Borrower cancels the whole or any part of any Available Commitment in accordance with Clause 7.5 (Right of repayment and cancellation in relation to a single Lender) or if the Available Commitment of any Lender is cancelled under Clause 7.1 (Illegality) then the Repayment Instalments falling after that cancellation will be reduced pro rata by the amount of the Available Commitments so cancelled.
(b)
If a Borrower cancels the whole or any part of any Available Commitment in accordance with Clause 7.2 (Voluntary and automatic cancellation) or if the whole or part of any Commitment is cancelled pursuant to Clause 5.5 (Cancellation of Commitments), the Repayment Instalments for the relevant Tranche for each Repayment Date falling after that cancellation will be reduced pro rata by the amount of the Commitments so cancelled but rounded up to the nearest thousand and the relevant Balloon Instalment will then be reduced by the amount of such rounding up.
(c)
If any part of the Loan is repaid or prepaid in accordance with Clause 7.5 (Right of repayment and cancellation in relation to a single Lender) or Clause 7.1 (Illegality) then the Repayment Instalments for each Repayment Date falling after that repayment or prepayment will be reduced pro rata by the amount of the Loan repaid or prepaid.
(d)
If any part of the Loan is prepaid in accordance with Clause 7.3 (Voluntary prepayment of Loan) or Clause 7.4 (Mandatory prepayment on sale, Total Loss) then the amount of the Repayment Instalments for the relevant Tranche for each Repayment Date falling after that


repayment or prepayment will be reduced in inverse chronological order by the amount of the Loan repaid or prepaid.
6.3
Additional Repayments
(a)
On each Repayment Date, any Excess Cash standing to the credit of an Operating Account shall be applied towards reducing the Balloon Instalment relevant to the Tranche which has been used to refinance the Ship whose Operating Account is in credit as specified in this paragraph (a).
(b)
The application of any Excess Cash in accordance with this Clause 6.3 (Additional Repayments) may only be made if:
(i)
the amount of an Additional Repayment is at least $10,000 or an integral multiple of that amount; and
(ii)
the aggregate amount of the Additional Repayments previously made and any new Additional Repayment pursuant to this Clause 6.3 (Additional Repayments) does not exceed, in the case of Tranche A, $3,600,000 and, in the case of Tranche B, $1,250,000.
6.4
Termination Date
On the Termination Date, the Borrowers shall additionally pay to the Facility Agent for the account of the Finance Parties all other sums then accrued and owing under the Finance Documents.
6.5
Reborrowing
Neither Borrower may reborrow any part of the Facility which is repaid.
7
PREPAYMENT AND CANCELLATION
7.1
Illegality
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or 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 Facility Agent upon becoming aware of that event;
(b)
upon the Facility Agent notifying the Borrowers, the Available Commitment of that Lender will be immediately cancelled; and
(c)
the Borrowers shall prepay that Lender's participation in the Loan on the last day of the Interest Period for the Loan occurring after the Facility Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender's corresponding Commitment shall be cancelled in the amount of the participation prepaid.
7.2
Voluntary and automatic cancellation
The Borrowers may, if they give the Facility Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of $100,000 or integral multiples thereof) of the Available Facility.  Any cancellation under this Clause 7.2 (Voluntary and automatic cancellation) shall


reduce the Commitments of the Lenders rateably and the amount of the relevant Tranche(s).
(a)
The unutilised Commitment (if any) of each Lender shall be automatically cancelled at close of business on the date on which Tranche B is made available.
7.3
Voluntary prepayment of Loan
(a)
Subject to paragraph (b) below, the Borrowers may, if they give the Facility Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) 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 $100,000 or an integral multiple of that amount).
(b)
The Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the day on which the Available Facility is zero).
(c)
Any partial prepayment under this Clause 7.3 (Voluntary prepayment of Loan) shall be applied towards prepayment of the Tranche specified in the relevant prepayment notice first in prepaying the relevant Balloon Instalment and thereafter against the outstanding Repayment Instalments of that Tranche in inverse order of maturity.
7.4
Mandatory prepayment on sale, Total Loss or non-compliance with Facility Agent's Unacceptable Countries List
(a)
If a Ship is sold or becomes a Total Loss, the Borrowers shall on the Relevant Date prepay the Relevant Amount.
(b)
If, in the Facility Agent's opinion, a Borrower not in compliance with the Facility Agent's Unacceptable Countries List as regards any Additional Unacceptable Country, the Borrowers shall, on the Facility Agent's demand, prepay the Loan.
In this Clause 7.4 (Mandatory prepayment on sale, Total Loss), if the event referred to in paragraph (a) of this Clause occurs:
"Relevant Amount" means the higher of:
(1)
the whole of the Tranche relative to such Ship which has been sold or has become a Total Loss; and
(2)
such amount of the Loan which, after giving credit for the amount of the prepayment made pursuant to this Clause 7.4 (Mandatory prepayment on sale, Total Loss or non-compliance with Facility Agent's Unacceptable Countries List), results in the Security Cover Ratio being equal to the security cover required to be maintained in Clause 25.1 (Minimum required security cover).
"Relevant Date" means:
(i)
in the case of a sale of a Ship, on the date on which the sale is completed by delivery of that Ship to the buyer of that Ship; and
(ii)
in the case of a Total Loss of a Ship, on the earlier of:
(A)
the date falling 180 days after the Total Loss Date; and
(B)
the date of receipt by the Security Agent of the proceeds of insurance relating to such Total Loss.



7.5
Right of repayment and cancellation in relation to a single Lender
(a)
If:
(i)
any sum payable to any Lender by a Transaction Obligor is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up) or under that clause as incorporated by reference or in full in any other Finance Document; or
(ii)
any Lender claims indemnification from a Borrower under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs); or
(iii)
the Facility Agent receives notification from a Relevant Lender under Clause 10.3 (Market disruption),
the Borrowers may:
(A)
whilst in the case of sub-paragraphs (i) and (ii) above the circumstance giving rise to the requirement for that increase or indemnification continues; or
(B)
whilst in the case of sub-paragraph (iii) above the situation in relation to the Relevant Lender continues,
give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender's participation in the Loan.
(b)
On receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment of that Lender shall immediately be reduced to zero.
(c)
On the last day of each Interest Period which ends after the Borrowers have given notice of cancellation under paragraph (a) above in relation to a Lender (or, if earlier, the date specified by the Borrowers in that notice), the Borrowers shall repay that Lender's participation in the Loan.
7.6
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, the amount of that cancellation or prepayment and, if relevant, the part of the Loan to be prepaid or cancelled.
(b)
Any prepayment or cancellation (whether voluntary or automatic) under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to the fee provided for in Clause 11.4 (Prepayment fee) and any Break Costs, without premium or penalty.
(c)
Neither Borrower may reborrow any part of the Facility which is prepaid.
(d)
Neither Borrower shall 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.
(e)
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.



(f)
If the Facility Agent receives a notice under this Clause 7 (Prepayment and Cancellation) it shall promptly forward a copy of that notice to either the Borrowers or the affected Lenders, as appropriate.
(g)
If all or part of any Lender's participation in the Loan is repaid or prepaid, an amount of that Lender's Commitment (equal to the amount of the participation which is repaid or prepaid) will be deemed to be cancelled on the date of repayment or prepayment.
7.7
Application of prepayments
Any prepayment of any part of the Loan (other than a prepayment pursuant to Clause 7.1 (Illegality) or Clause 7.5 (Right of repayment and cancellation in relation to a single Lender)) shall be applied pro rata to each Lender's participation in that part of the Loan.


SECTION 5


COSTS OF UTILISATION
8
INTEREST
8.1
Calculation of interest
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of:
(a)
the Margin; and
(b)
LIBOR.
8.2
Payment of interest
(a)
The Borrowers shall pay accrued interest on the Loan or any part of the Loan on the last day of each Interest Period (each an "Interest Payment Date").
(b)
If an Interest Period is longer than 3 Months, the Borrowers shall also pay interest then accrued on the Loan or the relevant part of the Loan on the dates falling at 3 Monthly intervals after the first day of the Interest Period.
8.3
Default interest
(a)
If a Transaction Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2 per cent. per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of the Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Facility Agent. Any interest accruing under this Clause 8.3 (Default interest) shall be immediately payable by the Obligor on demand by the Facility Agent.
(b)
If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or that part of the Loan:
(i)
the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan or that part of the Loan; and
(ii)
the rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2 per cent. per annum higher than the rate which would have applied if that Unpaid Sum had not become due.
(c)
Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but will remain immediately due and payable.
8.4
Notification of rates of interest
(a)
The Facility Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.
(b)
The Facility Agent shall promptly notify the Borrowers of each Funding Rate relating to the Loan, any part of the Loan or any Unpaid Sum.



