UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 31, 2006
EAGLE BULK SHIPPING INC.
(Exact name of each Registrant as specified in its Charter)
Marshall Islands 000-51366 98-0453513
(State or other jurisdiction (Commission File Number) (IRS employer
of incorporation or organization) identification no.)
477 Madison Avenue 10022
New York, New York (Zip Code)
(Address of principal executive offices)
(Registrant's telephone number, including area code): (212) 785-2500
(Former name or former address, if changed since last report.)
Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On July 28, 2006 Eagle Bulk Shipping Inc. (the "Company"), along with its vessel
owning subsidiaries as guarantors, entered into an amended and restated credit
agreement with The Royal Bank of Scotland PLC ("RBS") which amended and
supplemented the previous credit facility between the Company and RBS by
increasing the amount of revolving credit available to the Company from
$330,000,000 to $450,000,000 (the "Credit Agreement"). The Credit Agreement was
filed on Form 8-K on July 31, 2006 and is attached here as Exhibit 10.1. The
Company is filing this Amendment No. 1 to its report on Form 8-K in order to
incorporate the report into the Company's Registration Statements on Form S-3,
filed on July 11, 2006 (Registration No. 333-135708) and July 19, 2006
(333-135866). No other changes are being made to the report filed on July 31,
2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 3, 2006
EAGLE BULK SHIPPING INC.
By: /s/ Sophocles N. Zoullas
--------------------------
Sophocles N. Zoullas
Chief Executive Officer and President
Exhibit 10.1
$450,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 28, 2006
Among
EAGLE BULK SHIPPING INC.
as Borrower,
CARDINAL SHIPPING LLC
CONDOR SHIPPING LLC
FALCON SHIPPING LLC
GRIFFON SHIPPING LLC
HARRIER SHIPPING LLC
HAWK SHIPPING LLC
HERON SHIPPING LLC
JAEGER SHIPPING LLC
KESTREL SHIPPING LLC
KITE SHIPPING LLC
MERLIN SHIPPING LLC
OSPREY SHIPPING LLC
PEREGRINE SHIPPING LLC
SHIKRA SHIPPING LLC
SPARROW SHIPPING LLC
TERN SHIPPING LLC
and the Additional Guarantors party hereto from time to time,
as Guarantors,
and
THE ROYAL BANK OF SCOTLAND PLC
as Lender
ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS..........................6
SECTION 1.01. Certain Defined Terms ...........................................6
SECTION 1.02. Interpretation..................................................17
SECTION 1.03. Computation of Time Periods.....................................18
SECTION 1.04. Accounting Terms................................................18
ARTICLE II - AMOUNTS AND TERMS OF THE ADVANCES 18
SECTION 2.01. The Commitment..................................................18
SECTION 2.02. Additional Vessels..............................................18
SECTION 2.03. Drawdown........................................................19
SECTION 2.04. Repayment.......................................................19
SECTION 2.05. Reduction of Commitment.........................................20
SECTION 2.06. Interest........................................................20
SECTION 2.07. Interest Rate Determination.....................................21
SECTION 2.08. Fees............................................................21
SECTION 2.09. Master Agreement................................................21
SECTION 2.10. Increased Costs.................................................23
SECTION 2.11. Illegality......................................................24
SECTION 2.12. Payments and Computations.......................................24
SECTION 2.13. Taxes...........................................................25
ARTICLE III - CONDITIONS OF EFFECTIVENESS AND LENDING................26
SECTION 3.01. Conditions Precedent to Effectiveness...........................26
SECTION 3.02. Conditions Precedent to Each Advance for Additional Vessels.....29
SECTION 3.03. Conditions Precedent to Each Advance............................31
ARTICLE IV - REPRESENTATIONS AND WARRANTIES..........................33
SECTION 4.01. Representations and Warranties..................................33
ARTICLE V - GUARANTY.................................................36
SECTION 5.01. Guaranty........................................................36
SECTION 5.02. Obligations Absolute............................................36
SECTION 5.03. Guaranty Unconditional..........................................36
SECTION 5.04. Waiver of Subrogation; Contribution.............................37
SECTION 5.05. Reinstatement...................................................37
SECTION 5.06. Waiver..........................................................37
SECTION 5.07. Payments; No Reductions.........................................37
SECTION 5.08. Set-Off.........................................................38
SECTION 5.09. Continuing Guarantee............................................38
SECTION 5.10. Right of Contribution...........................................38
SECTION 5.11. Limitation of Liability.........................................39
ARTICLE VI - FINANCIAL COVENANTS.....................................39
SECTION 6.01. Financial Covenants.............................................40
ARTICLE VII - COVENANTS OF THE BORROWER..............................40
SECTION 7.01. Affirmative Covenants...........................................40
SECTION 7.02. Negative Covenants..............................................43
ARTICLE VIII - EVENTS OF DEFAULT.....................................45
SECTION 8.01. Events of Default...............................................45
ARTICLE IX - MISCELLANEOUS...........................................48
SECTION 9.01. Amendments, Etc.................................................48
SECTION 9.02. Notices, Etc....................................................48
SECTION 9.03. No Waiver, Remedies.............................................48
SECTION 9.04. Costs; Expenses.................................................48
SECTION 9.05. Right of Set-off................................................50
SECTION 9.06. Assignments and Participations..................................50
SECTION 9.07. Judgment........................................................51
SECTION 9.08. Governing Law; Submission to Jurisdiction.......................51
SECTION 9.09. Execution in Counterparts.......................................52
SECTION 9.10. WAIVER OF JURY TRIAL............................................52
SECTION 9.11. Entire Agreement................................................52
SECTION 9.12. Severability of Provisions......................................52
SECTION 9.12. Master Agreement and Collateral Documents.......................52
Exhibit A - Form of Notice of Drawdown
Exhibit B - Form of Note
Exhibit C - Form of Account Charge
Exhibit D - Form of Cash Pooling Deed
Exhibit E - Form of Mortgage
Exhibit F - Form of Assignment of Earnings
Exhibit G - Form of Assignment of Insurances
Exhibit H - Form of Approved Manager's Undertaking
Exhibit I - Form of Credit Agreement Supplement
Exhibit J - Form of Compliance Certificate
Exhibit K - Form of Security Interest Deed
AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 28, 2006 (as
such may be amended, supplemented (including, without limitation, by way of each
Credit Agreement Supplement executed and delivered from time to time), or
otherwise modified, this "Agreement") among (i) EAGLE BULK SHIPPING INC., a
Marshall Islands corporation (the "Borrower"), (ii) CARDINAL SHIPPING LLC,
CONDOR SHIPPING LLC, FALCON SHIPPING LLC, GRIFFON SHIPPING LLC, HARRIER SHIPPING
LLC, HAWK SHIPPING LLC, HERON SHIPPING LLC, JAEGER SHIPPING LLC, KESTREL
SHIPPING LLC, KITE SHIPPING LLC, MERLIN SHIPPING LLC, OSPREY SHIPPING LLC,
PEREGRINE SHIPPING LLC, SHIKRA SHIPPING LLC, SPARROW SHIPPING LLC and TERN
SHIPPING LLC, each a Marshall Islands limited liability company (collectively,
the "Initial Guarantors"), and the Additional Guarantors party hereto from time
to time, and (iii) THE ROYAL BANK OF SCOTLAND PLC, as Lender (the "Lender").
PRELIMINARY STATEMENTS:
1. The Borrower, the Initial Guarantors and the Lender are parties to a
Credit Agreement dated as of June 28, 2005 as heretofore amended and
supplemented (the "Existing Credit Agreement") providing for a reducing
revolving credit facility in the original principal amount of $330,000,000.
2. The Borrower has requested that the Lender amend and restate the
Existing Credit Agreement to increase the principal amount of the reducing
revolving credit facility under the Existing Credit Agreement from $330,000,000
to $450,000,000 in order (a) to continue financing Delivered Vessels, (b) to
provide working capital in an amount up to $15,000,000 at any time, and (c) to
finance a portion of the purchase price of Additional Vessels.
3. The Initial Guarantors have agreed, in order to induce the Lender to
make such additional amounts available to the Borrower hereunder, to guarantee
all of the obligations of the Borrower under this Agreement, the Note and the
other Loan Documents.
4. The Lender has agreed to amend and restate the Existing Credit
Agreement to make available a reducing revolving credit facility in the
aggregate principal amount of up to $450,000,000 to the Borrower upon the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Account Charges" means each of the deeds containing, among other
things, a first priority account charge made or to be made by a Guarantor in
favor of the Lender in respect of such Guarantor's Operating Account and in
substantially the form of Exhibit C (as amended from time to time in accordance
with its terms).
"Accounting Information" means the quarterly financial statements
and/or the annual audited financial statements to be provided by the Borrower to
the Lender in accordance with Section 7.01(h).
"Accounting Period" means each consecutive period of approximately
three months (ending on the last day in March, June, September and December of
each year) for which quarterly Accounting Information is required to be
delivered in accordance with Section 7.01(h).
"Additional Guarantor" means any wholly-owned Subsidiary of the
Borrower formed under the laws of the Republic of the Marshall Islands that (i)
is acceptable to the Lender in its sole and absolute discretion, and (ii) shall
execute and deliver to the Lender a Credit Agreement Supplement.
"Additional Vessel" means any dry bulk carrier (other than a Delivered
Vessel) which the Borrower notifies to the Lender pursuant to Section 2.02 as a
vessel which the Borrower wishes to finance or purchase with the assistance of
an Advance, and which the Lender, in its sole and absolute discretion, shall
notify to the Borrower as being acceptable to the Lender, in accordance with
Section 2.02, and which is or is to be registered in the ownership of a
Guarantor under the laws and flag of the Marshall Islands, and everything
belonging to such vessel; and "Additional Vessels" means, collectively, all such
vessels approved by the Lender in accordance with Section 2.02.
"Adjusted Net Worth" means, in respect of an Accounting Period, the
amount of Total Assets less Consolidated Debt.
"Advance" has the meaning specified in Section 2.01.
"Advance Ratio" has the meaning specified in Section 2.07(a).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 50% or more of the voting stock, membership or
partnership interests, or other similar interests of such Person or to direct or
cause direction of the management and policies of such Person, whether through
the ownership of voting stock, membership or partnership interests, or other
similar interests, by contract or otherwise.
"Agreement" has the meaning specified in the recital hereto.
"Applicable Margin" means, in relation to each Accounting Period (or
relevant portion thereof), (i) if the Advance Ratio for such Accounting Period
is less than fifty percent (50%), seventy-five hundredths of one percent (0.75%)
per annum, and (ii) if the Advance Ratio for such Accounting Period is equal to
or greater than fifty percent (50%), eighty-five hundredths of one percent
(0.85%) per annum.
"Approved Broker" means, as the context may require, any of H. Clarkson
& Company, Galbraiths Limited, Braemar Seascope or such other independent London
based sale and purchase ship broker as may from time to time be appointed by the
Lender.
"Approved Manager" means, as the context may require, either of (i)
Eagle Shipping International (USA) LLC, a Marshall Islands limited liability
company with offices currently at 477 Madison Avenue, New York, New York, or any
other company approved by the Lender from time to time as the commercial manager
of a Vessel, which approval shall not unreasonably be withheld, and (ii) V Ships
Management Ltd., an Isle of Man company with offices at Eaglehurst, Belmont
Hill, Douglas, Isle of Man, or any other company approved by the Lender from
time to time as the technical manager of a Vessel, which approval shall not
unreasonably be withheld.
"Approved Manager's Undertakings" means each of the undertakings made
or to be made by an Approved Manager in favor of the Lender in respect of a
Vessel and in substantially the form of Exhibit H (as amended from time to time
in accordance with its terms).
"Assignments of Earnings" means each of the first priority assignments
of earnings made or to be made by a Guarantor in favor of the Lender in respect
of a Vessel and in substantially the form of Exhibit F (as amended from time to
time in accordance with its terms).
"Assignments of Insurances" means each of the first priority
assignments of insurances made or to be made by a Guarantor in favor of the
Lender in respect of a Vessel and in substantially the form of Exhibit G (as
amended from time to time in accordance with its terms).
"Available Free Cash" means, for any Accounting Period, (i) EBITDA less
Interest Expenses for such Accounting Period, minus (ii) a reasonable reserve
for drydocking and maintenance for all Vessels during the twelve months
following such Accounting Period, plus (iii) the amount of any non-cash charges
relating to compensation payable to management of the Borrower pursuant to the
limited liability company agreement of Eagle Ventures.
"Borrower" has the meaning specified in the recital hereof.
"Business Day" means a day of the year on which dealings are carried on
in the London interbank market and banks are open for business in London and not
required or authorized to close in New York City.
"Cash Pooling Deeds" means each of the deeds containing, among other
things, instructions regarding an Operating Account made or to be made by the
Borrower and the relevant Guarantor in favor of the Lender in substantially the
form of Exhibit D (as amended from time to time in accordance with its terms).
"Change of Control" means the occurrence of any of the following: (a)
the Borrower ceases directly to own one hundred percent (100%) of the membership
interests of each of the Guarantors, or (b) a Person or group (as such term is
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
other than Kelso & Company shall at any time become the owner, directly or
indirectly, beneficially or of record, of shares representing more than 30% of
the outstanding voting or economic equity interests of the Borrower and such
Person or group shall at such time own more shares of the Borrower than Kelso &
Company, or (c) the board of directors of the Borrower ceases to consist of a
majority of the existing directors who constitute the board of directors as of
the date hereof or directors nominated by such existing directors or Kelso &
Company, or (d) Sophocles Zoullas shall cease to be the chief executive officer
of the Borrower.
"Classification Society" means in respect of any Vessel, Bureau
Veritas, Det norske Veritas, Nippon Kaiji Kyokai or, in any case, such other
classification society as is selected by the Borrower with the prior consent of
the Lender.
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be subject to any
Lien in favor of the Lender.
"Collateral Documents" means (a) this Agreement (where the context so
admits), (b) the Account Charges, (c) the Master Agreement Security Deed, (d)
the Mortgages, (e) the Assignments of Earnings, (f) the Assignments of
Insurances, (g) the Approved Manager's Undertakings, (h) the Security Interest
Deed, and (i) any other document that provides for the guarantee of the
obligations of any Person under any Loan Document or that creates, or purports
to create, a Lien in favor of, or for the benefit of, the Lender.
"Commitment" means, at any time, the maximum sum available to be
advanced at such time by the Lender to the Borrower pursuant to Section 2.01 of
this Agreement, as such amount may be reduced from time to time pursuant to
Sections 2.05, 2.10, 2.11 or 8.01.
"Commitment Period" has the meaning specified in Section 2.01.
"Commitment Termination Date" means (i) the tenth anniversary of the
Effective Date or, if such day is not a Business Day, the next succeeding
Business Day, provided that, if such succeeding Business Day would fall in the
next following calendar month, the Commitment Termination Date shall be the
immediately preceding Business Day, or (ii) such earlier day as the Commitment
shall have been canceled in full pursuant to the provisions of this Agreement.
"Compliance Certificate" means, as of any relevant date, a certificate
of the chief financial officer of the Borrower which sets forth the calculations
required to establish whether the Borrower was in compliance with the provisions
of Article VI as of such date in substantially the form of Exhibit J.
"Consolidated Debt" means, in respect of an Accounting Period, the
aggregate amount of Debt due by the members of the Group (other than any such
Debt owing by any member of the Group to another member of the Group) as stated
in the then most recent Accounting Information.
"Credit Agreement Supplement" means a supplement to this Agreement made
or to be made by an Additional Guarantor by which it becomes a Guarantor
hereunder, substantially the form of Exhibit I (as amended from time to time in
accordance with its terms).
"Current Assets" means, in respect of each Accounting Period on a
consolidated basis for the Group, the aggregate of the cash and marketable
securities, trade and other receivables from persons other than a member of the
Group realizable within one year, inventories and prepaid expenses which are to
be charged to income within one year less any doubtful debts and any discounts
or allowances given as stated in the then most recent Accounting Information.
"Debt" means in relation to any member of the Group (the "debtor"):
(a) Financial Indebtedness of the debtor;
(b) liability for any credit to the debtor from a supplier of
goods or services or under any instalment purchase or payment plan or
other similar arrangement;
(c) contingent liabilities of the debtor (including without
limitation any taxes or other payments under dispute) which have been
or, under GAAP, should be recorded in the notes to the Accounting
Information;
(d) deferred tax of the debtor; and
(e) liability under a guarantee, indemnity or similar obligation
entered into by the debtor in respect of a liability of another person
who is not a member of the Group which would fall within (a) to (d) if
the references to the debtor referred to the other person.
"Default" means any Event of Default or any event that would constitute
an Event of Default but for the requirement that notice be given or time elapse
or both.
"Delivered Vessels" means, collectively, the vessels described in
Schedule II hereto.
"Dollars" and the sign "$" each means lawful money of the United States
of America.
"Drawdown Date" means each requested date for the borrowing of an
Advance, which shall not be later than the Commitment Termination Date.
"Eagle Ventures" means Eagle Ventures LLC, a Marshall Islands limited
liability company.
"Early Termination Date" has the meaning ascribed thereto in Section 14
of the Master Agreement.
"EBITDA" means, in respect of an Accounting Period, the aggregate
amount of consolidated pre-tax profits of the Group before extraordinary or
exceptional items, depreciation, interest, rentals under finance leases and
similar charges payable as stated in the then most recent Accounting
Information.
"Effective Date" means the first date on which the conditions precedent
set forth in Section 3.01 shall be satisfied (or waived in writing by the
Lender).
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement based
upon or arising out of any Environmental Law including without limitation (a)
any claim by any governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions, or fines, penalties or damages
pursuant to any Environmental Law, and (b) any claim by any third party seeking
damages, contribution, or injunctive relief arising from alleged injury or
threat of injury to health, safety or the environment.
"Environmental Laws" means any and all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
petroleum or petroleum products, chemicals or industrial, toxic or hazardous
substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes or
the clean-up or other remediation thereof.
"Environmentally Sensitive Material" means oil, oil products, any other
substance which is polluting, toxic or hazardous or any substance the release of
which into the environment is regulated, prohibited or penalized by or pursuant
to any Environmental Law.
"Event of Loss", means any of the following events: (x) the actual or
constructive total loss or the agreed or compromised total loss of a Vessel; or
(y) the capture, condemnation, confiscation, requisition (excluding any
requisition for hire for a fixed period not in excess of ninety (90) days),
purchase, seizure or forfeiture of, or any taking of title to, a Vessel. An
Event of Loss shall be deemed to have occurred (i) in the event of an actual
loss of a Vessel, at noon Greenwich Mean Time on the date of such loss or if
that is not known on the date which such Vessel was last heard from; (ii) in the
event of damage which results in a constructive or compromised or arranged total
loss of a Vessel, at noon Greenwich Mean Time on the date of the event giving
rise to such damage; or (iii) in the case of an event referred to in clause (y)
above, at noon Greenwich Mean Time on the date on which such event is expressed
to take effect by the Person making the same. Notwithstanding the foregoing, if
the relevant Vessel shall have been returned to the relevant Borrower following
any capture, requisition or seizure referred to in clause (y) above prior to the
date upon which payment is required to be made under Section 2.04(c), no Event
of Loss shall be deemed to have occurred by reason of such capture, requisition
or seizure.
"Events of Default" has the meaning specified in Section 8.01.
"Existing Credit Agreement" has the meaning specified in the
Preliminary Statements hereof.
"Fair Market Value" means, in relation to any Vessel, the fair market
value of such Vessel determined by means of a valuation made (at the expense of
the Borrower) at any relevant time by an Approved Broker. Such valuation shall
be made with or without physical inspection of such Vessel (as the Lender may
require), on the basis of a sale for prompt delivery for cash at arms' length on
normal commercial terms as between a willing seller and a willing buyer, free of
any existing charter or other contracts of employment, and shall be conclusive
evidence of the fair market value of such Vessel at the date of such valuation.
"Financial Indebtedness" means, in relation to any member of the Group
(the "debtor"), a liability of the debtor:
(a) for principal, interest or any other sum payable in respect
of any moneys borrowed or raised by the debtor;
(b) under any loan stock, bond, note or other security issued by
the debtor;
(c) under any acceptance credit, guarantee or letter of credit
facility made available to the debtor;
(d) under a financial lease, a deferred purchase consideration
arrangement (in each case, other than in respect of assets or services
obtained on normal commercial terms in the ordinary course of
business) or any other agreement having the commercial effect of a
borrowing or raising of money by the debtor;
(e) under any foreign exchange transaction, interest or currency
swap or any other kind of derivative transaction entered into by the
debtor or, if the agreement under which any such transaction is
entered into requires netting of mutual liabilities, the liability of
the debtor for the net amount; or
(f) under a guarantee, indemnity or similar obligation entered
into by the debtor in respect of a liability of another person which
would fall within (a) to (e) if the references to the debtor referred
to the other person.
"GAAP" means accounting principles, concepts, bases and policies
generally adopted and accepted in the United States of America consistently
applied.
"Group" means the Borrower and its Subsidiaries (whether direct or
indirect and including, but not limited to, the Guarantors) from time to time
and "member of the Group" shall be construed accordingly.
"Guaranteed Obligations" has the meaning specified in Section 5.01.
"Guarantors" means, collectively, the Initial Guarantors and each
Additional Guarantor, if any, and "Guarantor" means any of them as the context
may require.
"Guaranty" means the joint and several guaranty of the Guarantors
provided in Article V as supplemented by each Credit Agreement Supplement
executed and delivered from time to time.
"Indemnified Party" has the meaning specified in Section 9.04(c).
"Initial Guarantors" has the meaning specified in the recital hereto.
"Interest Expenses" means, in respect of an Accounting Period, the
aggregate on a consolidated basis of all interest incurred by any member of the
Group (excluding any amounts owing by one member of the Group to another member
of the Group) and any net amounts payable under interest rate hedge agreements.
"Interest Period" means, in relation to each Advance (or any relevant
portion thereof), (x) in the case of the first such period, the period
commencing on the Drawdown Date for such Advance (or any relevant portion
thereof) and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and (y) thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be three, six
or twelve months (or such other period as may be requested by the Borrower and
consented to by the Lender so as to ensure that the Commitment Termination Date
is the last day of an Interest Period) as the Borrower may, upon notice received
by the Lender not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the first day of such Interest Period, select or request;
provided, however, that:
(a) the Borrower may not select any Interest Period that ends
after (A) any Scheduled Commitment Reduction Date, unless the aggregate
outstanding principal amount of Advances which have Interest Periods
which end or are deemed to end after such Scheduled Commitment
Reduction Date will not exceed the aggregate amount of the Lender's
Commitment on such Scheduled Commitment Reduction Date or (B) the
Commitment Termination Date;
(b) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided that, if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day;
(c) whenever the first day of any Interest Period occurs on a
day in a calendar month for which there is no numerically corresponding
day in the calendar month that succeeds such initial calendar month by
the number of months equal to the number of months in such Interest
Period, such Interest Period shall end on the last Business Day of such
succeeding calendar month;
(d) any notice given by the Borrower selecting the duration of
an Interest Period shall be irrevocable and, if the Borrower fails to
select an Interest Period then, subject as provided herein, the
Borrower shall be deemed to have selected an Interest Period of three
(3) months; and
(e) the Lender, in its sole and absolute discretion, is
satisfied that deposits in Dollars for a period equal to such Interest
Period will be available to the Lender in the London Interbank Market
at the commencement of such Interest Period and, if the Lender is not
so satisfied, such Interest Period shall be of such duration as the
Lender and the Borrower shall agree (or, in the absence of such
agreement, as the Lender shall specify).
"ISM Code" means in relation to its application to each Guarantor, any
relevant Approved Manager, each Vessel and its operation, the International
Safety Management Code (including the guidelines on its implementation) adopted
by the International Maritime Organization ("IMO") as Resolution A.741(18) and
Resolution A.913(22) (superseding Resolution A.788(19)), as the same may be
amended, supplemented or replaced from time to time (and the terms "safety
management system", "Safety Management Certificate" and "Document of Compliance"
have the meanings specified in the ISM Code).
"ISPS Code" means in relation to its application to each Guarantor, any
relevant Approved Manager, each Vessel and its operation, the International Ship
and Port Facility Security Code constituted pursuant to resolution A.924(22) of
the IMO adopted by a Diplomatic Conference of the IMO on Maritime Security on 13
December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea
Convention (SOLAS) 1974 (as amended).
"Kelso & Company" means, collectively, Kelso & Company, L.P., a
Delaware limited partnership, and its Affiliates.
"Lender" has the meaning ascribed thereto in the recital hereof.
"Lender's Account" means the account of the Lender maintained by the
Lender with American Express Bank Limited, 3 World Financial Center, 23rd Floor,
New York, New York 10285-2300, Account No. 00261123, SWIFT: AEIBUS33, or such
other account as may from time to time be notified by the Lender to the
Borrower.
"Lien" means any lien, security interest or other charge or encumbrance
of any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor.
"Loan Documents" means this Agreement, the Master Agreement, the Cash
Pooling Deeds, the Note and the Collateral Documents.
"Mandatory Cost Rate" means the percentage rate which represents the
cost to the Lender, relative to the Advances, of compliance with the
requirements of the Bank of England, the Financial Services Authority or any
other regulatory authority, as determined by the Lender in accordance with the
formula detailed in Schedule I hereto.
"Margin Stock" has the meaning specified in Regulation U of the Board
of Governors of the Federal Reserve System and any successor regulations
thereto, as in effect from time to time.
"Master Agreement" means the Master Agreement (on the 1992 ISDA
(Multicurrency-Cross Border) form as amended) dated as of June 28, 2005 between
the Borrower and the Lender pursuant to which the Borrower and the Lender may
enter into one or more interest rate swap transactions to hedge the Borrower'
exposure under this Agreement to interest rate fluctuations, and includes all
transactions from time to time entered into and confirmations from time to time
exchanged under such Master Agreement, and any amending, supplementing or
replacement agreements made from time to time.
"Master Agreement Security Deed" means the deed dated July 7, 2005 made
by the Borrower in favor of the Lender containing, among other things, a charge
in respect of the Master Agreement (as amended from time to time in accordance
with its terms).
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect upon (a) the condition (financial or otherwise), operations,
assets or business of such Person and its Subsidiaries, taken as a whole, (b)
the ability of such Person to perform any of its material obligations under any
Loan Document to which it is a party, or (c) the material rights and remedies of
the Lender under any Loan Document to which such Person is a party.
"Memorandum of Agreement" means, in relation to an Additional Vessel, a
memorandum of agreement executed by the owner of such Vessel, as seller, and a
Guarantor, as buyer, providing for the purchase by such Guarantor of such Vessel
(as amended from time to time in accordance with its terms).
"Mortgage" means each of the first preferred mortgages made or to be
made by a Guarantor in favor of the Lender in respect of a Vessel and in
substantially the form of Exhibit E, as the same may be amended in accordance
with this Agreement (as amended from time to time in accordance with its terms).
"Note" means the promissory note of the Borrower payable to the order
of the Lender, in substantially the form of Exhibit B hereto, evidencing the
aggregate indebtedness of the Borrower to the Lender resulting from the Advances
made or to be made by the Lender.
"Notice of Drawdown" has the meaning specified in Section 2.03(a).
"Obligors" means, collectively, the Borrower and the Guarantors, and
"Obligor" means any of them as the context may require.
"Operating Accounts" means each of the accounts opened or to be opened
in the name of a Guarantor with the Lender (or such other account with any other
branch of the Lender or with a bank or financial institution other than the
Lender (whether associated with the Lender or not) substituted therefor pursuant
to this Agreement).
"Other Taxes" has the meaning specified in Section 2.13(b).