9
INTEREST PERIODS
9.1
Selection of Interest Periods
(a)
The Borrowers may select the first Interest Period for a Tranche in the Utilisation Request for that Tranche.  Subject to paragraphs (f) and (i) below and Clause 9.2 (Changes to Interest Periods), the Borrowers may select each subsequent Interest Period in respect of a Tranche in a Selection Notice.
(b)
Each Selection Notice is irrevocable and must be delivered to the Facility Agent by the Borrowers not later than the Specified Time.
(c)
If the Borrowers fail to select an Interest Period in the first Utilisation Request or fail to deliver a Selection Notice to the Facility Agent in accordance with paragraphs (a) and (b) above, the relevant Interest Period will, subject to paragraphs (f) and (i) below and Clause 9.2 (Changes to Interest Periods), be three Months.
(d)
Subject to this Clause 9 (Interest Periods), the Borrowers may request an Interest Period of three Months but the length of the Interest period shall be at the sole discretion of the Facility Agent (acting on the instructions of all the Lenders)  Provided that the Borrowers may select an Interest Period of one Month up to six times per calendar year.
(e)
An Interest Period in respect of the Loan or any part of the Loan shall not extend beyond the Termination Date.
(f)
In respect of a Repayment Instalment, the Borrowers may request in the relevant Selection Notice that an Interest Period for a part of the Loan equal to such Repayment Instalment shall end on the Repayment Date relating to it and, subject to paragraph (d) above, select a longer Interest Period for the remaining part of the Loan.
(g)
The first Interest Period for Tranche A shall start on the Utilisation Date for Tranche A and, subject to paragraph (i) below, each subsequent Interest Period shall start on the last day of the preceding Interest Period.
(h)
The first interest period for Tranche B shall start on the Utilisation Date of Tranche B and end on 27 November 2017.
(i)
Except for the purposes of paragraph (f) above and Clause 9.2 (Changes to Interest Periods), the Loan shall have one Interest Period only at any time.
9.2
Changes to Interest Periods
(a)
In respect of a Repayment Instalment, prior to determining the interest rate for the Loan, the Facility Agent may establish an Interest Period for a part of the Loan equal to such Repayment Instalment to end on the Repayment Date relating to it and the remaining part of the Loan shall have the Interest Period selected in the relevant Selection Notice, subject to paragraph (d) of Clause 9.1 (Selection of Interest Periods).
(b)
If the Facility Agent makes any change to an Interest Period referred to in this Clause 9.2 (Changes to Interest Periods), it shall promptly notify the Borrowers and the Lenders.
9.3
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
Unavailability of Screen Rate
(a)
Interpolated Screen Rate:  If no Screen Rate is available for LIBOR for the Interest Period of the Loan or any part of the Loan, the applicable LIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(b)
Reference Bank Rate:  If no Screen Rate is available for LIBOR for:
(i)
dollars; or
(ii)
the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Screen Rate,
the applicable LIBOR shall be the Reference Bank Rate as of the Specified Time and for a period equal in length to the Interest Period of the Loan or that part of the Loan.
(c)
Cost of funds:  If paragraph (b) above applies but no Reference Bank Rate is available for dollars or the relevant Interest Period there shall be no LIBOR for the Loan or that part of the Loan (as applicable) and Clause 10.4 (Cost of funds) shall apply to the Loan or that part of the Loan for that Interest Period.
10.2
Calculation of Reference Bank Rate
(a)
Subject to paragraph (b) below, if LIBOR is to be determined on the basis of a Reference Bank Rate but a Reference Bank does not supply a quotation by the Specified Time, the Reference Bank Rate shall be calculated on the basis of the quotations of the remaining Reference Banks.
(b)
If at or about noon on the Quotation Day none or only one of the Reference Banks supplies a quotation, there shall be no Reference Bank Rate for the relevant Interest Period.
10.3
Market disruption
If before close of business in London on the Quotation Day for the relevant Interest Period the Facility Agent receives notification from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan exceed 20 per cent. of the Loan or the relevant part of the Loan as appropriate) (the "Relevant Lender") that the cost to it of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select would be in excess of LIBOR then Clause 10.4 (Cost of funds) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
10.4
Cost of funds
(a)
If this Clause 10.4 (Cost of funds) applies, the rate of interest on the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
(i)
the Margin; and
(ii)
the weighted average of the rates notified to the Facility Agent by each Lender as soon as practicable and in any event within 5 Business Days of the first day of that Interest Period (or, if earlier, on the date falling 5 Business Days before the date on which 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 the relevant Lender of funding its participation in the Loan or that part of the Loan from whatever source it may reasonably select.



(b)
If this Clause 10.4 (Cost of funds) applies and the Facility Agent or the Borrowers so require, the Facility Agent and the Borrowers shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
(c)
Subject to Clause 43.4 (Replacement of Screen Rate), any substitute or alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties.
(d)
If paragraph (e) below does not apply and any rate notified to the Facility Agent under sub-paragraph (ii) of paragraph (a) above is less than zero, the relevant rate shall be deemed to be zero.
(e)
If this Clause 10.4 (Cost of funds) applies pursuant to Clause 10.3 (Market disruption) and:
(i)
a Lender's Funding Rate is less than LIBOR; or
(ii)
a Lender does not supply a quotation by the time specified in sub-paragraph (ii) of paragraph (a) above,
the cost to that Lender of funding its participation in the Loan or the relevant part of the Loan for that Interest Period shall be deemed, for the purposes of paragraph (a) above, to be LIBOR.
(f)
If this Clause 10.4 (Cost of funds) applies but any Lender does not supply a quotation by the time specified in sub-paragraph (ii) of paragraph (a) above, the rate of interest shall be calculated on the basis of the quotations of the remaining Lenders.
10.5
Break Costs
(a)
The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
(b)
Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
11
FEES
11.1
Commitment fee
(a)
The Borrowers shall pay to the Facility Agent (for the account of each Lender) a fee computed at the rate of 2.325 per cent. per annum on that Lender's Available Commitment from time to time for the Availability Period.
(b)
The accrued commitment fee shall be payable on the earlier of (i) the Utilisation Date in respect of Tranche B and (ii) 15 October 2017 and, if cancelled, on the cancelled amount of the relevant Lender's Commitment at the time the cancellation is effective.
(c)
The commitment fee in respect of Tranche A was paid prior to the date of the Deed of Accession, Amendment and Restatement.
11.2
Arrangement fee
(a)
The Borrowers shall pay to the Arranger an arrangement fee in respect each Tranche in the amount and at the times agreed in the relevant Fee Letter.



(b)
The arrangement fee in respect of Tranche A was paid prior to date of the Deed of Accession, Amendment and Restatement.
11.3
Advisory fee
(a)
The Borrower shall pay to the Facility Agent (for its own account) an advisory fee in respect of each Tranche in the amount and at the times agreed in the relevant Fee Letter.
(b)
The advisory fee in respect of Tranche A was paid prior to the date of the Deed of Accession, Amendment and Restatement.
11.4
Prepayment fee
(a)
Subject to paragraph (c) below, the Borrowers must pay to the Facility Agent for each Lender a prepayment fee on the date of prepayment of all or any part of the Loan.
(b)
The amount of the prepayment fee is:
(i)
if the prepayment occurs on or before the first anniversary of the Utilisation Date for Tranche B, 2 per cent. of the amount prepaid;
(ii)
if the prepayment occurs after the first, but on or before the second, anniversary of the Utilisation Date for Tranche B, 1.50 per cent. of the amount prepaid;
(iii)
if the prepayment occurs after the second, but on or before the third, anniversary of the Utilisation Date for Tranche B, 1 per cent. of the amount prepaid; and
(iv)
if the prepayment occurs after the third, but on or before the fourth, anniversary of the Utilisation Date for Tranche B, 0.50 per cent. of the amount prepaid.
(c)
No prepayment fee shall be payable under this Clause if the prepayment is made under Clause 6.3 (Additional Repayments), Clause 7.4 (Mandatory prepayment on sale, Total Loss) as a result of a Total Loss of the Ship or Clause 25 (Security Cover) or in the case of a full or partial refinancing of the Loan by Original Lenders or any of their Affiliates, associates and partners.


SECTION 6


ADDITIONAL PAYMENT OBLIGATIONS
12
TAX GROSS UP AND INDEMNITIES
12.1
Definitions
(a)
In this Agreement:
"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.
"Tax Credit" means a credit against, relief or remission for, or repayment of any Tax.
"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.
"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).
(b)
Unless a contrary indication appears, in this Clause 12 (Tax Gross Up and Indemnities) reference to "determines" or "determined" means a determination made in the absolute discretion of the person making the determination.
12.2
Tax gross-up
(a)
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
(b)
The Borrowers shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a Lender it shall notify the Borrowers and that Obligor.
(c)
If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that 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.
(d)
If an Obligor is required to make a Tax Deduction, 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.
(e)
Within 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 deliver to the Facility 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 Obligors shall (within three Business Days of demand by the Facility 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)
Paragraph (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
(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 paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Obligors.
(d)
A Protected Party shall, on receiving a payment from an Obligor under this Clause 12.3 (Tax indemnity), notify the Facility Agent.
12.4
Tax Credit
If an 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 received; and
(b)
that Finance Party has obtained and utilised that Tax Credit,
the Finance Party shall pay an amount to the 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 required to be made by the Obligor.
12.5
Stamp taxes
The Obligors shall pay and, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability which that Secured 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 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 paragraph (b) below, if VAT is or becomes chargeable on any supply


made by any Finance Party to any Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party 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 that Party).
(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):
(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 sub-paragraph (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 of it 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 (VAT) to any Party shall, at any time when that Party is treated as a member of a group or unity (or fiscal unity) for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the person who is treated at that time as making the supply, or (as appropriate) receiving the supply, under the grouping rules (provided for in Article 11 of Council Directive 2006/112/EC (or as implemented by the relevant member state of the European Union) so that a reference to a Party shall be construed as a reference to that Party or the relevant group or unity (or fiscal unity) of which that Party is a member for VAT purposes at the relevant time or the relevant representative member (or representative or head) of that group or unity at the relevant time (as the case may be).
(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 paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:
(i)
confirm to that other Party whether it is:
(A)
a FATCA Exempt Party; or



(B)
not a FATCA Exempt Party; and
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and
(iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation or exchange of information regime.
(b)
If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)
Paragraph (a) above shall not oblige any Finance Party to do anything and sub-paragraph (iii) of paragraph (a) above shall not oblige any other Party to do anything which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality.
(d)
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
(e)
If a Borrower is a US Tax Obligor, or the Facility Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lender shall, within ten Business Days of:
(i)
where a Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;
(ii)
where a Borrower is a US Tax Obligor on a Transfer Date and the relevant Lender is a New Lender, the relevant Transfer Date; or
(iii)
where a Borrower is not a US Tax Obligor, the date of a request from the Facility Agent,
supply to the Facility Agent:
(i)
a withholding certificate on Form W-8, Form W-9 or any other relevant form; or
(ii)
any withholding statement or other document, authorisation or waiver as the Facility Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation.
(f)
The Facility Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (e) above to the Borrowers.