"Permitted Encumbrances" has the meaning specified in the Mortgages.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"RBS LIBOR" means, for any Interest Period, the rate per annum at which
deposits in Dollars in an amount approximately equal to the Advances (or any
relevant portion thereof) are (or would have been) offered by the Lender to
leading banks in the London Interbank Dollar Market at or about 11:00 a.m.
(London time) on the second Business Day prior to the commencement of such
Interest Period for a period equal to such Interest Period and for delivery on
the first Business Day thereof.
"Relevant Interest Rate" means RBS LIBOR, or, in the case where a
Transaction is to be, or has been entered into under the Master Agreement and
the Borrower has not made an election pursuant to Section 2.06(d), TELERATE.
"Relevant Percentage" means, in relation to any Vessel that is sold or
becomes the subject of an Event of Loss, a fraction (expressed as a percentage,
rounded up to the nearest tenth of a percent) where (i) the numerator is the
Fair Market Value of the Vessel sold or lost, and (ii) the denominator is the
aggregate amount of the Fair Market Values of all Vessels (including the Vessel
sold or lost) subject to a Mortgage immediately prior to such sale or loss, in
each case determined on the basis of the most recent valuation delivered
pursuant to Section 3.02(c)(iv) or Section 7.01(l).
"Scheduled Commitment Reduction Date" means the sixth anniversary of
the Effective Date and each day every six (6) months thereafter until and
including the Commitment Termination Date or, if any such day is not a Business
Day, the next succeeding Business Day, provided that, if such succeeding
Business Day would fall in the next following calendar month, the Scheduled
Commitment Reduction Date shall be the immediately preceding Business Day.
"Securities and Exchange Commission" shall mean the United States
Securities and Exchange Commission or any other governmental authority of the
United States of America at the time administrating the Securities Act of 1933,
as amended, the Investment Company Act of 1940, as amended, or the Securities
Exchange Act of 1934, as amended.
"Security Interest Deed" means the deed to be made by the Borrower and
the Guarantors in favor of the Lender containing, among other things, a charge
in respect of the Designated Account of the Borrower with the Lender described
therein and in substantially the form of Exhibit K (as amended from time to time
in accordance with its terms).
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Subsidiary" of any Person means any corporation, limited liability
company, partnership, joint venture, trust or estate or other entity of which
(or in which) more than 50% of (a) the voting stock or membership interests of
such corporation or company, (b) the interest in the capital or profits of such
partnership or joint venture or (c) the beneficial interest in such trust or
estate is at the time directly or indirectly owned or controlled by such Person,
by such Person and one or more of its other Subsidiaries or by one or more of
such Person's other Subsidiaries.
"Tangible Fixed Assets" means, in respect of an Accounting Period, the
value (less depreciation computed in accordance with GAAP) on a consolidated
basis of all tangible fixed assets of the Group as stated in the then most
recent Accounting Information; provided that, for the purposes of determining
compliance with the covenants set forth in Article VI, the amount of Tangible
Fixed Assets attributable to the Vessels shall be equal to the aggregate market
value of the Vessels (as determined by an independent London shipbroker
acceptable to the Lender) rather than the value of the Vessels as stated in the
then most recent Accounting Information.
"Taxes" has the meaning specified in Section 2.13(a).
"TELERATE" means, for any Interest Period:
(a) the rate per annum equal to the offered quotation for
deposits in Dollars for a period equal to, or as near as possible
equal to, that Interest Period or other relevant period which
appears on REUTERS BBA Page LIBOR 01 at or about 11:00 a.m.
(London time) on the second Business Day prior to the
commencement of that Interest Period or other period (and, for
the purposes of this Agreement, "REUTERS BBA Page LIBOR 01" means
the display designated as "REUTERS BBA Page LIBOR 01" on the
Reuters Money News Service or such other page as may replace
REUTERS BBA Page LIBOR 01 on that service for the purpose of
displaying rates comparable to that rate or on such other service
as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for Dollars); or
(b) if no rate is quoted on REUTERS BBA Page LIBOR 01, the
rate per annum determined by the Lender to be the rate per annum
which leading banks in the London Interbank Market offer for
deposits in Dollars in the London Interbank Market at or about
11:00 a.m. (London time) on the second Business Day prior to the
commencement of that Interest Period or other period for a period
equal to that Interest Period or other period and for delivery on
the first Business Day of it.
"Total Assets" means, in respect of an Accounting Period, the aggregate
of Current Assets and Tangible Fixed Assets.
"Transaction" has the meaning ascribed thereto in the introductory
paragraph of the Master Agreement.
"Vessels" means, collectively, the Delivered Vessels and the Additional
Vessels, and everything belonging to each such vessel, and, in the case of each
Additional Vessel, to be purchased by a Guarantor, and in each case registered
or to be registered by such Guarantor in its ownership under the laws and flag
of the Republic of the Marshall Islands, and "Vessel" means any of them as the
context may require.
"Working Capital Advances" has the meaning specified in Section
2.01(b).
SECTION 1.02. Interpretation. When used in this Agreement, (i) the
words "herein", "hereof" and "hereunder" and words of similar import shall refer
to this Agreement as a whole and not to any provision of this Agreement, and the
words "Article", "Section", "Schedule" and "Exhibit" shall refer to Articles and
Sections of, and Schedules and Exhibits to, this Agreement unless otherwise
specified and (ii)whenever the context so requires, the neuter gender includes
the masculine or feminine, the masculine gender includes the feminine, and the
singular number includes the plural, and vice versa.
SECTION 1.03. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.04. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Commitment. The Lender agrees, on the terms and
conditions hereinafter set forth, to make available advances (each an "Advance")
to the Borrower from time to time on any Business Day during the period from the
Effective Date until the Commitment Termination Date (the "Commitment Period")
in an aggregate amount not to exceed at any time an aggregate principal amount
of $450,000,000 as follows:
(a) Effective as of the Effective Date, all "Advances" outstanding
under the Existing Credit Agreement shall automatically be deemed Advances made
and outstanding hereunder;
(b) Up to an aggregate principal amount of $15,000,000, in one or more
Advances for working capital purposes (collectively, the "Working Capital
Advances"); and
(c) The balance of the Commitment, after deducting the aggregate
principal amount of all Advances outstanding as of the date of any Notice of
Drawdown, in one or more Advances, whereof each such Advance shall be applied by
the Borrower to assist a Guarantor to finance a portion of the purchase price of
an Additional Vessel under the relevant Memorandum of Agreement, and shall be an
amount which, together with all other Advances of the Commitment then
outstanding, shall not exceed seventy-five percent (75%) of the aggregate amount
of the Fair Market Values of all Vessels which would be subject to a Mortgage
immediately after the making of such Advance (determined on the basis of the
most recent valuation for each Vessel delivered pursuant to Section
3.02(c)(iv)).
Within the limits of the Commitment, and of Section 2.02, the Borrower
may borrow under this Section 2.01, repay pursuant to Section 2.04 and reborrow
under this Section 2.01.
SECTION 2.02. Additional Vessels. Where the Borrower wishes to borrow
an Advance other than a Working Capital Advance in relation to the proposed
purchase of a vessel by a Guarantor, the Borrower shall notify the Lender (i)
the name of such vessel (ii) the general description and deadweight tonnage
(which shall be between 25,000 and 85,000 deadweight tons), (iii) the age of
such vessel (which shall not be greater than ten years at the time of delivery
to such Guarantor), (iv) the identity of the current owner, (v) the identity of
the Guarantor, (vi) the purchase price of such vessel paid or to be paid by such
Guarantor, and (vii) such further information as the Lender may require. If
available, the Borrower shall also provide the Lender with a true and complete
copy of the relevant Memorandum of Agreement for such vessel. The Lender shall,
as soon as reasonably practical, notify the Borrower of the Lender's acceptance
or rejection of such vessel for the purposes of an Advance, which acceptance or
rejection shall be in the absolute discretion of the Lender.
SECTION 2.03. Drawdown. (a) Each Advance shall be made on notice given
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the proposed Drawdown Date by the Borrower to the Lender. Each such notice of
drawdown (a "Notice of Drawdown") shall be in writing, in substantially the form
of Exhibit A hereto, specifying therein (i) the requested Drawdown Date, which
shall be a Business Day during the Commitment Period, (ii) the aggregate
principal amount of the Advance requested on such Drawdown Date, and if it is a
Working Capital Advance, (iii) the duration of the initial Interest Period
applicable to such Advance, and (iv) the recipients (including payment
instructions) of the proceeds of such Advance. Upon fulfillment of the
applicable conditions set forth in Article III, the Lender will make such funds
available to, or for the account of, the Borrower according to the payment
instructions set forth in the Notice of Drawdown. Each Advance shall be
$5,000,000 ($1,000,000 in the case of any Working Capital Advance) or an
integral multiple of $1,000,000 in excess thereof.
(b) Each Notice of Drawdown shall be irrevocable and binding on the
Borrower. The Borrower shall indemnify the Lender against any loss, cost or
expense incurred by the Lender as a result of any failure to fulfill on or
before the Drawdown Date specified in any Notice of Drawdown the applicable
conditions set forth in Article III, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by the Lender to fund the Advance to be made by
the Lender on such Drawdown Date when such Advance, as a result of such failure,
is not made on such date.
SECTION 2.04. Repayment. (a) On any day on which the aggregate
principal amount of the Advances exceeds the aggregate amount of the Lender's
Commitment, the Borrower shall repay the principal amount of Advances in an
amount equal to such excess.
(b) The Borrower shall repay in full all outstanding Advances
immediately upon the occurrence of a Change of Control.
(c) In addition to, and without limitation of, the provisions of
Section 7.01(l), on (i) the date of any transfer of title of a Vessel by the
relevant Guarantor, and (ii) the earlier of (A) the date which is one hundred
fifty (150) days following an Event of Loss of a Vessel, and (B) the date of
receipt by the relevant Guarantor, the Borrower or the Lender of the insurance
proceeds relating to such Event of Loss, the Borrower shall repay the Advances
in an amount equal to the Relevant Percentage of the Advances outstanding
immediately prior to such sale or Event of Loss.
(d) The Borrower may, upon not less than fourteen (14) Business Days'
notice to the Lender identifying the Advance to be prepaid in whole or in part
and stating the proposed date and aggregate principal amount of such prepayment
(which notice shall be irrevocable), and if such notice is given the Borrower
shall, prepay the outstanding principal amount of such Advance in whole or in
part; provided, however, that each partial prepayment shall be in an aggregate
principal amount not less than $5,000,000 or an integral multiple of $5,000,000
in excess thereof (or, if the aggregate outstanding principal amount of such
Advance is less, such aggregate principal amount).
(e) Anything contained in this Agreement to the contrary
notwithstanding, all then outstanding Advances shall be repaid on the Commitment
Termination Date.
(f) With respect to each repayment of Advances required by this Section
2.04, the Borrower may designate the specific Advance or Advances pursuant to
which a repayment is made, provided that all Advances with Interest Periods
ending on such date of required repayment shall be paid in full prior to the
payment of any other Advances. In the absence of a designation by the Borrower
as described in the preceding sentence, the Lender shall, subject to the
preceding provisions of this subsection (g), make such designation in its sole
reasonable discretion with a view, but no obligation, to minimize breakage costs
owing pursuant to Section 9.04(b).
(g) Each such repayment of any Advance or relevant part thereof shall
be accompanied by accrued interest to the date of such prepayment on the
principal amount so repaid plus any amount payable pursuant to Section 9.04(b).
SECTION 2.05. Reduction of Commitment. (a) On each Scheduled Commitment
Reduction Date prior to the Commitment Termination Date, the Lender's Commitment
shall be reduced by an amount equal to $25,000,000, and the Lender's Commitment
shall be reduced to nil on the Commitment Termination Date.
(b) The Commitment shall be cancelled in full immediately upon the
occurrence of a Change of Control.
(c) The Borrower may, upon not less than five (5) Business Days' notice
to the Lender, terminate in whole or reduce in part the unused portion of the
Commitment; provided, however, that each partial reduction of the Commitment
shall be in an aggregate principal amount of $5,000,000 or an integral multiple
of $5,000,000 in excess thereof.
SECTION 2.06. Interest. (a) Ordinary Interest. Subject to subsection
(c) of this Section 2.06, the Borrower shall pay interest on the aggregate
unpaid principal amount of each Advance from the relevant Drawdown Date until
such principal amount shall be paid in full, at a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (i) the
Relevant Interest Rate for such Interest Period plus (ii) the Applicable Margin
in effect from time to time, plus (iii) the Mandatory Cost Rate in effect from
time to time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three (3) months, on each day
that occurs during such Interest Period every three (3) months from the first
day of such Interest Period.
(b) Default Interest. The Borrower shall pay on demand interest on the
unpaid principal amount of each Advance and on the unpaid amount of all
interest, fees and other amounts then due and payable hereunder that is not paid
when due from the due date thereof to the date paid, at a rate per annum equal
at such time to two percent (2%) per annum above the rate per annum required to
be paid on such Advance pursuant to clause (a) above.
(c) Interest Upon Default. Upon the occurrence and during the
continuance of any Event of Default (or, in the case of any involuntary
proceeding described in Section 8.01(f), a Default), the Borrower shall pay
interest on the aggregate unpaid principal amount of each Advance from the date
of the occurrence of such Event of Default or Default, as the case may be, until
such Event of Default or Default, as the case may be, shall have been cured or
waived, at a rate per annum equal to two percent (2%) per annum above the rate
per annum required to be paid on such Advance pursuant to clause (a) above.
(d) Interest Rate when Transactions under Master Agreement. If a
Transaction is to be entered into under the Master Agreement, the Relevant
Interest Rate for each Interest Period applicable to any Advance the subject of
the Transaction (commencing with the first Interest Period relating to such
Transaction) shall be TELERATE unless the Borrower, by giving written notice
(which shall be irrevocable) to the Lender not later than 11.00 A.M. (New York
City time) three Business Days before the commencement of such first Interest
Period, elects that the Relevant Interest Rate shall be RBS LIBOR rather than
TELERATE.
SECTION 2.07. Interest Rate Determination. (a) The Lender shall
calculate in relation to each Accounting Period the ratio (expressed as a
percentage) (the "Advance Ratio") of (i) the aggregate amount of Advances
outstanding on the first day of such Accounting Period, to (ii) the aggregate
amount of the Fair Market Value of all Vessels then subject to a Mortgage and
which have not become the subject of an Event of Loss, determined on the basis
of valuations delivered to the Lender pursuant to Section 7.01(l) not more than
twenty-one (21) days prior to the first day of such Accounting Period; provided,
however, if valuations are not timely delivered for such purpose, then the
aggregate amount of the Fair Market Value of all Vessels for such Accounting
Period shall be deemed to be one (1); and provided further, however, that the
Advance Ratio for the Accounting Period in which the Effective Date falls shall
be calculated on the basis of the aggregate amount of Advances outstanding on
the Effective Date and the valuation(s) delivered pursuant to Section
3.01(a)(xvii).
(b) The Lender shall give prompt notice to the Borrower of the
applicable interest rate determined by the Lender for purposes of Section
2.06(a).
SECTION 2.08. Fees. (a) The Borrower agrees to pay to the Lender a
non-refundable arrangement fee of $900,000 on the date hereof.
(b) The Borrower agrees to pay to the Lender a commitment fee on the
unused portion of the Lender's Commitment from the Effective Date until the
Commitment Termination Date, calculated on a 360 day year basis, at a rate per
annum equal to 0.25%, payable quarterly in arrears.
SECTION 2.09. Master Agreement. (a) If for any reason any Advance is
not drawn down under this Agreement but nonetheless a Transaction has been
entered into under the Master Agreement in relation thereto then, subject to
Section 2.09(c), the Lender shall be entitled but not obliged to amend,
supplement, cancel, net out, terminate, liquidate, transfer or assign all or any
part of the rights, benefits and obligations created by the Master Agreement
and/or to obtain or re-establish any hedge or related trading position in any
manner and with any Person the Lender in its absolute discretion decides, and in
the event of the Lender exercising any part of its entitlement aforesaid the
Borrower's continuing obligations under the Master Agreement shall, unless
agreed otherwise by the Lender, be calculated so far as the Lender considers it
practicable by reference to the reduction schedule for the Commitment taking
into account the fact that such Advance has not been advanced.
(b) In the case of repayment of all or part of any Advance under this
Agreement or a reduction of the Commitment (whether scheduled or not) then,
subject to Section 2.09(c), the Lender shall be entitled but not obliged to
amend, supplement, cancel, net out, transfer or assign all or such part of the
rights, benefits and obligations created by the Master Agreement which equate or
relate to the Advance so repaid or prepaid or the part of the Commitment so
reduced and/or to obtain or re-establish any hedge or related trading position
in any manner and with any person the Lender in its absolute discretion decides,
and in the case of such repayment or a partial prepayment or reduction of part
of the Commitment and the Lender exercising any part of its entitlement as
aforesaid the Borrower's continuing obligations under the Master Agreement
shall, unless agreed otherwise by the Lender, be calculated so far as the Lender
considers it practicable by reference to the reduction schedule (as it may be
amended) for the Commitment taking account of the fact that more or less than
the originally scheduled amount of the Commitment remains outstanding.
(c) If either (i) less than the full amount of any Advance is drawn
down under this Agreement, or (ii) more or less than the originally scheduled
amount of the Commitment remains outstanding following a repayment or a
reduction of the Commitment under this Agreement, and the Lender in its absolute
discretion agrees, following a written request of the Borrower, that the
Borrower may be permitted to maintain all or part of a Transaction in an amount
not wholly matched with or linked to all or part of an Advance, the Borrower
shall within ten (10) days of being notified by the Lender of such requirement
provide the Lender with, or procure the provision to the Lender of, such
additional security as shall in the opinion of the Lender acting reasonably be
adequate to secure the performance of such Transaction, which additional
security shall take such form, be constituted by such documentation, and be
entered into between such parties, as the Lender in its absolute discretion may
approve or require, and each document comprising such additional security shall
constitute a Credit Support Document (as defined in Section 14 of the Master
Agreement).
(d) The Borrower shall on the first written demand of the Lender
indemnify the Lender in respect of all loss, cost and expense (including the
fees of legal advisers) incurred or sustained by the Lender as a consequence of
or in relation to the effecting of any matters or transactions referred to in
this Section 2.09.
(e) Without prejudice to or limitation of the obligation of the
Borrower under Section 2.09(d), in the event that the Lender exercises any of
its rights under Section 2.09(a) or (b) and such exercise results in all or part
of a Transaction being terminated, such termination shall be treated under the
Master Agreement in the same manner as if it were a Terminated Transaction (as
defined in Section 14 of the Master Agreement) effected by the Lender after an
Event of Default by the Borrower and, accordingly, the Lender shall be permitted
to recover from the Borrower payment for early termination calculated in
accordance with the provisions of Section 6(e)(i) of the Master Agreement.
SECTION 2.10. Increased Costs. (a) If, due to either (i) the
introduction of or any change (other than any change in the Mandatory Cost Rate)
in or in the interpretation of any law or regulation or (ii) the compliance by
the Lender with any guideline or request from any central bank or other
governmental authority in any case introduced, changed, interpreted or requested
after the date hereof (whether or not having the force of law), there shall be
(x) imposed, modified or deemed applicable any reserve, special deposit or
similar requirement against assets held by, or deposits in or for the account
of, the Lender or (y) imposed on the Lender any other condition relating to this
Agreement or the Advances, and the result of any event referred to in clause (x)
or (y) shall be to increase the cost to the Lender of agreeing to make or
making, funding or maintaining the Advances, then the Borrower shall from time
to time, upon demand by the Lender, pay to the Lender additional amounts
sufficient to compensate the Lender for such increased cost; provided, however,
that, before making any such demand, the Lender agrees to use its best efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different lending office for making and maintaining the Advances if
the making of such a designation would avoid the need for, or reduce the amount
of, such increased cost and would not, in the reasonable judgment of the Lender,
be otherwise disadvantageous to the Lender. A certificate as to the amount of
such increased cost, submitted to the Borrower by the Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(b) If the Lender determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental or
monetary authority in regard to capital adequacy (whether or not having the
force of law), in any case in which such law, regulation, guideline or request
became effective or was made after the date hereof, has or would have the effect
of reducing the rate of return on the capital of, or maintained by, the Lender
or any corporation controlling the Lender as a consequence of the Lender's
Commitment or the Advances hereunder and other commitments of such type, by
increasing the amount of capital required or expected to be maintained by the
Lender or any corporation controlling the Lender, to a level below that which
the Lender or any corporation controlling the Lender could have achieved but for
such adoption, effectiveness, change or compliance (taking into account the
Lender's or such corporation's policies with respect to capital adequacy) then
the Borrower shall, from time to time, pay the Lender, upon demand by the
Lender, such additional amount as may be specified by the Lender as being
sufficient to compensate the Lender for such reduction in return, to the extent
that the Lender reasonably determines such reduction to be attributable to the
existence of the Lender's commitment to lend hereunder; provided however, that
before making such demand, the Lender agrees to use its best efforts (consistent
with its internal policy and legal and regulatory restrictions) to enter into
consultations with the Borrower in good faith and without prejudice to the
rights of the Lender under this Agreement and the other Loan Documents with
regard to the impact of such law, regulation, guideline or request and the
amount of compensation required by the Lender as aforesaid. A certificate as to
such amounts submitted to the Borrower by the Lender shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.11. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for the Lender to perform
its obligations hereunder to make the Advances or to fund or maintain the
Advances or any portion thereof hereunder, then, upon written notice by the
Lender to the Borrower, the Lender and the Borrower shall negotiate in good
faith to agree on terms for the Lender to continue the Advances or any portion
thereof on a basis which is not unlawful. If no agreement shall be reached
between the Borrower and the Lender within a period which in the sole discretion
of the Lender is reasonable, the Lender shall be entitled to give notice to the
Borrower that the obligation of the Lender to make or maintain the Advances or
any portion thereof shall be forthwith terminated and the amount of the Lender's
Commitment shall be reduced accordingly, and thereupon the aggregate outstanding
principal amount of the Advances or any relevant portion thereof shall become
due and payable in full, together with accrued interest thereon and other sums
payable hereunder, and such amounts as the Borrower shall be obligated to
reimburse the Lender pursuant to Section 9.04(b) if earlier prepayment is
required by any law, regulation and/or regulatory requirement; provided,
however, that, before making any such demand, the Lender shall designate a
different lending office for monitoring the Advances if the making of such a
designation would avoid the need for giving such notice and demand and would
not, in the judgment of the Lender, be otherwise disadvantageous to the Lender.
SECTION 2.12. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Note not later than 11:00 A.M. (New York
City time) on the day when due in Dollars to the Lender at the Lender's Account
in same day funds. Partial payments of overdue amounts in respect of fees,
expenses, interest and/or principal shall (unless specifically provided for
elsewhere herein or in any other Loan Document) be applied to the payment of
such overdue fees, expenses, interest and/or principal, as the case may be, in
such order as the Lender may determine.
(b) The Borrower hereby authorizes the Lender, if and to the extent
payment of principal, interest or fees owed to the Lender is not made when due
hereunder or under the Note, to charge from time to time against any or all of
the accounts of the Borrower with the Lender any amount so due.
(c) All computations of interest shall be made by the Lender, on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable. Each determination by the Lender of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Note shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, if such extension would cause payment of
interest on or principal of the Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
SECTION 2.13. Taxes. (a) All payments by the Borrower of principal of,
and interest on, the Advances, the Note and all other amounts payable by the
Borrower hereunder shall be made free and clear of, and without deduction or
withholding for or on account of any present or future income or franchise taxes
and other taxes, fees, levies, duties, withholdings or other charges of any
nature whatsoever now or hereafter imposed, withheld, collected or assessed by
any taxing authority, but excluding (such non-excluded items being called
"Taxes"), in the case of the Lender, (i) net income, capital, doing business,
and franchise taxes imposed on the Lender by the jurisdiction under the laws of
which the Lender is organized or any political subdivision or taxing authority
thereof or therein, or by any jurisdiction in which the Lender's lending office
with respect to this Agreement is located, as the case may be, or any political
subdivision or taxing authority thereof or therein; and (ii) any taxes, fees,
levies, duties, withholdings or other charges that would not have been imposed
but for the failure of the Lender to comply with any certification,
identification or other similar requirement with which the Lender is in its
reasonable judgment eligible to comply, to establish entitlement to exemption
from such tax. If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under the Note to the Lender, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions of Taxes (including deductions of Taxes applicable to
additional sums payable under this Section 2.13) the Lender receives an amount
equal to the sum it would have received had no such deductions of Taxes been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law; provided, however, that the Lender
shall designate a different lending office for making or maintaining the
Advances if, in the judgment of the Lender, such designation would avoid the
need for, or reduce the amount of, any Taxes required to be deducted from or in
respect of any sum payable hereunder to the Lender and would not, in the
judgment of the Lender, be otherwise disadvantageous to the Lender.
(b) In addition, the Borrower agree to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Note or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Note (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify the Lender for the full amount of Taxes
or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.13) paid by the
Lender and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 45 days from the date the Lender makes written demand therefor.
(d) Within 30 days (or as soon thereafter as available) after the date
of any payment of Taxes under this Section 2.13, the Borrower will furnish to
the Lender, at its address referred to in Section 9.02, appropriate evidence of
payment thereof.
(e) The Lender shall, on or prior to the Effective Date and from time
to time thereafter if requested in writing by the Borrower (but only so long as
the Lender is and remains lawfully able to do so), provide the Borrower with two
duly completed copies of Internal Revenue Service Form W-8BEN or W-8ECI, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that the Lender is entitled to benefits under an income tax treaty to
which the United States is a party that reduces the rate of withholding tax on
payments under this Agreement or the Note or certifying that the income
receivable pursuant to this Agreement or the Note is effectively connected with
the conduct of a trade or business in the United States.
(f) For any period with respect to which the Lender has failed to
provide the Borrower with the appropriate forms described in subsection (e)
above (other than if such failure is due to a change in law occurring after the
date on which the Lender was originally required to provide such forms, or if
such forms are otherwise not required under subsection (e) above), the Lender
shall not be entitled to increased payments or indemnification under subsection
(a) or (c) above with respect to Taxes imposed by the United States; provided,
however, that should the Lender become subject to Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as the
Lender shall reasonably request to assist the Lender to recover such Taxes if,
in the judgment of the Borrower such steps would avoid the need for, or reduce
the amount of, any Taxes required to be deducted from or in respect of any sum
payable hereunder to the Lender and would not, in the judgment of the Borrower,
be disadvantageous to the Borrower.
(g) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.13 shall survive the payment in full of principal and interest
hereunder and under the Note.