(g)
If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Facility Agent by a Lender pursuant to paragraph (e) above 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 Facility Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Facility Agent).  The Facility Agent shall provide any such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrowers.
(h)
The Facility Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (e) or (g) above without further verification.  The Facility Agent shall not be liable for any action taken by it under or in connection with paragraphs (e), (f) or (g) above.
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 each Obligor and the Facility Agent and the Facility Agent shall notify the other Finance Parties.
13
INCREASED COSTS
13.1
Increased costs
(a)
Subject to Clause 13.3 (Exceptions), the Borrowers shall, within three Business Days of a demand by the Facility Agent, pay 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,
in each case after the date of this Agreement; or
(iii)
the implementation, application of or compliance with Basel III or CRD IV or any law or regulation that implements or applies Basel III or CRD IV.
(b)
In this Agreement:
(i)
"Basel III" means:
(A)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
(B)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional


loss absorbency requirement - Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
(C)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
(ii)
"CRD IV" means:
(A)
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;
(B)
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
(C)
any other law or regulation which implements Basel III.
(iii)
"Increased Costs" means:
(A)
a reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital;
(B)
an additional or increased cost; or
(C)
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.
13.2
Increased cost claims
(a)
A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Borrowers.
(b)
Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.
13.3
Exceptions
Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:
(a)
attributable to a Tax Deduction required by law to be made by an Obligor;
(b)
attributable to a FATCA Deduction required to be made by a Party;
(c)
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 paragraph (b) of Clause 12.3 (Tax indemnity) applied);
(d)
compensated for by any payment made pursuant to Clause 14.3 (Mandatory Cost); or
(e)
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.



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, on demand, indemnify each Secured Party to which 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 Obligor shall, on demand, indemnify each Secured Party against any cost, loss or liability incurred by it as a result of:
(i)
the occurrence of any Event of Default;
(ii)
a failure by a Transaction 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 33 (Sharing among the Finance Parties);
(iii)
funding, or making arrangements to fund, its participation in an Advance requested by the Borrowers in a 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 Secured Party alone); or
(iv)
the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.
(b)
Each Obligor shall, 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 (Other indemnities) 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  Ship 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 14.2 (Other indemnities) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act.
14.3
Mandatory Cost
Each Borrower shall, on demand by the Facility Agent, pay to the Facility Agent for the account of the relevant Lender, such amount which any Lender certifies in a notice to the Facility Agent to be its good faith determination of the amount necessary to compensate it for complying with:
(a)
in the case of a Lender lending from a Facility Office in a Participating Member State, the minimum reserve requirements (or other requirements having the same or similar purpose) of the European Central Bank or any other authority or agency which replaces all or any of its functions) in respect of loans made from that Facility Office; and
(b)
in the case of any Lender lending from a Facility Office in the United Kingdom, any reserve asset, special deposit or liquidity requirements (or other requirements having the same or similar purpose) of the Bank of England (or any other governmental authority or agency) and/or paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority (or any other governmental authority or agency which replaces all or any of their functions),
which, in each case, is referable to that Lender's participation in the Loan.
14.4
Indemnity to the Facility Agent
Each Obligor shall, on demand, indemnify the Facility Agent against:
(a)
any cost, loss or liability incurred by the Facility 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 the Finance Documents; and
(b)
any cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility Agent's gross negligence or wilful misconduct) or, in the case of any cost, loss or liability pursuant to Clause 34.11 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent in acting as Facility Agent under the Finance Documents.
14.5
Indemnity to the Security Agent
(a)
Each Obligor shall, on demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them:



(i)
in relation to or as a result of:
(A)
any failure by a Borrower to comply with its obligations under Clause 16 (Costs and Expenses);
(B)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;
(C)
the taking, holding, protection or enforcement of the Finance Documents and the Transaction Security;
(D)
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;
(E)
any default by any Transaction Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents;
(F)
any action by any Transaction Obligor which vitiates, reduces the value of, or is otherwise prejudicial to, the Transaction Security; and
(G)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents.
(ii)
acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Security Property or the performance of the terms of this Agreement or the other Finance Documents (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 Secured Parties, indemnify itself out of the Security Assets in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 14.5 (Indemnity to the Security Agent) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it.
15
MITIGATION BY THE FINANCE PARTIES
15.1
Mitigation
(a)
Each Finance Party shall, in consultation with the Borrowers, take all reasonable but commercially prudent endeavours 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), Clause 13 (Increased Costs) or paragraph (a) of Clause 14.3 (Mandatory Cost) 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 Transaction Obligor under the Finance Documents.
15.2
Limitation of liability
(a)
Each Obligor shall, on 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 either:



(i)
a Default has occurred and is continuing; or
(ii)
in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
16
COSTS AND EXPENSES
16.1
Transaction expenses
The Obligors shall, on demand, pay the Facility Agent, the Security Agent and the Arranger the amount of all costs and expenses (including legal fees) reasonably incurred by any Secured Party in connection with the negotiation, preparation, printing, execution and perfection of:
(a)
this Agreement and any other documents referred to in this Agreement or in a Security Document; and
(b)
any other Finance Document executed after the date of this Agreement.
16.2
Amendment costs
If:
(a)
a Transaction Obligor requests an amendment, waiver or consent; or
(b)
an amendment is required pursuant to Clause 34.9 (Change of currency); or
(c)
a Transaction Obligor requests, and the Security Agent agrees to, the release of all or any part of the Security Assets from the Transaction Security,
the Obligors shall, on demand, reimburse each of the Facility Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by each Secured Party in responding to, evaluating, negotiating or complying with that request or requirement.
16.3
Enforcement and preservation costs
The Obligors shall, on demand, pay to each Secured Party the amount of all costs and expenses (including legal fees) incurred by that Secured 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 Secured Party as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights.


SECTION 7


GUARANTEE
17
GUARANTEE AND INDEMNITY - CORPORATE GUARANTOR
17.1
Guarantee and indemnity
The Corporate Guarantor irrevocably and unconditionally:
(a)
guarantees to each Finance Party punctual performance by each Transaction Obligor other than the Corporate Guarantor of all such other Transaction Obligor's obligations under the Finance Documents;
(b)
undertakes with each Finance Party that whenever a Transaction Obligor other than the Corporate Guarantor does not pay any amount when due under or in connection with any Finance Document, the Corporate Guarantor shall immediately on demand pay that amount as if it 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 a Transaction Obligor other than the Corporate Guarantor 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 Corporate Guarantor under this indemnity will not exceed the amount it would have had to pay under this Clause 17 (Guarantee and Indemnity - Corporate Guarantor) 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 Transaction 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 Transaction Obligor or any security for those obligations or otherwise) is made by a Secured 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 Corporate Guarantor under this Clause 17 (Guarantee and Indemnity - Corporate Guarantor) will continue or be reinstated as if the discharge, release or arrangement had not occurred.
17.4
Waiver of defences
The obligations of the Corporate Guarantor under this Clause 17 (Guarantee and Indemnity - Corporate Guarantor) and in respect of any Transaction Security will not be affected or discharged by an act, omission, matter or thing which, but for this Clause 17.4 (Waiver of defences), would reduce, release or prejudice any of its obligations under this Clause 17 (Guarantee and Indemnity - Corporate Guarantor) or in respect of any Transaction Security (without limitation and whether or not known to it or any Secured Party) including:
(a)
any time, waiver or consent granted to, or composition with, any Transaction Obligor or other person;



(b)
the release of any other Transaction Obligor or any other person under the terms of any composition or arrangement with any creditor of any Transaction Obligor;
(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Transaction 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;
(d)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Transaction 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
Immediate recourse
The Corporate Guarantor waives any right it may have of first requiring any Secured 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 (including without limitation to commence any proceedings under any Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings under this Clause 17 (Guarantee and Indemnity - ).  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
17.6
Appropriations
Until all amounts which may be or become payable by the Transaction Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Secured 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 Secured 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 Corporate Guarantor shall not be entitled to the benefit of the same; and
(b)
hold in an interest-bearing suspense account any moneys received from the Corporate Guarantor or on account of the Corporate Guarantor's liability under this Clause 17 (Guarantee and Indemnity - Corporate Guarantor).
17.7
Deferral of Corporate Guarantor's rights
All rights which the Corporate Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against either Borrower, any other Transaction Obligor or their respective assets shall be fully subordinated to the rights of the Secured Parties under the Finance Documents and until the end of the Security Period and unless the Facility Agent otherwise directs, the Corporate Guarantor will not exercise any rights which it may have (whether in respect of any Finance Document to which it is a Party or any other transaction) 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 Clause17 (Guarantee and Indemnity - Corporate Guarantor):
(a)
to be indemnified by a Transaction Obligor;
(b)
to claim any contribution from any third party providing security for, or any other guarantor of, any Transaction 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 Secured Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Secured Party;
(d)
to bring legal or other proceedings for an order requiring any Transaction Obligor to make any payment, or perform any obligation, in respect of which the Corporate Guarantor has given a guarantee, undertaking or indemnity under Clause 17.1 (Guarantee and indemnity);
(e)
to exercise any right of set-off against any Transaction Obligor; and/or
(f)
to claim or prove as a creditor of any Transaction Obligor in competition with any Secured Party.
If the Corporate 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 Secured Parties by the Transaction Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Secured Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 34 (Payment Mechanics).
17.8
Additional security
This guarantee and any other Security given by the Corporate Guarantor 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 Secured Party or any right of set-off or netting or right to combine accounts in connection with the Finance Documents.
17.9
Applicability of provisions of Guarantee to other Security
Clauses 17.2 (Continuing guarantee), 17.3 (Reinstatement), 17.4 (Waiver of defences), 17.5 (Immediate recourse), 17.6 (Appropriations), 17.7 (Deferral of Corporate Guarantor's rights) and 17.8 (Additional security) shall apply, with any necessary modifications, to any Security which the Corporate Guarantor creates (whether at the time at which it signs this Agreement or at any later time) to secure the Secured Liabilities or any part of them.
18
JOINT AND SEVERAL LIABILITY OF THE BORROWERS
18.1
Joint and several liability
All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several.
18.2
Waiver of defences
The liabilities and obligations of a Borrower shall not be impaired by:
(a)
this Agreement being or later becoming void, unenforceable or illegal as regards any other Borrower;



(b)
any Lender or the Security Agent entering into any rescheduling, refinancing or other arrangement of any kind with any other Borrower;
(c)
any Lender or the Security Agent releasing any other Borrower or any Security created by a Finance Document; or
(d)
any time, waiver or consent granted to, or composition with any other Borrower or other person;
(e)
the release of any other Borrower or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(f)
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 other Borrower 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;
(g)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any other Borrower or any other person;
(h)
any amendment, novation, supplement, extension, restatement (however fundamental, and whether or not more onerous) or replacement of a 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;
(i)
any unenforceability, illegality or invalidity of any obligation or any person under any Finance Document or any other document or security; or
(j)
any insolvency or similar proceedings.
18.3
Principal Debtor
Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and neither Borrower shall, in any circumstances, be construed to be a surety for the obligations of any other Borrower under this Agreement.
18.4
Borrower restrictions
(a)
Subject to paragraph (b) below, during the Security Period neither Borrower shall:
(i)
claim any amount which may be due to it from any other Borrower whether in respect of a payment made under, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or
(ii)
take or enforce any form of security from any other Borrower for such an amount, or in any way seek to have recourse in respect of such an amount against any asset of any other Borrower; or
(iii)
set off such an amount against any sum due from it to any other Borrower; or
(iv)
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving any other Borrower; or
(v)
exercise or assert any combination of the foregoing.



(b)
If during the Security Period, the Facility Agent, by notice to a Borrower, requires it to take any action referred to in paragraph (a) above in relation to any other Borrower, that Borrower shall take that action as soon as practicable after receiving the Facility Agent's notice.
18.5
Deferral of Borrowers' rights
Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full and unless the Facility Agent otherwise directs, neither Borrower will exercise any rights  which it may have by reason of performance by it of its obligations under the Finance Documents:
(a)
to be indemnified by any other Borrower; or
(b)
to claim any contribution from any other Borrower in relation to any payment made by it under the Finance Documents.



SECTION 8


REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
19
REPRESENTATIONS
19.1
General
Each Obligor makes the representations and warranties set out in this Clause 19 (Representations) to each Finance Party on the date of this Agreement.
19.2
Status
(a)
Each Borrower is a corporation, duly incorporated and validly existing in good standing under the law of its jurisdiction of incorporation.
(b)
The Corporate Guarantor is a corporation duly incorporated and validly existing in good standing under the law of its jurisdiction of incorporation.
(c)
It and each Transaction Obligor has the power to own its assets and carry on its business as it is being conducted.
19.3
Share capital and ownership
(a)
Each Borrower has an authorised share capital of 500 registered and/or bearer shares of no par value, all of which have been issued in registered form and are fully paid.
(b)
The Corporate Guarantor owns one hundred per cent (100%) of the shares in each Borrower.
(c)
The legal title to and beneficial interest in the share capital in each Borrower is held free of any Security or any other claim by the Corporate Guarantor.
(d)
None of the shares in either Borrower is subject to any option to purchase, pre-emption rights or similar rights.
19.4
Binding obligations
The obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
19.5
Validity, effectiveness and ranking of Security
(a)
Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery create, subject to the Perfection Requirements, the Security it purports to create over any assets to which such Security, by its terms, relates, and such Security will, when created or intended to be created, be valid and effective.
(b)
No third party has or will have any Security over any assets that are the subject of any Transaction Security granted by it.
(c)
Subject to the Perfection Requirements, the Transaction Security granted by it to the Security Agent or any other Secured Party has or will when created or intended to be created have first ranking priority and is not subject to any prior ranking or pari passu ranking security.



(d)
No concurrence, consent or authorisation of any person is required for the creation of or otherwise in connection with any Transaction Security.
19.6
Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
(a)
any law or regulation applicable to it;
(b)
its constitutional documents; or
(c)
any agreement or instrument binding upon it or constitute a default or termination event (however described) under any such agreement or instrument.
19.7
Power and authority
(a)
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise:
(i)
its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and
(ii)
the continuing registration of its Ship under the Approved Flag.
(b)
No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
19.8
Validity and admissibility in evidence
All Authorisations required or desirable:
(a)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
(b)
to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
have been obtained or effected and are in full force and effect.
19.9
Governing law and enforcement
(a)
The choice of governing law of each Transaction Document to which it is a party will be recognised and enforced in its Relevant Jurisdictions.
(b)
Any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions.
19.10
Insolvency
No:
(a)
corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 27.8 (Insolvency proceedings); or



(b)
creditors' process described in Clause 27.9 (Creditors' process),
has been taken or, to its knowledge, threatened in relation to any Transaction Obligor; and none of the circumstances described in Clause 27.7 (Insolvency) applies to any Transaction Obligor.
19.11
No filing or stamp taxes
Under the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which it is a party be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance Documents except any filing, recording or enrolling or any tax or fee payable in relation to the Mortgage which is referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) and which will be made or paid promptly after the date of the relevant Finance Document.
19.12
Deduction of Tax
It is not required to make any Tax Deduction from any payment it may make under any Finance Document to which it is a party.
19.13
No default or mandatory prepayment event
(a)
No Event of Default and, on the date of this Agreement and on each Utilisation Date, no Default is continuing or might reasonably be expected to result from the making of any Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.
(b)
No event has occurred which would give rise to a mandatory prepayment under Clause 7.4 (Mandatory prepayment on sale, Total Loss).
(c)
No other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or to which its assets are subject.
19.14
No misleading information
(a)
Any factual information provided by any Transaction Obligor for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
(b)
The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions.
(c)
Nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading in any material respect.
19.15
Financial Statements
(a)
The Original Financial Statements were prepared in accordance with GAAP consistently applied.
(b)
The Original Financial Statements give a true and fair view of its financial condition as at the end of the relevant financial year and results of operations during the relevant financial year.



(c)
There has been no material adverse change in its assets, business or financial condition since 31 December 2016.
(d)
Its most recent financial statements delivered pursuant to Clause 20.2 (Financial statements):
(i)
have been prepared in accordance with Clause 20.4 (Requirements as to financial statements); and
(ii)
give a true and fair view of (if audited) or fairly represent (if unaudited) its financial condition as at the end of the relevant financial year and operations during the relevant financial year.
(e)
Since the date of the most recent financial statements delivered pursuant to Clause 20.2 (Financial statements) there has been no material adverse change in its business, assets or financial condition.
19.16
Pari passu ranking
Its payment obligations 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.
19.17
No proceedings pending or threatened
(a)
No litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against it or any other Transaction Obligor.
(b)
No judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body which might reasonably be expected to have a Material Adverse Effect has (to the best of its knowledge and belief (having made due and careful enquiry)) been made against it or any other Transaction Obligor.
19.18
Validity and completeness of the Deed of Release
(a)
The Deed of Release constitutes legal, valid, binding and enforceable obligations of the Existing Lender.
(b)
The copies of the Deed of Release delivered to the Facility Agent are true and complete copies.
(c)
No amendments or additions to the Deed of Release have been agreed nor have any rights under the Deed of Release been waived.
19.19
Valuations
(a)
All information supplied by it or on its behalf to the Approved Brokers for the purposes of a valuation delivered to the Facility Agent in accordance with this Agreement was true and accurate as at the date it was supplied 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 Approved Brokers which, if disclosed, would adversely affect any valuation prepared by the Approved Brokers.



(c)
There has been no change to the factual information provided pursuant to paragraph (a) above in relation to any valuation between the date such information was provided and the date of that valuation which, in either case, renders that information untrue or misleading in any material respect.
19.20
No breach of laws
It has not breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
19.21
No Charter
Neither Ship is subject to any Charter other than a Permitted Charter.
19.22
Compliance with Environmental Laws
All Environmental Laws relating to the ownership, operation and management of each Ship and the business of each Transaction Obligor (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.
19.23
No Environmental Claim
No Environmental Claim has been made or threatened against any Transaction Obligor or either Ship.
19.24
No Environmental Incident
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
19.25
ISM and ISPS Code compliance
All requirements of the ISM Code and the ISPS Code as they relate to each Borrower, each Approved Manager and each Ship have been complied with.
19.26
Taxes paid
(a)
It is not materially overdue in the filing of any Tax returns and it is not overdue in the payment of any amount in respect of Tax.
(b)
No claims or investigations are being, or are reasonably likely to be, made or conducted against it with respect to Taxes.
19.27
Financial Indebtedness
Neither Borrower has any Financial Indebtedness outstanding other than Permitted Financial Indebtedness.
19.28
Overseas companies
No Obligor has delivered particulars, whether in its name stated in the Finance Documents or any other name, of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or, if it has so registered, it has provided to the Facility Agent sufficient details to enable an accurate search against it to be undertaken by the Lenders at the Companies Registry.
19.29
Good title to assets


Each Borrower has good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.
19.30
Ownership
(a)
Each Borrower is the sole legal and beneficial owner of its Ship, its Earnings and its Insurances.
(b)
With effect on and from the date of its creation or intended creation, each Transaction Obligor will be the sole legal and beneficial owner of any asset that is the subject of any Transaction Security created or intended to be created by such Transaction Obligor.
(c)
The constitutional documents of each Transaction Obligor do not and could not restrict or inhibit any transfer of the shares of the Borrowers on creation or enforcement of the security conferred by the Security Documents.
19.31
Centre of main interests and establishments
For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the "Regulation"), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in Greece and it has no "establishment" (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.
19.32
Place of business
No Obligor has a place of business in any country other than and its executive office functions are carried out, in the case of the Borrowers and the Corporate Guarantor, at c/o 16 G. Lambraki Str., Premiera Mall, 2nd floor 166 74 Glyfada, Greece.
19.33
No employee or pension arrangements
Neither Borrower has any employees or any liabilities under any pension scheme.
19.34
Sanctions
(a)
No Transaction Obligor:
(i)
is a Prohibited Person;
(ii)
is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person;
(iii)
owns or controls a Prohibited Person; or
(iv)
has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee.
(b)
No proceeds of any Advance or the Loan shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person nor shall they be otherwise directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.
19.35
US Tax Obligor
No Obligor is a US Tax Obligor.
19.36
Anti-bribery, anti-corruption and anti-money laundering