ARTICLE III
CONDITIONS OF EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness. The amendment and
restatement of the Existing Credit Agreement pursuant hereto shall become
effective on and as of the first date (the "Effective Date") not later than July
31, 2006 on which all the following conditions precedent shall have been
satisfied (or waived in writing by the Lender):
(a) the Lender shall have received, in form and substance satisfactory
to the Lender (unless otherwise specified):
(i) certified copies of the resolutions of the board of
directors of the Borrower approving (for itself and as sole member of
each Initial Guarantor) this Agreement and each other document
contemplated hereby to which any Obligor is or is to be a party, and
of all documents evidencing other necessary corporate or company
action and governmental approvals of each Obligor, if any, with
respect to this Agreement and other documents to which it is or is to
be a party;
(ii) a certificate of an officer of the Borrower (for itself
and as sole member of each Initial Guarantor, as the case may be)
certifying the names and true signatures of the respective officers
and attorneys-in-fact of each Obligor authorized to sign this
Agreement and each other document contemplated thereby to which it is
or is to be a party;
(iii) a copy of the articles of incorporation and by-laws,
or certificate of formation and limited liability company agreement,
as the case may be, of each Obligor and each amendment thereto,
certified (as of a date reasonably near the Effective Date) by an
officer of the Borrower (for itself or as sole member of each Initial
Guarantor, as the case may be) as being a true and correct copy
thereof;
(iv) a copy of a certificate of goodstanding of each Obligor
dated as of a date reasonably near the Effective Date, certifying that
such Obligor is duly formed and in good standing under the laws of its
jurisdiction of incorporation;
(v) a written confirmation from the Borrower as to which
individuals are authorized to give verbal and/or written instructions
to the Lender on behalf of the Borrower in respect of the selection of
any Interest Period pursuant to this Agreement;
(vi) a certificate of an officer of the Borrower (for itself
and as sole member of each Guarantor), dated as of the Effective Date
(the statements made in such certificate shall be true on and as of
the Effective Date), certifying as to (A) the veracity of the
representations and warranties of the Obligors contained in this
Agreement mutatis mutandis on and as of the Effective Date, unless
such representation or warranty shall expressly relate to a different
date, and (B) the absence of any event occurring and continuing that
constitutes a Default;
(vii) a satisfactory review by the Lender's counsel of the
equity structure of the Borrower, including confirmation that the
rights of equity holders of the Borrower shall be legally or
effectively subordinated to the right of the Lender to payment of any
and all amounts due to the Lender under this Agreement, the Note and
the Security Documents;
(viii) the Note evidencing the Advances dated the date of
the Effective Date, duly executed by the Borrower to the order of the
Lender;
(ix) the Security Interest Deed, duly executed by the
Borrower and the Initial Guarantors;
(x) an amendment to each Mortgage relating to a Delivered
Vessel, duly executed by the relevant Initial Guarantor;
(xi) evidence of insurance in respect of each of the
Delivered Vessels naming the Lender as loss payee and, if required by
the Lender, as co-assured with such responsible and reputable
insurance companies or associations, and in such amounts and covering
such risks, as is required pursuant to the relevant Mortgages;
(xii) a favorable opinion from an independent insurance
consultant acceptable to the Lender on such matters relating to the
insurances for each of the Delivered Vessels as the Lender may
require;
(xiii) a Certificate of Ownership and Encumbrance issued by
the maritime administrator for the Marshall Islands (or other relevant
authority) stating that each of the Delivered Vessels is owned by the
relevant Initial Guarantor and that there are on record no Liens on
such Delivered Vessel except the relevant Mortgage as amended in
accordance herewith;
(xiv) evidence of the completion of all other recordings and
filings of, or with respect to, the Collateral Documents executed in
connection with the making of the first Advance that the Lender may
deem necessary or desirable in order to perfect and protect the Liens
created thereby, including under the Uniform Commercial Code of New
York (or such other jurisdiction where the relevant Initial Guarantor
and/or any Collateral may be located);
(xv) a copy of a certificate duly issued by the
Classification Society, dated within seven (7) days of the Effective
Date, to the effect that each of the Delivered Vessels has received
the highest classification and rating for vessels of the same age and
type, free of all recommendations and notations of the Classification
Society affecting class;
(xvi) evidence that each of the Delivered Vessels will, as
from the Effective Date, be managed by an Approved Manager on terms
acceptable to the Lender, together with copies of the Document of
Compliance and Safety Management Certificate issued pursuant to the
ISM Code in respect of such Delivered Vessel;
(xvii) one or more valuation(s), each dated no more than
twenty one (21) days prior to the date of delivery to the Lender,
addressed to the Lender (at the expense of the Borrower) by an
Approved Broker indicating the Fair Market Value of each of the
Delivered Vessels;
(xviii) such other certificates relating any of the
Delivered Vessels, or the operation thereof, as may be reasonably
requested by the Lender;
(xix) a favorable opinion of Messrs. Seward & Kissel LLP,
counsel for the Obligors, in respect of the Loan Documents executed on
or before the Effective Date and as to such other matters as the
Lender may reasonably request addressed to the Lender in form and
substance satisfactory to the Lender;
(xx) a favorable opinion of Watson, Farley & Williams,
counsel for the Lender, addressed to the Lender and in form and
substance satisfactory to the Lender; and
(xxi) such documents and evidence as the Lender shall
require, based on applicable law and regulations and the Lender's own
internal guidelines, relating to the Lender's knowledge of its
customers.
(b) The Obligors shall have paid all accrued and unpaid fees of the
Lender under the Existing Credit Agreement.
(c) The Obligors shall have paid all accrued and unpaid fees of the
Lender in connection herewith which are payable on or prior to the Effective
Date.
SECTION 3.02. Conditions Precedent to Each Advance for Additional
Vessels. The obligation of the Lender to make an Advance in relation to any
Additional Vessel is subject to the following conditions precedent having been
satisfied (or waived in writing by the Lender) on or prior to the relevant
Drawdown Date (for purposes of this Section 3.02, "relevant Advance" means, in
relation to an Additional Vessel, the Advance to be used to assist in financing
such Vessel, "relevant Vessel" refers to the Additional Vessel to be financed by
the relevant Advance, and "relevant Guarantor" refers to the Guarantor acquiring
the relevant Vessel):
(a) the amount of the relevant Advance shall not exceed the purchase
price of such Vessel under the Memorandum of Agreement for such Vessel;
(b) the amount of the relevant Advance shall not exceed the amount
permitted for such Advance under Section 2.01(c);
(c) the Lender shall have received on or before the relevant Drawdown
Date the following, each dated as of such Drawdown Date (unless otherwise
specified), in form and substance satisfactory to the Lender (unless otherwise
specified):
(i) if the relevant Guarantor is an Additional Guarantor, a
Credit Agreement Supplement duly executed by such Additional Guarantor;
(ii) if the relevant Guarantor is an Additional Guarantor,
documentation respecting such Additional Guarantor specified mutatis
mutandis in Section 3.01(a)(i), (ii), (iii) and (iv);
(iii) a copy of the Memorandum of Agreement (together with all
amendments and addenda thereto) for such Additional Vessel, duly
executed by the relevant Guarantor and the relevant seller, together
with evidence of any address or similar commission arrangements, all of
which shall be on terms acceptable to the Lender (certified by an
officer of the Borrower to be a true, correct and complete copy
thereof);
(iv) one or more valuation(s), each dated no more than twenty
one (21) days prior to the date of delivery to the Lender, addressed to
the Lender (at the expense of the Borrower) by an Approved Broker
indicating the Fair Market Value of each of the Vessels and the
relevant Vessel;
(v) such evidence as the Lender and its counsel shall require
in relation to the due authorization and execution by the relevant
seller of the Memorandum of Agreement relating to the relevant Vessel
and all documents to be executed by the relevant seller pursuant
thereto;
(vi) evidence that (i) the relevant Vessel has been
unconditionally delivered by the relevant seller to the relevant
Guarantor in accordance with all the terms of the relevant Memorandum
of Agreement, warranted free and clear of all Liens, (ii) the relevant
seller shall have been paid in full under the terms of the relevant
Memorandum of Agreement; and (iii) the relevant Vessel has been duly
registered in the ownership of the relevant Guarantor under the laws
and flag of the Republic of the Marshall Islands;
(vii) if the relevant Guarantor is an Additional Guarantor,
evidence that the relevant Guarantor has duly opened an Operating
Account and has delivered to the Lender all resolutions, signature
cards and other documents or evidence required in connection with the
opening, maintenance and operation of such Operating Account;
(viii) if the relevant Guarantor is an Additional Guarantor,
an Account Charge and a Cash Pooling Deed relating to the Operating
Account of such Additional Guarantor, duly executed by such Additional
Guarantor;
(ix) a Mortgage relating to the relevant Vessel, duly executed
by the relevant Guarantor;
(x) an Assignment of Earnings relating to the relevant Vessel,
duly executed by the relevant Guarantor;
(xi) an Assignment of Insurances relating to the relevant
Vessel, duly executed by the relevant Guarantor, together with a signed
Notice of Assignment, substantially in the form attached thereto;
(xii) an Approved Manager's Undertakings relating to the
relevant Vessel, duly executed by each Approved Manager of the relevant
Vessel;
(xiii) evidence of insurance in respect of the relevant Vessel
naming the Lender as loss payee and, if required by the Lender, as
co-assured with such responsible and reputable insurance companies or
associations, and in such amounts and covering such risks, as is
required pursuant to the relevant Mortgage;
(xvi) a favorable opinion from an independent insurance
consultant acceptable to the Lender on such matters relating to the
insurances for the relevant Vessel as the Lender may require;
(xv) a Certificate of Ownership and Encumbrance issued by the
maritime administrator for the Marshall Islands (or other relevant
authority) stating that the relevant Vessel is owned by the relevant
Guarantor and that there are on record no Liens on such Vessel except
the relevant Mortgage;
(xvi) evidence of the completion of all other recordings and
filings of, or with respect to, the Collateral Documents executed in
connection with the making of the relevant Advance that the Lender may
deem necessary or desirable in order to perfect and protect the Liens
created thereby, including under the Uniform Commercial Code of New
York (or such other jurisdiction where the relevant Guarantor and/or
any Collateral may be located);
(xvii) a copy of a certificate duly issued by the
Classification Society, dated within seven (7) days of the relevant
Drawdown Date, to the effect that the relevant Vessel has received the
highest classification and rating for vessels of the same age and type,
free of all recommendations and notations of the Classification Society
affecting class;
(xviii) evidence that the relevant Vessel will, as from the
relevant Drawdown Date, be managed by an Approved Manager on terms
acceptable to the Lender, together with copies of the Document of
Compliance and Safety Management Certificate issued pursuant to the ISM
Code in respect of the relevant Vessel;
(xix) a copy of any charter to which the relevant Vessel is
subject as of the relevant Drawdown Date;
(xx) such other certificates relating to the relevant Vessel,
or the operation thereof, as may be reasonably requested by the Lender;
(xxi) a favorable opinion of Messrs. Seward & Kissel LLP,
counsel for the Obligors, in respect of the Loan Documents executed in
connection with the advance of the relevant Advance and as to such
other matters as the Lender may reasonably request addressed to the
Lender in form and substance satisfactory to the Lender; and
(xxii) a favorable opinion of Watson, Farley & Williams,
counsel for the Lender, addressed to the Lender and in form and
substance satisfactory to the Lender.
SECTION 3.03. Conditions Precedent to Each Advance. The obligation of
the Lender to make each Advance is subject to the following conditions precedent
having been satisfied (or waived in writing by the Lender) on or prior to the
relevant Drawdown Date:
the Lender shall have received a Notice of Drawdown as required by
Section 2.03(a);
the Borrower shall have paid the fees due pursuant to Section 2.08 and
any other fees payable pursuant hereto;
immediately after the making of the relevant Advance, (i) the aggregate
outstanding principal amount of Working Capital Advances will not exceed
$15,000,000, and (ii) the aggregate outstanding principal amount of all Advances
will not exceed the Commitment;
evidence that, if the test set out in Section 7.01(l)(i) were applied
immediately following the making of the relevant Advance, the Borrower would not
be obliged to provide additional security or repay part of the Advances as
therein provided (determined on the basis of the most recent valuation for each
Vessel delivered pursuant to Section 3.02(c)(iv) or Section 7.01(l)(ii), as the
case may be);
immediately after the making of the relevant Advance, no Default or
Event of Default shall have occurred and be continuing;
the representations and warranties of the Obligors contained in this
Agreement shall be true mutatis mutandis on and as of the date of the relevant
Advance, unless such representation or warranty shall expressly relate to a
different date;
the Lender shall have received on or before the relevant Drawdown Date
the following, each dated as of such Drawdown Date (unless otherwise specified),
in form and substance satisfactory to the Lender (unless otherwise specified):
a certificate of an officer of the Borrower (for itself and as
sole member of each Guarantor), dated as of the relevant Drawdown Date
(the statements made in such certificate shall be true on and as of
such Drawdown Date), certifying as to (A) the absence of any amendments
to the articles of incorporation and by-laws, or certificate of
formation and limited liability company agreement of each Obligor
certified to the Lender pursuant to Sections 3.01(a)(iii) or
3.02(c)(ii) above, (B) the due incorporation or formation, as the case
may be, and good standing of each Obligor, as a corporation or limited
liability company formed under the laws of the Republic of The Marshall
Islands and the absence of any proceeding for the dissolution or
liquidation of such Obligor, (C) the veracity of the representations
and warranties of the Obligors contained in this Agreement mutatis
mutandis on and as of the date of the relevant Advance, unless such
representation or warranty shall expressly relate to a different date,
and (D) the absence of any event occurring and continuing, or resulting
from the making of the relevant Advance that constitutes a Default;
a duly signed and completed Compliance Certificate confirming
that the Borrower shall be in compliance with the provisions of Article
VI immediately after the making of the relevant Advance;
the original of any power of attorney issued in favor of any
Person executing any Loan Document (or any other document delivered
pursuant to a Loan Document) on behalf of any Obligor in relation to
the relevant Advance;
true and complete copies of any governmental or regulatory
consents, filings, registrations, approvals and waivers required in
connection with the execution, delivery and performance of (A) each
Loan Document executed in relation to the relevant Advance, and (B) the
consummation of the transactions contemplated thereby;
if applicable, the relevant confirmation exchanged under the
Master Agreement and which evidences a Transaction entered into between
the Borrower and the Lender in connection with the relevant Advance,
and any mandates required in connection therewith; and
such opinions, consents, agreements and documents in connection
with this Agreement, the Master Agreement and the Collateral Documents
as the Lender may reasonably request by notice to the Borrower prior to
the relevant Drawdown Date; and
(h) to the extent required by any change in applicable law and
regulation or any changes in the Lender's own internal guidelines since the date
on which the applicable documents and evidence were delivered to the Lender
pursuant to Section 3.01(a)(xxi), such further documents and evidence as the
Lender shall require relating to the Lender's knowledge of its customers.
The making of each Advance hereunder shall be deemed to be a
representation and warranty by the Obligors on the date of such Advance as to
the facts specified in clauses (c), (d), (e) and (f) of this Section 3.03.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. Each of the Obligors,
jointly and severally, represents and warrants as follows:
(a) Existence and Power. Each Obligor (i) is a corporation or limited
liability company duly organized or formed, validly existing and in good
standing under the laws of the Republic of the Marshall Islands, (ii) is duly
qualified and in good standing as a foreign company in each other jurisdiction
in which it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed, and (iii) has all requisite corporate
or company power and authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.
(b) Authorization; No Violation. The execution, delivery and
performance by each Obligor of this Agreement, the Note and each other Loan
Document to which it is or is to be a party, and the consummation of other
transactions contemplated thereby, are within such Obligor's corporate or
company powers, have been duly authorized by all necessary company action, and
do not (i) contravene such Obligor's articles of incorporation or by-laws, or
certificate of formation or limited liability company agreement, as the case may
be, (ii) violate any applicable law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award, (iii) conflict with or result in the
breach of, or constitute a default under, any loan agreement, contract,
indenture, mortgage, deed of trust, lease or other instrument binding on or
affecting such Obligor or any of its properties, or (iv) except for the Liens
created by the Collateral Documents, result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of such
Obligor. None of the Obligors is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in breach
of any such loan agreement, contract, indenture, mortgage, deed of trust, lease
or other instrument.
(c) Governmental Consents, Etc. Except for the recording of the
Mortgages and filing of proper financing statements in respect of the
Assignments of Earnings specified in Section 4.01(s), no authorization,
approval, consent or other action by, and no notice to or filing with, any
governmental authority or regulatory body or any other consent or approval of
any other Person is required for (i) the due execution, delivery and performance
by any Obligor of this Agreement or the Note or any other Loan Document to which
it is or is to be a party or for the consummation of the transactions
contemplated thereby, (ii) the grant by any Obligor of the Liens granted by it
pursuant to the Collateral Documents, (iii) the perfection or maintenance of the
Liens created by the Collateral Documents (including the first priority nature
thereof), or (iv) the exercise by the Lender of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents.
(d) Binding Effect. This Agreement has been, and the Note, and each
other Loan Document when delivered hereunder will have been, duly executed and
delivered by each Obligor party thereto. This Agreement is, and the Note and
each other Loan Document when delivered hereunder will be, the legal, valid and
binding obligations of each Obligor party thereto, enforceable against each such
Obligor in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditor's rights generally.
(e) Compliance with Laws. Each Obligor is in compliance with all
applicable statutes, regulations and laws, including, without limitation, all
Environmental Laws.
(f) Financial Information; Other Obligations. The audited consolidated
balance sheet of the Borrower and its Subsidiaries as at December 31, 2005, a
copy of which has been delivered to the Lender by the Borrower, fairly presents,
in all material respects, the financial condition of the Borrower and its
Subsidiaries as at such date. None of the Obligors has engaged in any business
other than that contemplated by this Agreement and the Existing Credit
Agreement. Except for the Existing Credit Agreement and the "Collateral"
described therein, none of the Obligors is a party to any other loan or security
agreement and none has filed or permitted to be filed any financing statement,
mortgage, pledge or charge with respect to any assets owned by it and, as of the
date hereof, there is (except as aforesaid) no Lien of any kind on any of the
properties or assets of any of the Obligors.
(g) No litigation. There is no pending or (to the knowledge of any
Obligor) threatened action, proceeding, governmental investigation or
arbitration affecting any Obligor or any of its properties before any court,
governmental agency or arbitrator which may affect the legality, validity or
enforceability of this Agreement, the Note or any other Loan Document, or the
consummation of the transactions contemplated hereby or thereby.
(h) Margin Stock. None of the Obligors is engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock and no
proceeds of any Advance will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock.
(i) ERISA. None of the Obligors has ever established or maintained any
employee benefit plan subject to the Employee Retirement Income Security Act of
1974, as amended.
(j) Not "Investment Company". None of the Obligors is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
(k) Subsidiaries. None of the Guarantors has any direct or indirect
Subsidiaries.
(l) Not "National". None of the Obligors is a "national" of any
"designated foreign country", within the meaning of the Foreign Asset Control
Regulations or the Cuban Asset Control Regulations of the U.S. Treasury
Department, 31 C.F.R., Subtitle B, Chapter V, as amended, or any regulations or
rulings issued thereunder.
(m) No Restriction. Neither the making or any Advance nor the use of
the proceeds thereof nor the performance by the Obligors of this Agreement
violates any statute, regulation or executive order restricting loans to,
investments in, or the export of assets to, foreign countries or entities doing
business there.
(n) Ownership of Obligors. All of the outstanding limited liability
company interests of each of the Initial Guarantors is, and each Additional
Guarantor shall be, directly owned and controlled by the Borrower.
(o) Solvency. Each of the Obligors is, individually, and the Borrower
and its Subsidiaries are, together, Solvent.
(p) Use of Proceeds. The Borrower is using the proceeds of the Advances
solely for the purposes set forth in the Preliminary Statements hereof.
(q) Place of Business. The Borrower has a place of business in New York
City. None of the Obligors (other than the Borrower) has a place of business in
the United States of America, the District of Columbia, the United States Virgin
Islands, or any territory or insular possession subject to the jurisdiction of
the United States of America.
(r) Veracity of Statements. No representation, warranty or statement
made or certificate, document or financial statement provided by any of the
Obligors in or pursuant to this Agreement, the Note or any other Loan Document,
or in any other document furnished in connection therewith, is untrue or
incomplete in any material respect or contains any misrepresentation of a
material fact or omits to state any material fact necessary to make any such
statement herein or therein not misleading.
(s) Collateral Documents. The provisions of each of the Collateral
Documents create, or when delivered will create, in favor of the Lender, (i) in
the case of the Mortgages, a valid first "preferred mortgage" within the meaning
of Chapter 3 of the Marshall Islands Maritime Act, 1990, as amended, on the
Vessels in favor of the Lender, subject to the recording of the Mortgages as
described in the following sentence, and (ii) in the case of the Assignments of
Earnings and the Assignments of Insurances, a valid, binding and executed and
enforceable security interest and Lien in all right, title and interest in the
Collateral therein described, and shall constitute a fully perfected first
priority security interest in favor of the Lender in all right, title and
interest in such Collateral, subject to no other Liens and subject in the case
of (A) the Assignments of Earnings, to notice being given to account parties and
to filing proper financing statements in the District of Columbia, and (B) the
Assignments of Insurances, to notice being given to underwriters and protection
and indemnity clubs, and their consent being obtained where policy provisions or
club rules so require. Upon execution and delivery by the relevant Guarantor and
recording in accordance with the laws of the Republic of The Marshall Islands,
each of the Mortgages will be a first "preferred mortgage" within the meaning of
Chapter 313 of Title 46 of the United States Code and will qualify for the
benefits accorded a "preferred mortgage" under Chapter 313 of Title 46 of the
United States Code and no other filing or recording or refiling or rerecording
or any other act is necessary or advisable to create or perfect such security
interest under the Mortgages or in the mortgaged property therein described.
(t) No Money Laundering. Without prejudice to the generality of the
foregoing provisions of this Section 4.01, in relation to the borrowing by the
Borrower of the Advances, the performance and discharge of its obligations under
this Agreement and the other Loan Documents and the transactions and other
arrangements affected or contemplated by this Agreement and the other Loan
Documents, the Borrower confirms that it is acting for its own account and that
the foregoing will not involve or lead to contravention of any law, official
requirement or other regulatory measure or procedure implemented to combat
"money laundering" (as defined in Article 1 of the Directive (91/308/EEC) of the
Council of the European Communities).
ARTICLE V
GUARANTY
SECTION 5.01. Guaranty. In order to induce the Lender to make Advances
to the Borrower, each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, the performance and punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Borrower now
or hereafter existing under this Agreement, the Note and any other Loan
Document, whether for principal, interest, fees, expenses or otherwise
(collectively the "Guaranteed Obligations") due or owing to the Lender, and
agrees to pay any and all expenses (including, without limitation, counsel fees
and expenses) incurred by the Lender in enforcing any rights under this
Guaranty. Each of the Guarantors hereby unconditionally and irrevocably agrees
to indemnify the Lender immediately on demand against any cost, loss or
liability suffered by the Lender (i) if any Guaranteed Obligation is or becomes
unenforceable, invalid or illegal, or (ii) by operation of law as a consequence
of the transactions contemplated by the Loan Documents. The amount of the cost,
loss or liability shall be equal to the amount which the Lender would otherwise
have been entitled to recover. The obligations of the Guarantors under this
Article V are in addition to and shall not in any way be prejudiced by any other
guaranty or security now or subsequently held by the Lender.
SECTION 5.02. Obligations Absolute. Each of the Guarantors guarantees
that the Guaranteed Obligations will be performed and paid to the Lender
strictly in accordance with the terms of any applicable agreement, express or
implied, with the Borrower, regardless of any law, regulation or order of any
jurisdiction affecting any term of any Guaranteed Obligation or the rights of
the Lender with respect thereto, including, without limitation, any law, rule or
policy which is now or hereafter promulgated by any governmental authority
(including, without limitation, any central bank) or regulatory body any of
which may adversely affect the Borrower's ability or obligation to make, or
right of the Lender to receive, such payments, including, without limitation,
any sovereign act or circumstance which might otherwise constitute a defense to,
or a legal or equitable discharge of, the Borrower.
SECTION 5.03. Guaranty Unconditional. The liability of each Guarantor
under this Guaranty shall be unconditional irrespective of (i) any amendment or
waiver or consent to departure from the terms of any Guaranteed Obligation,
including any extension of the time or change of the manner or place of payment,
(ii) any exchange, release, or non-perfection of any collateral securing payment
of any Guaranteed Obligation, (iii) any change in the corporate existence,
structure or ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or its assets
or any resulting release or discharge of any of the Guaranteed Obligations, (iv)
the existence of any claim, set-off or other rights which any of the Guarantors
may have at any time against the Borrower, the Lender or any other corporation
or person, whether in connection herewith or any unrelated transactions, and (v)
any other circumstance whatsoever that might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Borrower.
SECTION 5.04. Waiver of Subrogation; Contribution. Notwithstanding any
other provision of this Guaranty, until payment in full of the Guaranteed
Obligations in cash after termination of any of the Lender's commitments with
respect thereto, (i) each of the Guarantors hereby irrevocably waives any right
to assert, enforce, or otherwise exercise any right of subrogation to any of the
rights, security interests, claims, or liens which the Lender have against the
Borrower in respect of the Guaranteed Obligations, (ii) none of the Guarantors
shall have any right of recourse, reimbursement, contribution, indemnification,
or similar right (by contract or otherwise) against the Borrower in respect of
the Guaranteed Obligations, and (iii) each of the Guarantors hereby irrevocably
waives any and all of the foregoing rights and also irrevocably waives the
benefit of, and any right to participate in, any collateral or other security
given to the Lender to secure payment of the Guaranteed Obligations.
SECTION 5.05. Reinstatement. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Guaranteed Obligations is rescinded or must otherwise be returned by
the Lender.
SECTION 5.06. Waiver. Each of the Guarantors waives promptness,
diligence, notice of acceptance, presentment, demand, protest and notice of
dishonor with respect to any Guaranteed Obligation and this Guaranty and any
requirement that the Lender exhaust any right or take any action against the
Borrower or any other entity or any Collateral.
SECTION 5.07. Payments; No Reductions. (a) All payments under this
Guaranty shall be made in accordance with Section 2.12 of this Agreement
(concerning payments) free and clear of and without deduction for any and all
present or future Taxes. If any Guarantor shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
paragraph) the Lender receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Guarantor shall make such deductions
and (iii) such Guarantor shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law. In
addition, each of the Guarantors agrees to pay any Other Taxes which arise from
any payment made hereunder or from the execution, delivery or registration by
the Guarantors of, or otherwise with respect to, this Agreement. Each of the
Guarantors will indemnify the Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this paragraph) paid by the Lender and any
liability (including, without limitation, penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be made
within 45 days from the date the Lender makes written demand therefor. Within 30
days after the date of any payment of Taxes the Guarantors will furnish to the
Lender the original or a certified copy of a receipt evidencing payment thereof.
If no Taxes are payable in respect of any payment, the Guarantors will furnish
to the Lender a certificate from each appropriate taxing authority, or an
opinion of counsel acceptable to the Lender, in either case stating that such
payment is exempt from or not subject to Taxes. Without prejudice to the
survival of any other agreement contained herein, the agreements and obligations
of the Guarantors contained in this Section shall survive the payment in full of
the Guaranteed Obligations and principal and interest hereunder and any
termination or revocation of this Guaranty.
SECTION 5.08. Set-Off. If any of the Guarantors shall fail to pay any
of its obligations hereunder when the same shall become due and payable, the
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Lender to or for the Guarantor's credit or
account against any and all of the Guaranteed Obligations, whether or not the
Lender shall have made any demand under this Guaranty. The Lender agrees
promptly to notify the relevant Guarantor after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
paragraph are in addition to any other rights and remedies (including, without
limitation, other rights of set-off) which the Lender may have.
SECTION 5.09. Continuing Guarantee. This Guaranty is a continuing
guaranty, is joint and several with any other guarantee given in respect of the
Guaranteed Obligations, and shall remain in full force and effect until the
later of the termination of any commitment of the Lender under this Agreement
and the payment in full of the Guaranteed Obligations and all other amounts
payable hereunder and shall be binding upon each of the Guarantors, and their
respective successors and permitted assigns. The obligations of each of the
Guarantors under this Guaranty shall rank pari passu with all other unsecured
obligations of such Guarantor.