No Transaction Obligor nor any of its subsidiaries, directors or officers, or, to the best knowledge of such Transaction Obligor, any affiliate, agent or employee of it, has engaged in any activity or conduct which would violate any applicable anti-bribery, anti-corruption or anti-money laundering laws, regulations or rules in any applicable jurisdiction and each Transaction Obligor has instituted and maintains policies and procedures designed to prevent violation of such laws, regulations and rules.
19.37
Validity and completeness of the MOA
(a)
The MOA constitutes legal, valid, binding and enforceable obligations of Borrower A and the Seller respectively.
(b)
The copy of the MOA delivered to the Facility Agent before the date of this Agreement is true and complete copy.
(c)
No amendments or additions to the MOA have been agreed nor have any rights under the MOA been waived other than those disclosed to the Lenders prior to the date of this Agreement.
19.38
Repetition
The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of each Utilisation Request and the first day of each Interest Period.
20
INFORMATION UNDERTAKINGS
20.1
General
The undertakings in this Clause 20 (Information Undertakings) remain in force throughout the Security Period unless the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders), may otherwise permit.
20.2
Financial statements
The Obligors shall supply to the Facility Agent in sufficient copies for all the Lenders:
(a)
as soon as they become available, but in any event within 120 days after the end of each of their respective financial years their respective audited financial statements for that financial year (consolidated in the case of the Corporate Guarantor);
(b)
as soon as the same become available, but in any event within 90 days after the end of each quarter in each of their respective financial years:
(i)
their respective financial statements for that financial quarter; and
(ii)
together with the financial statements referred to in paragraph (b) of this Clause 20.2 (Financial statements), a performance report in relation to each Ship in the form set out in Schedule 9 (Vessel Report).
20.3
Compliance Certificate
(a)
The Corporate Guarantor shall supply to the Facility Agent, semi-annually together with the financial statements delivered pursuant to paragraph (b), in the case of the first two financial quarters in each Financial Year and, the financial statements delivered pursuant to paragraph (a) of Clause 20.2 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clauses 21 (Financial Covenants) and 25 (Security Cover) as at the date as at which those financial statements were drawn up.



(b)
Each Compliance Certificate shall be signed by a director of each Borrower and, if required to be delivered with the financial statements delivered pursuant to paragraph (a) of Clause 20.2 (Financial statements).
20.4
Requirements as to financial statements
(a)
Each set of financial statements delivered by a Borrower or the Corporate Guarantor pursuant to Clause 20.2 (Financial statements) shall be certified by a director or officer of the relevant company fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn up.
(b)
Each of the Borrowers and the Corporate Guarantor shall procure that each set of financial statements delivered pursuant to Clause 20.2 (Financial statements) is prepared using GAAP.
20.5
Information: miscellaneous
Each Obligor shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):
(a)
all documents dispatched by it to its partners or members (or any class of them) or its creditors generally at the same time as they are dispatched;
(b)
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) which are current, threatened or pending against any Transaction Obligor, and which might, if adversely determined, have a Material Adverse Effect;
(c)
promptly, its constitutional documents where these have been amended or varied;
(d)
promptly, such further information and/or documents regarding:
(i)
each Ship, goods transported on each Ship, its Earnings and its Insurances;
(ii)
the Qualifying Charter;
(iii)
the Security Assets;
(iv)
compliance of the Obligors with the terms of the Finance Documents;
(v)
the financial condition, business and operations of any Transaction Obligor,
as any Finance Party (through the Facility Agent) may reasonably request; and
(e)
promptly, such further information and/or documents as any Finance Party (through the Facility Agent) may reasonably request so as to enable such Finance Party to comply with any laws applicable to it or as may be required by any regulatory authority.
20.6
Notification of Default
(a)
Each Obligor shall notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor).
(b)
Promptly upon a request by the Facility Agent, each Borrower shall supply to the Facility Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).



(c)
Without prejudice to paragraph (a) of this Clause 20.6 (Notification of Default), if either the Borrowers or the Corporate Guarantor becomes aware that it is not in compliance with or (with the giving of any notice by any Finance Party to the Borrowers or the lapse of any grace periods) would not be in compliance with the provisions of Clauses 21 (Financial Covenants), 25.1 (Minimum required security cover) or 25.2 (Provision of additional security; prepayment), the Borrowers shall notify the Facility Agent of such occurrence (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.
20.7
Use of websites
(a)
Each Obligor may satisfy its obligation under the Finance Documents to which it is a party to deliver any information in relation to those Lenders (the "Website Lenders") which accept this method of communication by posting this information onto an electronic website designated by the Borrowers and the Facility Agent (the "Designated Website") if:
(i)
the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii)
both the relevant Obligor and the Facility Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii)
the information is in a format previously agreed between the relevant Obligor and the Facility Agent.
If any Lender (a "Paper Form Lender") does not agree to the delivery of information electronically then the Facility Agent shall notify the Obligors accordingly and each Obligor shall supply the information to the Facility Agent (in sufficient copies for each Paper Form Lender) in paper form.  In any event each Obligor shall supply the Facility Agent with at least one copy in paper form of any information required to be provided by it.
(b)
The Facility Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Obligors or any of them and the Facility Agent.
(c)
An Obligor shall promptly upon becoming aware of its occurrence notify the Facility Agent if:
(i)
the Designated Website cannot be accessed due to technical failure;
(ii)
the password specifications for the Designated Website change;
(iii)
any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv)
any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v)
if that Obligor becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.
If an Obligor notifies the Facility Agent under sub-paragraph (i) or (v) of paragraph (c) above, all information to be provided by the Obligors under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d)
Any Website Lender may request, through the Facility Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the


Designated Website.  The Obligors shall comply with any such request within 10 Business Days.
20.8
"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 (including, without limitation, a change of ownership 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 a Finance Party (or, in the case of sub-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 Obligor shall promptly upon the request of any Finance Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by a Servicing Party (for itself or on behalf of any other Finance Party) or any Lender (for itself or, in the case of the event described in sub-paragraph (iii) above, on behalf of any prospective new Lender) in order for such Finance Party or, in the case of the event described in sub-paragraph (iii) above, 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 a Servicing Party supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Servicing Party (for itself) in order for that Servicing Party 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.
21
FINANCIAL COVENANTS
21.1
Minimum Liquidity
(a)
Borrower A shall maintain a credit balance in its Operating Account of at least $500,000 from the Utilisation Date of Tranche A and at all times thereafter during the Security Period (the "Minimum Liquidity Amount A").
(b)
Borrower B shall maintain a credit balance in its Operating Account of at least:
(i)
on the Utilisation Date of Tranche B, $800,000; and
(ii)
at all times thereafter during the Security Period, $500,000
(the "Minimum Liquidity Amount B" and together with the Minimum Liquidity Amount A, the "Minimum Liquidity Amounts" and each, a "Minimum Liquidity Amount").
(c)
The Facility Agent shall have the right to block a payment or transfer of funds if the provisions of paragraph (a) above would be breached following such transfer.
21.2
Other financial covenants



The Corporate Guarantor shall procure that at all times:
(a)
from 30 June 2017 and for the remainder of the Security Period, it shall maintain Cash (which, without limitation, shall include the Minimum Liquidity Amounts, the amounts in the DD Reserve Accounts and any contractually committed but undrawn parts of the Notes) in an amount not less than the product of (i) the number of Fleet Vessels and (ii) $500,000; and
(b)
from 30 June 2018 and for the remainder of the Security Period:
(i)
the EBITDA to Net Interest Expense Ratio is at least equal to 2:1; and
(ii)
the Leverage Ratio does not exceed 75 per cent.
21.3
Testing
The financial covenants set out in this Clause 21 (Financial Covenants) shall be tested semi-annually by reference to each of the audited annual and the unaudited financial statements of the Corporate Guarantor (in the case of the unaudited financial statements, those relating to the first two quarters in each financial year of the Corporate Guarantor) delivered pursuant to Clause 20.2 (Financial statements) and each Compliance Certificate.
21.4
Financial covenants in other credit agreements
The financial covenants as set out in Clause 21.2 (Other financial covenants) are in substantially the same form (and for the avoidance of doubt where the same covenants apply, the figures or ratios shall be required to be in the same form) as given to financing parties in any other agreements relating to any other Financial Indebtedness of the Corporate Guarantor (or Financial Indebtedness of a Subsidiary of the Corporate Guarantor which is guaranteed by the Corporate Guarantor).  Should any financial covenants be given by the Corporate Guarantor that are more favourable to any person to whom Financial Indebtedness is owed to, or guaranteed, by the Corporate Guarantor, the Corporate Guarantor shall promptly provide details of such covenants to the Facility Agent and agrees that those more favourable financial covenants shall be deemed to apply to this Agreement as if set out in full in this Clause with effect from the date on which details of such covenants are provided and the Corporate Guarantor shall enter into such additional documentation as the Finance Parties may require to make the necessary amendments to the financial covenants set out in Clauses 21.1 (Minimum Liquidity) or 21.2 (Other financial covenants).
22
GENERAL UNDERTAKINGS
22.1
General
The undertakings in this Clause 22 (General Undertakings) remain in force throughout the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
22.2
Authorisations
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly:
(a)
obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)
supply certified copies to the Facility Agent of,
any Authorisation required under any law or regulation of a Relevant Jurisdiction or the state of the applicable Approved Flag at any time of each Ship to enable it to:
(i)
perform its obligations under the Transaction Documents to which it is a party;



(ii)
ensure the legality, validity, enforceability or admissibility in evidence in any Relevant Jurisdiction or in the state of the applicable Approved Flag at any time of each Ship, of any Transaction Document to which it is a party; and
(iii)
own and operate each Ship (in the case of the Borrowers).
22.3
Compliance with laws
Each Obligor shall, and shall procure that each other Transaction Obligor will, comply in all respects with all laws and regulations to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
22.4
Environmental compliance
Each Obligor shall, and shall procure that each other Transaction Obligor will:
(a)
comply with all Environmental Laws;
(b)
obtain, maintain and ensure compliance with all requisite Environmental Approvals;
(c)
implement procedures to monitor compliance with and to prevent liability under any Environmental Law,
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
22.5
Environmental Claims
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly upon becoming aware of the same, inform the Facility Agent in writing of:
(a)
any Environmental Claim against any Transaction Obligor 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 Transaction Obligor,
where the claim, if determined against that Transaction Obligor, has or is reasonably likely to have a Material Adverse Effect.
22.6
Taxation
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor will 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 maintained for those Taxes and the costs required to contest them and both have been disclosed in its Latest Financial Statements delivered to the Facility Agent under Clause 20.2 (Financial statements); and
(iii)
such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.
(b)
No Obligor shall change its residence for Tax purposes.
22.7
Overseas companies
 

Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly inform the Facility Agent if it delivers to the Registrar particulars required under the Overseas Regulations of any UK Establishment and it shall comply with any directions given to it by the Facility Agent regarding the recording of any Transaction Security on the register which it is required to maintain under The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009.
22.8
No change to centre of main interests
No Obligor shall change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated in relation to it in Clause 19.31 (Centre of main interests and establishments) and it will create no "establishment" (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.
22.9
Pari passu ranking
Each Obligor shall, and shall procure that each other Transaction Obligor will, 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.
22.10
Title
(a)
Each Borrower shall hold the legal title to, and own the entire beneficial interest in its Ship, its Earnings and its Insurances.
(b)
With effect on and from its creation or intended creation, each Borrower shall hold the legal title to, and own the entire beneficial interest in any other assets the subject of any Transaction Security created or intended to be created by such Obligor.
22.11
Negative pledge
(a)
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, create or permit to subsist any Security over any of its assets which are, in the case of the Transaction Obligors other than the Borrowers, the subject of the Security created or intended to be created by the Finance Documents.
(b)
Neither Borrower shall:
(i)
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor;
(ii)
sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(iii)
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
(iv)
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)
Paragraphs (a) and (b) above do not apply to any Permitted Security.
22.12
Disposals



(a)
Neither Borrower 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 (including without limitation either Ship, its Earnings or its Insurances).
(b)
Paragraph (a) above does not apply to:
(i)
any Charter as all Charters are subject to Clause 24.15 (Restrictions on chartering, appointment of managers etc.); or
(ii)
a sale of a Ship provided that the Borrowers comply with the prepayment obligations in Clause 7 (Prepayment and Cancellation).
22.13
Merger
No Obligor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction unless, in the case of the Corporate Guarantor, the Corporate Guarantor is the surviving entity and no breach of Clauses 21.14 (Change of business) and 21.22 (NASDAQ listing) occurs or will occur as a result of such action.
22.14
Change of business
No Obligor shall engage in any business other than, in the case of a Borrower, the ownership and operation of its Ship and, in the case of the Corporate Guarantor, the holding of single purpose ship owning subsidiaries and arrangement of acquisition, financing and the operation of vessels on behalf of these single purpose ship owning subsidiaries.
22.15
Financial Indebtedness
Neither Borrower shall incur or permit to be outstanding any Financial Indebtedness except Permitted Financial Indebtedness.
22.16
Expenditure
Neither Borrower shall incur any expenditure, except for expenditure reasonably incurred in the ordinary course of owning, operating, maintaining and repairing its Ship.
22.17
Share capital
Neither Borrower shall:
(a)
increase or reduce its authorised share capital;
(b)
issue any further shares except to the Corporate Guarantor and provided such new shares are made subject to the terms of the Shares Security applicable to that Borrower immediately upon the issue of such new shares in a manner satisfactory to the Facility Agent and the terms of that Shares Security are complied with; or
(c)
appoint any further director or officer of that Borrower (unless the provisions of the Shares Security applicable to that Borrower are complied with).
22.18
Dividends
A Borrower may make or pay any dividend or other distribution (in cash or in kind) in respect of its shares if:
(a)
Additional Repayments in an aggregate amount of $4,850,000 have been made (and for the avoidance of doubt, in the case of Tranche A, $3,600,000 and, in the case of Tranche B, $1,250,000); and



(b)
no Default has occurred or would result from the making of any such payment,
Provided that no Event of Default has occurred and is continuing, the Borrowers may pay $4,750,000 from Tranche A over to the Corporate Guarantor for reduction of the outstanding amount under the Junior Amended and Restated Agreement.
22.19
Other transactions
Neither Borrower shall:
(a)
be the creditor in respect of any loan or any form of credit to any person;
(b)
give or allow to be outstanding any guarantee or indemnity to or for the benefit of any person in respect of any obligation of any other person or enter into any document under which that Obligor assumes any liability of any other person other than any guarantee or indemnity given under the Finance Documents;
(c)
make any asset acquisitions;
(d)
enter into any material agreement other than:
(i)
the Transaction Documents;
(ii)
any other agreement expressly allowed under any other term of this Agreement; and
(e)
enter into any transaction on terms which are, in any respect, less favourable to that Obligor than those which it could obtain in a bargain made at arms' length; or
(f)
acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks.
22.20
Unlawfulness, invalidity and ranking; Security imperilled
No Obligor shall, and the Obligors shall procure that no other Transaction Obligor will, do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
(a)
make it unlawful for a Transaction Obligor to perform any of its obligations under the Transaction Documents;
(b)
cause any obligation of a Transaction Obligor under the Transaction Documents to cease to be legal, valid,  binding or enforceable;
(c)
cause any Transaction Document to cease to be in full force and effect;
(d)
cause any Transaction Security to rank after, or lose its priority to, any other Security; and
(e)
imperil or jeopardise the Transaction Security.
22.21
Further assurance
(a)
Each Obligor shall, and shall procure that each other Transaction Obligor will, promptly, and in any event within the time period specified by the Security Agent do all such acts (including procuring or arranging any registration, notarisation or authentication or the giving of any notice) or execute or procure execution of all such documents (including assignments, transfers, mortgages, charges, notices, instructions, acknowledgments, proxies and powers of attorney), as the Security Agent may specify (and in such form as the Security Agent may require in favour of the Security Agent or its nominee(s)):



(i)
to create, perfect, vest in favour of the Security Agent or protect the priority of the Security or any right of any kind created or intended to be created under or evidenced by the Finance 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 Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent, any Receiver or any of the Secured Parties provided by or pursuant to the Finance Documents or by law;
(ii)
to confer on the Security Agent or confer on the Secured Parties Security over any property and assets of that Transaction Obligor located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Finance Documents;
(iii)
to facilitate or expedite the realisation and/or sale of, the transfer of title to or the grant of, any interest in or right relating to the assets which are, or are intended to be, the subject of the Transaction Security or to exercise any power specified in any Finance Document in respect of which the Security has become enforceable; and/or
(iv)
to enable or assist the Security Agent to enter into any transaction to commence, defend or conduct any proceedings and/or to take any other action relating to any item of the Security Property.
(b)
Each Obligor shall, and shall procure that each other Transaction Obligor will, 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 Secured Parties by or pursuant to the Finance Documents.
(c)
At the same time as an Obligor delivers to the Security Agent any document executed by itself or another Transaction Obligor pursuant to this Clause 22.21 (Further assurance), that Obligor shall deliver, or shall procure that such other Transaction Obligor will deliver, to the Security Agent reasonable evidence that that Obligor's or Transaction Obligor's execution of such document has been duly authorised by it.
22.22
NASDAQ listing
The Corporate Guarantor shall maintain its listing on the NASDAQ Stock Exchange.
22.23
No variation, release etc. of MOA
Borrower A shall not, whether by a document, by conduct, by acquiescence or in any other way:
(a)
vary the MOA in a material manner without the prior consent of the Facility Agent; or
(b)
release, waive, suspend, subordinate or permit to be lost or impaired any interest or right of any kind which Borrower A has at any time to, in or in connection with, the MOA or in relation to any matter arising out of or in connection with the MOA.
22.24
Provision of information relating to MOA
Borrower A shall:
(a)
immediately inform the Facility Agent if any breach of the MOA occurs or a serious risk of such a breach arises and of any other event or matter affecting the MOA which has or is reasonably likely to have a Material Adverse Effect; and



(b)
upon the reasonable request of the Facility Agent, keep the Facility Agent informed as to any notice of readiness of delivery of Ship A.
22.25
No assignment etc. of MOA
Borrower A shall not assign, novate, transfer or dispose of any of its rights or obligations under the MOA.
23
INSURANCE UNDERTAKINGS
23.1
General
The undertakings in this Clause 23 (Insurance Undertakings) remain in force from the date of this Agreement (and in the case of Ship B from the Utilisation Date of Tranche B) throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
23.2
Maintenance of obligatory insurances
Each Borrower shall keep the Ship owned by it insured at its expense against:
(a)
fire and usual marine risks (including hull and machinery and excess risks);
(b)
war risks;
(c)
protection and indemnity risks; and
(d)
any other risks against which the Facility Agent acting on the instructions of the Majority Lenders considers, having regard to practices and other circumstances prevailing at the relevant time, it would be reasonable for that Borrower to insure and which are specified by the Facility Agent by notice to that Borrower.
23.3
Terms of obligatory insurances
Each Borrower shall effect such insurances:
(a)
in dollars;
(b)
in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of:
(i)
120 per cent. of the Tranche relating to the Ship owned by it; and
(ii)
the Market Value of that Ship;
(c)
in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and in the international marine insurance market;
(d)
in the case of protection and indemnity risks, in respect of the full tonnage of its Ship;
(e)
on approved terms; and
(f)
through Approved Insurance 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.
23.4
Further protections for the Finance Parties



In addition to the terms set out in Clause 23.3 (Terms of obligatory insurances), each Borrower shall procure that the obligatory insurances effected by it shall:
(a)
subject always to paragraph (b), name that Borrower as the sole named insured unless the interest of every other named insured is limited:
(i)
in respect of any obligatory insurances for hull and machinery and war risks;
(A)
to any provable out-of-pocket expenses that it has incurred and which form part of any recoverable claim on underwriters; and
(B)
to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against it); and
(ii)
in respect of any obligatory insurances for protection and indemnity risks, to any recoveries it is entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against it;
and every other named insured has undertaken in writing to the Security Agent (in such form as it requires) that any deductible shall be apportioned between that Borrower and every other named insured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
(b)
whenever the Facility Agent requires, name (or be amended to name) the Security Agent as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Agent, but without the Security Agent being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
(c)
name the Security Agent as loss payee with such directions for payment as the Facility Agent may specify;
(d)
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;
(e)
provide that the obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Agent or any other Finance Party; and
(f)
provide that the Security Agent may make proof of loss if that Borrower fails to do so.
23.5
Renewal of obligatory insurances
Each Borrower shall:
(a)
at least 21 days before the expiry of any obligatory insurance:
(i)
notify the Facility Agent of the Approved Insurance Brokers (or other insurers) and any protection and indemnity or war risks association through or with which it proposes to renew that obligatory insurance and of the proposed terms of renewal; and
(ii)
obtain the Facility Agents' approval to the matters referred to in sub-paragraph (i) above;