SECTION 5.10. Right of Contribution. At any time a payment in respect
of the Guaranteed Obligations is made under this Guaranty, the right of
contribution of each Guarantor against each other Guarantor shall be determined
as provided in the immediately following sentence, with the right of
contribution of each Guarantor to be revised and restated as of each date on
which a payment (a "Relevant Payment") is made on the Guaranteed Obligations
under this Guaranty. At any time that a Relevant Payment is made by a Guarantor
that results in the aggregate payments made by such Guarantor in respect of the
Guaranteed Obligations to and including the date of the Relevant Payment
exceeding such Guarantor's Contribution Percentage (as defined below) of the
aggregate payments made by all Guarantors in respect of the Guaranteed
Obligations to and including the date of the Relevant Payment (such excess, the
"Aggregate Excess Amount"), each such Guarantor shall have a right of
contribution against each other Guarantor who has made payments in respect of
the Guaranteed Obligations to and including the date of the Relevant Payment in
an aggregate amount less than such other Guarantor's Contribution Percentage of
the aggregate payments made to and including the date of the Relevant Payment by
all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of
such deficit, the "Aggregate Deficit Amount") in an amount equal to (x) a
fraction the numerator of which is the Aggregate Excess Amount of such Guarantor
and the denominator of which is the Aggregate Excess Amount of all Guarantors
multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A
Guarantor's right of contribution pursuant to the preceding sentences shall
arise at the time of each computation, subject to adjustment to the time of each
computation; provided that no Guarantor may take any action to enforce such
right until the Guaranteed Obligations have been paid in full in cash, it being
expressly recognized and agreed by all parties hereto that any Guarantor's right
of contribution arising pursuant to this Section 5.10 against any other
Guarantor shall be expressly junior and subordinate to such other Guarantor's
obligations and liabilities in respect of the Guaranteed Obligations and any
other obligations under this Guaranty. As used in this Section 5.10: (i) each
Guarantor's "Contribution Percentage" shall mean the percentage obtained by
dividing (x) the Relevant Net Worth (as defined below) of such Guarantor by (y)
the aggregate Relevant Net Worth of all Guarantors; (ii) the "Relevant Net
Worth" of each Guarantor shall mean the greater of (x) the Net Worth (as defined
below) of such Guarantor and (y) zero; and (iii) the "Net Worth" of each
Guarantor shall mean the amount by which the fair saleable value of such
Guarantor's assets on the date of any Relevant Payment exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to any Guaranteed Obligations arising under this Guaranty) on such
date. All parties hereto recognize and agree that, except for any right of
contribution arising pursuant to this Section 5.10, each Guarantor who makes any
payment in respect of the Guaranteed Obligations shall have no right of
contribution or subrogation against any other Guarantor in respect of such
payment until all of the Guaranteed Obligations have been irrevocably paid in
full in cash. Each Guarantor recognizes and acknowledges that the rights to
contribution arising hereunder shall constitute an asset in favor of the party
entitled to such contribution. In this connection, each Guarantor has the right
to waive its contribution right against any Guarantor to the extent that after
giving effect to such waiver such Guarantor would remain Solvent, in the
determination of the Lender.
SECTION 5.11. Limitation of Liability. Each Guarantor and the Lender
hereby confirms that it is its intention that the Guaranteed Obligations not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention, each
Guarantor and the Lender hereby irrevocably agrees that the Guaranteed
Obligations guaranteed by each Guarantor shall be limited to such amount as
will, after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws and
after giving effect to any rights to contribution pursuant to any agreement
providing for an equitable contribution among such Guarantor and the other
Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of
such maximum amount not constituting a fraudulent transfer or conveyance.
ARTICLE VI
FINANCIAL COVENANTS
SECTION 6.01. Financial Covenants. So long as any Advance shall remain
unpaid or the Lender shall have any Commitment hereunder, the Borrower shall
maintain, and each of the Guarantors jointly and severally covenants and
undertakes to cause the Borrower to maintain:
(a) Minimum Adjusted Net Worth: At all times on or after the date
hereof Adjusted Net Worth at an amount not less than (i) $100,000,000 during any
Accounting Period that Consolidated Debt is less than $250,000,000, and (ii)
$150,000,000 during any Accounting Period that Consolidated Debt is greater than
or equal to $250,000,000;
(b) Minimum Interest Coverage Ratio: For each Accounting Period ending
after the date hereof, EBITDA at an amount not less than 200% of Interest
Expenses; and
(c) Minimum Liquidity: At all times on or after the date hereof, for
each Vessel owned by a Guarantor, free cash in an amount of $400,000 in one or
more accounts with the Lender.
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.01. Affirmative Covenants. So long as any Advance shall
remain unpaid or the Lender shall have any Commitment hereunder, each of the
Obligors shall:
(a) Compliance with Laws, Etc. Comply with all applicable laws, rules,
regulations and orders, including Environmental Laws, the ISM Code and the ISPS
Code in all material respects.
(b) Compliance with Agreements. Comply with, observe and perform all of
the terms, covenants and provisions of the Loan Documents to which it is a
party.
(c) Preservation of Corporate/Company Existence, Etc. Preserve and
maintain its corporate or company existence, as the case may be, as well as its
material rights and franchises.
(d) Visitation Rights. Permit at any reasonable time and from time to
time, upon reasonable prior notice, the Lender or its representatives, at the
Lender's risk and cost, to the extent reasonably requested, to examine and make
copies of and abstracts from the records and books of account of, and visit the
properties of, such Obligor and to discuss the affairs, finances and accounts of
such Obligor with any of its officers or representatives and with its
independent certified public accountants.
(e) Keeping of Books. Keep, and cause to be kept, proper books of
record and account, in which full and correct entries shall be made in
accordance with GAAP of all financial transactions and the assets and business
of such Obligor to the extent necessary to permit the preparation of the
financial statements required to be delivered hereunder.
(f) Maintenance of Properties, Etc. Maintain and preserve all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(g) Approvals and Other Consents. Obtain all such governmental
licenses, authorizations, consents, permits and approvals as are required, by
applicable law or otherwise, for (a) such Obligor to perform its obligations
under this Agreement and all other Loan Documents and (b) the operation of the
Vessels.
(h) Reporting Requirements. Furnish, or cause to be furnished, to the
Lender:
(i) as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower and its
Subsidiaries, the consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such year, and the related consolidated
statements of profit and loss, and changes in financial position of
the Borrower and its Subsidiaries for the fiscal year then ended,
setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and in each case certified by
Ernst & Young or by another independent public or chartered accountant
satisfactory to the Lender stating that in making the examination
necessary for the audit of such financial statements it has obtained
no knowledge of the existence of any condition, event or act which
constitutes a Default or Event of Default, or if it has obtained
knowledge of the existence of any such condition, event or act,
specifying the same;
(ii) as soon as available and in any event within 60 days
after the close of each of the first three quarterly accounting
periods in each fiscal year of the Borrower, the consolidated balance
sheet of Borrower and its Subsidiaries as of the end of such quarterly
period, and the related consolidated statements of profit and loss,
and changes in financial position of the Borrower and its Subsidiaries
for the period then ended, setting forth in each case in comparative
form the corresponding figures for the corresponding periods in the
preceding fiscal year, all of which shall be certified by an officer
of the Borrower and subject only to normal year-end adjustments;
(iii) simultaneously with the delivery of each set of
financial statements referred to in clauses (i) and (ii) above, (A) a
certificate of an officer of the Borrower stating whether any Default
or Event of Default exists on the date of such certificate and, if any
Default or Event of Default then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to
take with respect thereto, and (B) a duly signed and completed
Compliance Certificate confirming that the Borrower is in compliance
with the provisions of Article VI;
(iv) promptly upon the Borrower becoming aware of (A) the
occurrence of a Default or Event of Default, or (B) the commencement
of any action, suit, litigation or proceeding of the kind described in
Section 4.01(g), a statement of an officer of the Borrower setting
forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(v) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
(vi) promptly upon the filing thereof, copies of all
registration statements and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) and other material filings which the Borrower shall
have filed with the Securities and Exchange Commission or any similar
governmental authority, or any national securities exchange,
including, any reports or other disclosures required to be made in
relation to the Borrower under Regulation FD or the Sarbanes-Oxley Act
of 2002; and
(vii) from time to time such additional information
regarding the financial position, results of operations, business or
prospects of the Borrower and its Subsidiaries as the Lender may
reasonably request.
(i) Payment of Obligations. Pay and discharge at or before maturity,
all its material obligations and liabilities, including, without limitation, tax
liabilities, except where the same may be contested in good faith by appropriate
proceedings, and maintain in accordance with GAAP appropriate reserves for the
accrual of any of the same.
(j) Use of Proceeds. Use the proceeds of the Advances solely for the
purposes set forth in the Preliminary Statement hereof.
(k) Maintenance of Insurance. Maintain insurance on any of its
properties other than the Vessels, payable in United States Dollars, with
responsible companies, in such amounts and against such risks as is usually
carried by owners of similar businesses and properties in the same general areas
in which it operates, and as shall be satisfactory to the Lender.
(l) Vessel Value Maintenance.
(i) Ensure that the aggregate Fair Market Value of the Vessels
subject to a Mortgage (plus the market value of any additional security
for the time being actually provided to the Lender pursuant to this
Section 7.01(1)(i)) is at all times not less than one hundred
twenty-five percent (125%) of the sum of (A) the aggregate outstanding
principal amount of the Advances plus (B) the notional amount if any
(determined by the Lender) that would be payable by the Borrower to the
Lender under Section 6(e)(i) of the Master Agreement if an Early
Termination Date was deemed to have occurred in relation to all then
subsisting Transactions after an Event of Default by the Borrower. If
the Obligors at any time shall not be in compliance with the preceding
sentence, and in any event within ten (10) days of being notified by
the Lender of such noncompliance (which notification shall be
conclusive and binding on the Obligors), the Obligors shall either: (1)
provide the Lender with, or procure the provision to the Lender of,
such additional security as shall in the opinion of the Lender be
adequate to make up such deficiency, which additional security shall
take such form, be constituted by such documentation and be entered
into between such parties as the Lender in its absolute discretion may
approve or require (and, if the Obligors do not make proposals
satisfactory to the Lender in relation to such additional security
within five (5) days of the date of the Lender's notification to the
Obligors aforesaid, the Obligors shall be deemed to have elected to
repay in accordance with (2) below); or (2) repay (subject to, and in
accordance with Section 2.04(d), (f) and (g)) such part of the Advances
as will ensure compliance with this Section 7.01(l)(i).
(ii) For purposes of Section 2.07(a) and this Section 7.01(l),
the Obligors at their expense shall cause a valuation of each Vessel to
be made by an Approved Broker indicating the Fair Market Value of such
Vessel (i) not more than twenty-one (21) days prior to the first day of
each Accounting Period, and (ii) at any time the Lender may request
upon not less 5 days' prior written notice from the Lender to the
Borrower. The Obligors shall supply to the Lender and to any relevant
Approved Broker such information concerning the Vessels and their
condition as such Approved Broker may require for the purpose of making
valuations of the Vessels.
(iii) If the aggregate Fair Market Value of the Vessels
subject to a Mortgage (plus the market value of any additional security
for the time being actually provided to the Lender pursuant to Section
7.01(1)(i)) is at any time less than one hundred fifty percent (150%)
of the sum of (A) the aggregate outstanding principal amount of the
Advances plus (B) the notional amount if any (determined by the Lender)
that would be payable by the Borrower to the Lender under Section
6(e)(i) of the Master Agreement if an Early Termination Date was deemed
to have occurred in relation to all then subsisting Transactions after
an Event of Default by the Borrower, then the Borrower shall consult
with the Lender as to the action intended to be taken by the Borrower
to prevent any further decline in such ratio, taking into consideration
the employment of the Vessels and the prospects of the dry bulk market.
(m) Operating Account. Cause each Guarantor to maintain its Operating
Account with the Lender and to cause all earnings in respect of its Vessel to be
deposited into such Operating Account.
(n) "Know Your Customer" Documentation. The Borrower will produce such
documents and evidence as the Lender shall from time to time require, based on
applicable law and regulations from time to time and the Lender's own internal
guidelines from time to time relating to the Lender's knowledge of its
customers.
SECTION 7.02. Negative Covenants. So long as any Advance shall remain
unpaid or the Lender shall have any Commitment hereunder, none of the Obligors
shall:
(a) Liens, Etc. Create, incur, assume or suffer to exist any Lien on
any of its properties whether now owned or hereafter acquired, or sign or file,
under the Uniform Commercial Code (or analogous statute or law) of any
jurisdiction, a financing statement that names it as debtor, or sign any
security agreement authorizing any secured party thereunder to file such
financing statement, or assign any right to receive income, other than: (i)
Liens on Collateral in favor of the Lender, (ii) Liens permitted by the Loan
Documents, (iii) Permitted Encumbrances, and (iv) in the case of the Borrower,
Liens incurred in the ordinary course of its business and which do not secure
Financial Indebtedness.
(b) Consolidations, Mergers. Consolidate or merge with or into any
other Person.
(c) Sales, Etc. of Assets. Sell, transfer or otherwise dispose of any
assets or grant any option or other right to purchase or otherwise acquire any
Collateral other than in the ordinary course of its business, except (i) sales
in the ordinary course of its business and (ii) dispositions of obsolete, worn
out or surplus property disposed of in the ordinary course of business;
provided, that any Guarantor may sell the Vessel it owns but only if the
Borrower shall be in compliance with the provisions of Sections 2.04(c) and
7.01(l) immediately after giving effect to such sale.
(d) Restrictions on Chartering. Without the consent of the Lender,
which consent shall not unreasonably be withheld (i) let any Vessel on demise
charter for any period; (ii) enter into any time or consecutive voyage charter
in respect of any Vessel for a term which exceeds, or which by virtue of any
optional extensions may exceed, 13 months; (iii) enter into any charter in
relation to any Vessel under which more than 2 months' hire (or the equivalent)
is payable in advance; (iv) charter any Vessel otherwise than on bona fide arm's
length terms at the time when such Vessel is fixed; (v) de-activate or lay up
any Vessel; or (iv) put any Vessel into the possession of any Person for the
purpose of work being done upon her in an amount exceeding or likely to exceed
$1,000,000 (or the equivalent in any other currency) unless that Person has
first given to the Lender and in terms satisfactory to it a written undertaking
not to exercise any Lien on such Vessel or her earnings for the cost of such
work or for any other reason.