(b)
at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Facility Agent's approval pursuant to paragraph (a) above; and
(c)
procure that the Approved Insurance Brokers and/or the approved war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Facility Agent in writing of the terms and conditions of the renewal.
23.6
Copies of policies; letters of undertaking
Each Borrower shall ensure that the Approved Insurance Brokers provide the Security Agent with:
(a)
pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew; and
(b)
a letter or letters or undertaking in a form required by the Facility Agent and including undertakings by the Approved Insurance Brokers that:
(i)
they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 23.4 (Further protections for the Finance Parties);
(ii)
they will hold such policies, and the benefit of such insurances, to the order of the Security Agent in accordance with such loss payable clause;
(iii)
they will advise the Security Agent immediately of any material change to the terms of the obligatory insurances;
(iv)
they will, if they have not received notice of renewal instructions from the Borrower or its agents, notify the Security Agent not less than 14 days before the expiry of the obligatory insurances;
(v)
if they receive instructions to renew the obligatory insurances, they will promptly notify the Facility Agent of the terms of the instructions;
(vi)
they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts; and
(vii)
they will arrange for a separate policy to be issued in respect of the Ship owned by that Borrower forthwith upon being so requested by the Facility Agent.
23.7
Copies of certificates of entry
Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provide the Security Agent with:
(a)
a certified copy of the certificate of entry for that Ship;
(b)
a letter or letters of undertaking in such form as may be required by the Facility Agent acting on the instructions of Majority Lenders; and



(c)
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to that Ship.
23.8
Deposit of original policies
Each Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the Approved Insurance Brokers through which the insurances are effected or renewed.
23.9
Payment of premiums
Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Facility Agent or the Security Agent.
23.10
Guarantees
Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
23.11
Compliance with terms of insurances
(a)
Neither Borrower shall do or omit to do (nor 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.
(b)
Without limiting paragraph (a) above, each Borrower shall:
(i)
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 sub-paragraph (iii) of paragraph (b) of Clause 23.6 (Copies of policies; letters of undertaking)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Facility Agent has not given its prior approval;
(ii)
not make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;
(iii)
make (and promptly supply copies to the Facility Agent of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and
(iv)
not employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
23.12
Alteration to terms of insurances
Neither Borrower shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.
23.13
Settlement of claims



Each Borrower shall:
(a)
not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty; and
(b)
do all things necessary and provide all documents, evidence and information 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
Provision of copies of communications
Each Borrower shall provide the Security Agent, at the time of each such communication, with copies of all written communications other than (unless specifically required by the Security Agent) communications of an entirely routine nature) between that Borrower and:
(a)
the Approved Insurance Brokers;
(b)
the approved protection and indemnity and/or war risks associations; and
(c)
the approved insurance companies and/or underwriters,
which relate directly or indirectly to:
(i)
that Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and
(ii)
any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.
23.15
Provision of information
Each Borrower shall promptly provide the Facility Agent (or any persons which it may designate) with any information which the Facility Agent (or any such designated person) requests for the purpose of:
(a)
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 23.16 (Mortgagee's interest and additional perils insurances) or dealing with or considering any matters relating to any such insurances,
and the Borrowers shall, forthwith upon demand, indemnify the Security Agent in respect of all fees and other expenses incurred by or for the account of the Security Agent in connection with any such report as is referred to in paragraph (a) above once in each 12 Months period (starting on the first Utilisation Date) and at any time when an Event of Default has occurred.
23.16
Mortgagee's interest and additional perils insurances
(a)
The Security Agent shall be entitled from time to time to effect, maintain and renew a mortgagee's interest marine insurance and a mortgagee's interest additional perils insurance in an amount of up to 120 per cent. of the Loan, on such terms, through such insurers and generally in such manner as the Security Agent acting on the instructions of the Majority Lenders may from time to time consider appropriate.



(b)
The Borrowers 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 paragraph (a) above or dealing with, or considering, any matter arising out of any such insurance.
24
GENERAL SHIP UNDERTAKINGS
24.1
General
The undertakings in this Clause 24 (General Ship Undertakings) remain in force on and from the date of this Agreement (and in the case of Ship B from the Utilisation Date of Tranche B) and throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
24.2
Ship's name and registration
Each Borrower shall in respect of the Ship owned by it:
(a)
keep that Ship registered in its name under the applicable Approved Flag from time to time at its port of registration;
(b)
not do or allow to be done anything as a result of which such registration might be suspended, cancelled or imperilled; and
(c)
not change the name of that Ship, without the prior written consent of the Facility Agent,
provided that any change of flag of a Ship shall be subject to:
(i)
that Ship remaining subject to Security securing the Secured Liabilities created by a first priority or preferred ship mortgage on that Ship and, if appropriate, a first priority deed of covenant collateral to that mortgage (or equivalent first priority Security) on substantially the same terms as the Mortgage on that Ship and on such other terms and in such other form as the Facility Agent, acting with the authorisation of the Lenders, shall approve or require; and
(ii)
the execution of such other documentation amending and supplementing the Finance Documents as the Facility Agent, acting with the authorisation of the Lenders, shall approve or require.
24.3
Repair and classification
Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:
(a)
consistent with first class ship ownership and management practice; and
(b)
so as to maintain the Approved Classification free of overdue recommendations and conditions.
24.4
Modifications
Neither Borrower shall make any modification or repairs to, or replacement of, its Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of its Ship or materially reduce its value.
24.5
Removal and installation of parts



(a)
Subject to paragraph (b) below, the Borrower shall not remove any material part of the Ship, or any item of equipment installed on the Ship unless:
(i)
the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed;
(ii)
the replacement part or item is free from any Security in favour of any person other than the Security Agent; and
(iii)
the replacement part or item becomes, on installation on that Ship, the property of that Borrower and subject to the security constituted by the Mortgage on that Ship.
(b)
A Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by that Borrower.
24.6
Surveys
Each Borrower shall submit the Ship owned by it regularly to all periodic or other surveys which may be required for classification purposes and, if so required by the Facility Agent acting on the instructions of the Majority Lenders, provide the Facility Agent, with copies of all survey reports.
24.7
Inspection
Each Borrower shall permit the Security Agent (acting through surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times and upon reasonable notice and without interfering with that Ship's normal course of trading to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. Each Borrower will be liable for the costs of the inspection for the Ship owned by it once in each 12-month period (starting on the Utilisation Date of the relevant Tranche) and at any time when an Event of Default has occurred.
24.8
Prevention of and release from arrest
(a)
Each Borrower shall, in respect of the Ship owned by it, promptly discharge:
(i)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against that Ship, its Earnings or its Insurances;
(ii)
all Taxes, dues and other amounts charged in respect of that Ship, its Earnings or its Insurances; and
(iii)
all other outgoings whatsoever in respect of that Ship, its Earnings or its Insurances.
(b)
Each Borrower shall immediately upon receiving notice of the arrest of the  Ship owned by it or of its detention in exercise or purported exercise of any lien or claim, take all steps necessary to procure its release by providing bail or otherwise as the circumstances may require.
24.9
Compliance with laws etc.
Each Borrower shall:
(a)
comply, or procure compliance with all laws or regulations:
(i)
relating to its business generally; and
 



(ii)
relating to the Ship owned by it, its ownership, employment, operation, management and registration,
including, but not limited to, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;
(b)
obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and
(c)
without limiting paragraph (a) above, not employ the Ship owned by it nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and Sanctions (or which would be contrary to Sanctions if Sanctions were binding on each Obligor).
24.10
ISPS Code
Without limiting paragraph (a) of Clause 24.9 (Compliance with laws etc.), each Borrower shall:
(a)
procure that the Ship owned by it and the company responsible for that Ship's compliance with the ISPS Code comply with the ISPS Code; and
(b)
maintain an ISSC for that Ship; and
(c)
notify the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
24.11
Sanctions and Ship trading
Without limiting Clause 24.9 (Compliance with laws etc.), each Borrower shall procure:
(a)
that the Ship owned by it shall not be used by or for the benefit of a Prohibited Person;
(b)
that such Ship shall not be used in trading in any manner contrary to Sanctions (or which could be contrary to Sanctions if Sanctions were binding on each Obligor);
(c)
that such Ship shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances; and
(d)
that each charterparty in respect of that Ship shall contain, for the benefit of that Borrower, language which gives effect to the provisions of paragraph (c) of Clause 24.9 (Compliance with laws etc.) as regards Sanctions and of this Clause 24.11 (Sanctions and Ship trading) and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions (or which would result in a breach of Sanctions if Sanctions were binding on each Obligor.
24.12
Trading in war zones
In the event of hostilities in any part of the world (whether war is declared or not), neither Borrower shall cause or permit its Ship to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless:
(a)
the prior written consent of the Security Agent acting on the instructions of the Majority Lenders has been given; and



(b)
that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Agent acting on the instructions of the Majority Lenders may require.
24.13
Provision of information
Without prejudice to Clause 20.5 (Information: miscellaneous) each Borrower shall, in respect of the Ship owned by it,  promptly provide the Facility Agent with any information which it requests regarding:
(a)
that Ship, its employment, position and engagements;
(b)
the Earnings and payments and amounts due to its master and crew;
(c)
any expenditure incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made by it in respect of that Ship;
(d)
any towages and salvages; and
(e)
its compliance, the Approved Manager's compliance and the compliance of the Ship with the ISM Code and the ISPS Code,
and, upon the Facility Agent's request, promptly provide copies of any current Charter relating to that Ship, of any current guarantee of any such Charter, the Ship's Safety Management Certificate and any relevant Document of Compliance.
24.14
Notification of certain events
Each Borrower shall, in respect of the Ship owned by it, immediately notify the Facility Agent by email, confirmed forthwith by letter, of:
(a)
any casualty to that Ship which is or is likely to be or to become a Major Casualty;
(b)
any occurrence as a result of which that Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;
(c)
any requisition of that Ship for hire;
(d)
any requirement or recommendation made in relation to that Ship by any insurer or classification society or by any competent authority which is not immediately complied with;
(e)
any arrest or detention of that Ship or any exercise or purported exercise of any lien on that Ship or the Earnings;
(f)
any intended dry docking of that Ship;
(g)
any Environmental Claim made against that Borrower or in connection with that Ship, or any Environmental Incident;
(h)
any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, an Approved Manager or otherwise in connection with that Ship; or
(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 each Borrower shall keep the Facility Agent advised in writing on a regular basis and in such detail as the Facility Agent shall require as to that Borrower's, any such Approved Manager's or any other person's response to any of those events or matters.



24.15
Restrictions on chartering, appointment of managers etc.
Neither Borrower shall, in respect of the Ship owned by it, without the prior written consent of the Facility Agent:
(a)
let that Ship on demise charter for any period;
(b)
enter into any time, voyage or consecutive voyage charter in respect of that Ship other than a Permitted Charter;
(c)
amend, supplement or terminate a Management Agreement;
(d)
appoint a manager of that Ship other than the Approved Commercial Manager and the Approved Technical Manager or agree to any alteration to the terms of an Approved Manager's appointment;
(e)
de activate or lay up that Ship; or
(f)
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Agent and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason.
24.16
Notice of Mortgage
Each Borrower shall keep the relevant Mortgage registered against the Ship owned by it as a valid first preferred mortgage, carry on board that Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the navigation room and the master's cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the Security Agent.
24.17
Sharing of Earnings
Neither Borrower, other than between the two Borrowers, shall enter into any agreement or arrangement for the sharing of any Earnings other than for the purposes of this Agreement.
24.18
Copies of Charters; charter assignment
Provided that all approvals necessary under Clause 24.15 (Restrictions on chartering, appointment of managers etc.) have been previously obtained, each Borrower shall:
(a)
provide promptly to the Facility Agent a true and complete copy of any Charter exceeding 6 Months (including all amendments) for its Ship and all other documents related thereto; and
(b)
in respect of any Charter for a term which exceeds, or which by virtue of any optional extensions may exceed 13 Months, execute and deliver to the Facility Agent a Charter Assignment together with each of the documents required to be delivered pursuant to such Charter Assignment (each in agreed form).
24.19
Notification of compliance
Each Borrower shall promptly provide the Facility Agent from time to time with evidence (in such form as the Facility Agent requires) that it is complying with this Clause 24 (General Ship Undertakings).



25
SECURITY COVER
25.1
Minimum required security cover
(a)
Clause 25.2 (Provision of additional security; prepayment) applies, if on or after the first Utilisation Date, the Facility Agent notifies the Borrowers that:
(i)
the aggregate Market Value of the Ships then subject to a Mortgage; plus
(ii)
the net realisable value of additional Security previously provided under this Clause 25 (Security Cover),
(b)
is:
(i)
during the period commencing on the first Utilisation Date and ending on the date falling on the second anniversary of that Utilisation Date, below 145 per cent. of the Loan; and
(ii)
at all times thereafter, below 165 per cent. of the Loan.
25.2
Provision of additional security; prepayment
(a)
If the Facility Agent serves a notice on the Borrowers under Clause 25.1 (Minimum required security cover), the Borrowers shall, on or before the date falling 14 Business Days after the date (the "Prepayment Date") on which the Facility Agent's notice is served, prepay such part of the Loan as shall eliminate the shortfall.
(b)
A Borrower may, instead of making a prepayment as described in paragraph (a) above, provide, or ensure that a third party has provided, additional security which, in the opinion of the Facility Agent acting on the instructions of the Majority Lenders:
(i)
has a net realisable value at least equal to the shortfall; and
(ii)
is documented in such terms as the Facility Agent may approve or require,
before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.
25.3
Value of additional vessel security
The net realisable value of any additional security which is provided under Clause 25.2 (Provision of additional security; prepayment) and which consists of Security over a vessel shall be the Market Value of the vessel concerned.
25.4
Valuations binding
Any valuation under this Clause 25 (Security Cover) shall be binding and conclusive as regards each Borrower.
25.5
Provision of information
(a)
Each Borrower shall promptly provide the Facility Agent and any shipbroker acting under this Clause 25 (Security Cover) with any information which the Facility Agent or the shipbroker may request for the purposes of the valuation.
(b)
If a Borrower fails to provide the information referred to in paragraph (a) above by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Facility Agent considers prudent.



25.6
Prepayment mechanism
Any prepayment pursuant to Clause 25.2 (Provision of additional security; prepayment) shall be made in accordance with the relevant provisions of Clause 7 (Prepayment and Cancellation) and shall be treated as a voluntary prepayment pursuant to Clause 7.3 (Voluntary prepayment of Loan).
25.7
Provision of valuations
Each Borrower shall provide the Facility Agent with 2 valuations of the Ship owned by it on the relevant Utilisation Date and any other vessel over which additional Security has been created in accordance with Clause 25.3 (Value of additional vessel security), both from the Approved Brokers (one appointed by the Facility Agent), to enable the Facility Agent to determine the Initial Market Value of that Ship not more than 14 days before the Utilisation Date of the Tranche financing such Ship and the Market Value of that Ship as at 30 June and 31 December in each year.
26
ACCOUNTS AND APPLICATION OF EARNINGS
26.1
Accounts
Neither Borrower may, without the prior consent of the Facility Agent, maintain any bank account other than:
(a)
its Operating Account;
(b)
the DD Reserve Account; and
(c)
in the case of Borrower B, the earnings account in respect of Ship B with the Existing Lender  Provided that Borrower B shall ensure that such account is closed within 10 Business Days from the date of the Deed of Accession, Amendment and Restatement.
26.2
Payment of Earnings
Each Borrower shall ensure that, subject only to the provisions of the General Assignment to which it is a party, all the Earnings in respect of the Ship owned by it are paid in to its Operating Account.
26.3
Application of Earnings
Each Borrower shall ensure that the Earnings in respect of the Ship owned by it shall be retained on its Operating Account and hereby instructs the Facility Agent and the Security Agent to release, on each Repayment Date and on each Interest Payment Date, for distribution to the Finance Parties in accordance with Clause 33.2 (Redistribution of payments) so much of the then balance on its Operating Account (in excess of the relevant Minimum Liquidity Amount) in discharge of the Borrowers' liability for that Repayment Instalment or that interest, as the case may be, in the following order:
(a)
first, in or towards payment of all expenses reasonably incurred (and evidenced, if required by the Lenders, to the satisfaction of the Lenders) in the usual course of the day-to-day running of the Ships;
(b)
secondly, in or towards payment pro rata of any unpaid fees, costs and expenses of, and any other amounts owing to, the Facility Agent, the Security Agent under the Finance Documents;



(c)
thirdly, in or towards payment pro rata of the Repayment Instalments due and payable under Clause 6.1 (Repayment of Loan) and any accrued interest and principal due but unpaid to the Lenders under this Agreement;
(d)
fourthly, towards payment of any Additional Repayments payable under Clause 6.3 (Additional Repayments);
(e)
fifthly, towards any Quarterly Increase to be made under Clause 26.4 (Transfers to the DD Reserve Accounts); and
(f)
sixthly, subject to compliance with Clauses 21 (Financial Covenants) and 22.18 (Dividends) and provided no Default has occurred, to the Borrowers for distribution in accordance with Clause 22.18 (Dividends).
26.4
Transfers to the DD Reserve Accounts
(a)
Each Borrower shall procure that an amount in the case of Borrower A, $35,000 and, in the case of Borrower B, $30,000 is transferred to its DD Reserve Account from its Operating Account (subject to the balance on that Operating Account following such transfer being in excess of the relevant Minimum Liquidity Amount) on each Repayment Date.
(b)
Subject to the other provisions of this Agreement and the other Finance Documents, each Borrower undertakes to use the monies in its DD Reserve Account only towards payment of any planned drydocking and interim survey expenses of the Ship owned by it.
(c)
Each Borrower shall provide the Facility Agent with an invoice or invoices to evidence the amount of the drydocking or interim survey expenses in respect of the Ship owned by it and the relevant amount shall be released from its DD Reserve Account to pay such drydocking or interim survey expenses subject to the Facility Agent's written approval.
(d)
On the Termination Date, all amounts standing to the credit of the DD Reserve Accounts shall be applied towards repayment of the Loan.
26.5
Shortfall in Earnings
(a)
If the aggregate of the credit balance on each Operating Account is insufficient at any Repayment Date for the required amount to be transferred to each DD Reserve Account under Clause 26.4 (Transfers to the DD Reserve Accounts), the Borrowers shall make up the amount of the insufficiency on demand from the Facility Agent.
(b)
Without prejudicing the Facility Agent's right to make such demand at any time, the Facility Agent may, if so authorised by the Majority Lenders, permit the Borrowers to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 26.4 (Transfers to the DD Reserve Accounts) from the Earnings received in the next or subsequent calendar months.
26.6
Location of Accounts
Each Borrower shall promptly:
(a)
comply with any requirement of the Facility Agent as to the location or relocation of its Operating Account and its DD Reserve Account (or either of them); and
(b)
execute any documents which the Facility 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) its Operating Account and its DD Reserve Account.



27
EVENTS OF DEFAULT
27.1
General
Each of the events or circumstances set out in this Clause 27 (Events of Default) is an Event of Default except for Clause 27.20 (Acceleration) and Clause 27.21 (Enforcement of security).
27.2
Non-payment
A Transaction Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
(a)
its failure to pay is caused by:
(i)
administrative or technical error; or
(ii)
a Disruption Event; and
(b)
payment is made within 3 Business Days of its due date.
27.3
Specific obligations
A breach occurs of:
(a)
Clause 4.4 (Waiver of conditions precedent), 19.34 (Sanctions), Clause 21 (Financial Covenants), Clause 22.10 (Title), Clause 22.11 (Negative pledge), Clause 22.20 (Unlawfulness, invalidity and ranking; Security imperilled), Clause, 23.2 (Maintenance of obligatory insurances), Clause 23.3 (Terms of obligatory insurances), Clause 23.5 (Renewal of obligatory insurances), Clause 23.11 (Sanctions and Ship Trading) or Clause 25 (Security Cover); or
(b)
any provision of the Intercreditor Agreement and such breach is occasioned by the Shareholder.
27.4
Other obligations
(a)