(e) Change in Nature of Business. Engage in any line of business other
than directly or indirectly owning and operating the Vessels.
(f) Debt. Create, incur, assume or suffer to exist any Debt other than
(i) Debt under the Loan Documents and, prior to the first Drawdown Date, under
the Existing Credit Agreement, (ii) Debt for (x) trade payables and expenses
accrued in the ordinary course of business and that are not overdue, or (y)
customer advance payments and customer deposits received in the ordinary course
of business, and (iii) Debt owing to Affiliates provided that such Debt is
subordinated on terms and conditions acceptable to the Lender and subject in
right of payment to the prior payment in full of all amounts outstanding under
this Agreement and the Note.
(g) Dividends. Declare or pay any dividend of any kind or make any
purchase or redemption of or distribution on any stock, limited liability
company interest or other equity interest without the prior written consent of
the Lender except that (i) any Guarantor may make distributions to the Borrower,
and (ii) for any Accounting Period, the Borrower may pay a dividend, if and so
long as both immediately before and after the declaration and payment of such
dividend, no Default or Event of Default shall have occurred and be continuing,
up to the amount of Available Free Cash at the time such dividend is declared
and paid.
(h) Loans, Investments. Make any loan or advance to, make any
investment in, or enter into any working capital maintenance or similar
agreement with respect to any Person whether by acquisition of stock or
indebtedness, by loan, guarantee or otherwise, except loans to another Obligor
to the extent such Obligor is permitted to incur such Debt under Section
7.02(f).
(i) Acquisitions. Make any acquisition of an asset (other than a
Vessel) outside the ordinary course of its business.
(j) Constitutive Document Amendments. Permit any amendment of its
articles of incorporation and by-laws, or certificate of formation or limited
liability company agreement, as the case may be, without giving the Lender prior
written notice of such proposed amendment.
(k) Transactions with Affiliates. Enter into or become a party to any
material transaction or arrangement with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except pursuant to (i) the
reasonable requirements of its business and upon terms which are fair and
reasonable and in its best interests, or (ii) existing arrangements heretofore
disclosed to the Lender in writing and approved by the Lender.
(l) Place of Business. Establish a place of business in the United
States of America, the District of Columbia, the United States Virgin Islands,
or any territory or insular possession subject to the jurisdiction of the United
States of America unless sixty (60) days' prior written notice of such
establishment is given to the Lender.
(m) Approved Manager. Employ a manager of any Vessel other than an
Approved Manager, or change the terms and conditions of the management of such
Vessel in any material respect other than upon such terms and conditions as the
Lender shall approve.
(n) Operating Accounts. Make any withdrawal from any of the Operating
Accounts except in accordance with the Cash Pooling Deeds and except, so long as
no Event of Default shall have occurred and be continuing, any amount credited
to an Operating Account shall be available to the relevant Obligor to pay (i)
the reasonable operating expenses of its Vessel, (ii) the principal amount of
the Advances, interest thereon and any other amounts payable to the Lender
hereunder or under the other Loan Documents, (iii) the reasonable overhead,
legal and other expenses of the Obligors and Eagle Ventures incurred in
connection with their involvement in the acquisition, ownership and operation of
the Vessels, as well as any other fees and expenses to which the Lender may in
its sole discretion agree from time to time, and (iv) any dividends or
distributions permitted under Section 7.02(g).
(o) Capital Stock. Permit the Borrower to issue any class of capital
stock unless such stock is legally or effectively subordinated to the right of
the Lender to payment of any and all amounts due to the Lender under this
Agreement, the Note and the Security Documents.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of principal of any
Advance when due and payable; or
(b) The Borrower shall fail to pay any interest on any Advance or any
fee payable to the Lender hereunder, or the Borrower shall fail to make any
other payment hereunder, in each case within three (3) Business Days after the
same becomes due and payable; or
(c) Any representation or warranty made by any Obligor under or in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made or confirmed; or
(d) (i) Any Obligor shall fail to perform or observe any term, covenant
or agreement contained in Article VI or in Sections 7.01(h), 7.01(l) and 7.02 to
be observed by it, or (ii) any Obligor shall fail to perform or observe any
other term, covenant or agreement contained in any Loan Document on its part to
be performed or observed if such failure shall remain unremedied (A) beyond the
expiration of any applicable notice and/or grace period or (B) if there is no
applicable notice and/or grace period, for fifteen (15) days after written
notice thereof shall have been given to the Borrower by the Lender; or
(e) Any Obligor shall fail to pay any principal of or premium or
interest on any Debt which such Obligor is liable to pay, when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), redeemed, purchased or defeased, or an
offer to prepay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
(f) Any Obligor shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Obligor seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of forty-five (45) days, or any of
the actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or any Obligor shall take any corporate or company action
to authorize any of the actions set forth above in this Section 8.01(f); or
(g) In the reasonable determination of the Lender, it becomes
impossible or unlawful for any Obligor to fulfill any of the covenants and
obligations required to be fulfilled as contained in any Loan Document or any of
the instruments granting or creating rights in any of the Collateral in any
material respect, or for the Lender to exercise any of the rights or remedies
vested in it under any Loan Document, any of the Collateral or any of such
instruments in any material respect; or
(h) Any judgment or order shall be rendered against any Obligor that is
reasonably likely to result in a Material Adverse Effect with respect to such
Obligor, and there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect unless such judgment or order shall have been
vacated, satisfied, discharged or bonded pending appeal; or
(i) Any material provision of any Loan Document after delivery thereof
pursuant to Sections 3.01, 3.02 or 3.03 shall for any reason cease to be valid
and binding on or enforceable against any Borrower or any such Borrower shall so
state in writing; or
(j) Any Collateral Document after delivery thereof shall for any reason
(other than pursuant to the terms thereof) cease to create (i) in the case of
any Mortgage, a valid first preferred mortgage under the Marshall Islands
Maritime Act, 1990, as amended, and (ii) in the case of any Assignment of
Earnings or Assignment of Insurance, a valid and perfected first priority Lien
on the Collateral purported to be covered thereby; or
(k) An "Event of Default" as defined in any Mortgage shall occur; or
(l) Notice of an Early Termination Date is given by the Lender under
section 6(a) of the Master Agreement; or
(m) A person entitled to do so gives notice of an Early Termination
Date under Section 6(b)(iv) of the Master Agreement; or
(n) An Event of Default (as defined in Section 14 of the Master
Agreement) shall occur; or
(o) The Master Agreement is terminated, cancelled, suspended, rescinded
or revoked or otherwise ceases to remain in full force and effect for any
reason; or
(p) Any event occurs or any other circumstances arise or develop
including, without limitation, a change in the financial position, state of
affairs or prospects of the Borrower or its Subsidiaries in the light of which
in the judgment of the Lender there is a significant risk that the Borrower is,
or will later become unable to discharge its liabilities as they fall due;
then, and in any such event, the Lender may, by notice to the Borrower, (i)
declare the Commitment and the obligation of the Lender to make the Advances
available to be terminated, whereupon the same shall forthwith terminate, and
(ii) declare the Note, all interest thereon and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon the Note, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that, in the
event of an actual or deemed entry of an order for relief with respect to any of
the Borrower under the Federal Bankruptcy Code, (A) the obligation of the Lender
to make the Advances available shall automatically be terminated and (B) the
Note, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Note, nor consent to any departure by any Obligor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 9.02. Notices, Etc. Except as otherwise provided for in this
Agreement, all notices or other communications under or in respect of this
Agreement to any party hereto shall be in writing (that is by letter or
telefacsimile) and shall be deemed to be duly given or made when delivered (in
the case of personal delivery or letter) and when dispatched (in the case of
telefacsimile) to such party addressed to it at the address appearing below (or
at such address as such party may hereafter specify for such purpose to the
other by notice in writing):
(a) if to any Obligor:
c/o Eagle Shipping International (USA) LLC
477 Madison Avenue
New York, New York 10022
Facsimile No: +1 212 785 3311
(b) if to the Lender:
Shipping Business Centre
5-10 Great Tower Street
London EC3P 3HX
England
Attention: Ship Finance Portfolio Management Team
Facsimile No: +44 207 615 0112
A notice or other communication received on a non-working day or after business
hours in the place of receipt, shall be deemed to be served on the next
following working day in such place.
SECTION 9.03. No Waiver, Remedies. No failure on the part of the Lender
to exercise, and no delay in exercising, any right hereunder or under the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 9.04. Costs; Expenses. (a) Whether or not any Advance is made
or the transactions contemplated by this Agreement are consummated (including
the proposed execution and delivery of the other Loan Documents), the Borrower
agrees to pay on demand all reasonable out-of-pocket costs and expenses of the
Lender in connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents and the other documents to be
delivered hereunder including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Lender with respect thereto, and for
advising the Lender as to its rights and responsibilities, or the protection or
preservation of rights or interests, under the Loan Documents. The Borrower
further agrees to pay on demand all reasonable out-of-pocket costs and expenses
of the Lender in connection with the enforcement of the Loan Documents and the
other documents to be delivered hereunder, whether in action, suit, litigation,
any bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally or otherwise (including, without limitation, the reasonable
fees and reasonable expenses of counsel for the Lender with respect thereto) and
expenses in connection with the enforcement of rights under this Section
9.04(a).
(b) If any payment of principal of any Advance (or any relevant portion
thereof) is made by the Borrower to the Lender other than on the last day of the
Interest Period for such Advance (or relevant portion thereof), as a result of a
payment pursuant to Section 2.04, acceleration of the maturity of the Note
pursuant to Section 8.01 or for any other reason, the Borrower shall, upon
demand by the Lender pay to the Lender (i) any amounts required to compensate
such Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without limitation, any loss, cost
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund or maintain such Advance (or any
relevant portion thereof), plus (ii) an amount equal to the Applicable Margin
which would, but for such payment of such Advance (or any relevant portion
thereof), have accrued on such Advance (or any relevant portion thereof) from
the date of such payment to the earlier of (A) the end of the current Interest
Period, and (B) the ninetieth (90th) day following the date of such payment.
(c) Each of the Obligors jointly and severally agrees to indemnify and
hold harmless the Lender and each of its Affiliates, and their respective
officers, directors, employees, agents, advisors and representatives (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
disbursements of counsel), that may be incurred by or asserted or awarded
against any Indemnified Party, arising out of or in connection with or relating
to (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the making of the Advances or consummation
of any other transaction contemplated hereby, (ii) the Advances or the use of
the proceeds therefrom, (iii) any actual or alleged presence or release of
Environmentally Sensitive Material on or from any property owned or operated by
any Obligor, or any Environmental Action related in any way to any Obligor, or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnified Party is a party thereto,
except, with respect to any particular Indemnified Party, to the extent such
claim, damage, loss, liability or expense is either admitted to by such
Indemnified Party or found in a final, non-appealable judgment of a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct, provided that the foregoing exceptions to the
liability of the Obligors with respect to such Indemnified Person shall not
limit or affect the liability of the Obligors to any other Indemnified Party.
Each of the Obligors jointly and severally further agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to any Obligor or any of their respective shareholders, members or
creditors for or in connection with the transactions contemplated hereby,
except, with respect to any particular Indemnified Party, to the extent such
liability is either admitted to by such Indemnified Party or found in a final,
non-appealable judgment of a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. The
indemnities of this Section 9.04(c) shall survive the termination of this
Agreement and the other Loan Documents.
SECTION 9.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby authorized at any time
and from time to time to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower to the Lender now or hereafter existing under this
Agreement and the Note held by the Lender, whether or not the Lender shall have
made any demand under this Agreement or the Note and although such obligations
may be unmatured. The Lender agrees promptly to notify the Borrower after any
such set-off and application shall be made by the Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section 9.05 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Lender may have.
SECTION 9.06. Assignments and Participations. (a) This Agreement shall
be binding upon and inure to the benefit of the Lender and the Borrower and
their respective successors and permitted assigns.
(b) The Borrower may not assign or transfer all or any part of its
rights and/or obligations under this Agreement.
(c) The Lender may, at the Lender's expense and with the prior consent
of the Borrower which consent shall not unreasonably be withheld, assign or
transfer all or any part of its rights or obligations under this Agreement and
the Loan Documents; provided, however, the Lender may assign or transfer all or
any part of its rights or obligations under this Agreement and the Loan
Documents to any Affiliate of the Lender or, if an Event of Default shall have
occurred and is continuing, to any other Person without the consent of the
Borrower. The Lender shall notify the Borrower promptly following any such
assignment or transfer.
(d) The Lender may change its lending office without the consent of the
Borrower provided that the Lender shall notify the Borrower promptly following
any such change of lending office and such change of lending office shall not
result in a Material Adverse Effect with respect to the Borrower and its
Subsidiaries, taken as a whole.
(e) The Lender may, at its own expense, sell participations to one or
more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including without limitation, all or a portion
of its Commitment, any Advance and the Note); provided, however, that (i) the
Lender's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) the Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the Lender shall remain the holder of the Note for
all purposes of this Agreement, (iv) the Borrower shall continue to deal solely
and directly with the Lender in connection with this Agreement and (v) no
participant under any such participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by the Borrower therefrom, except to the extent that such amendment,
waiver or consent would reduce or postpone any date fixed for payment of
principal of, or interest on, the Note or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation.
(f) The Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 9.06, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower to be furnished to the Lender by or on
behalf of the Borrower.
SECTION 9.07. Judgment. (a) If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due hereunder or under the Note in
Dollars into another currency, the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Lender could purchase
Dollars with such other currency on the Business Day preceding that on which
final judgment is given.
(b) The obligation of each Obligor in respect of any sum due from it to
the Lender hereunder or under the Note or any other Loan Document shall,
notwithstanding any judgment in a currency other than Dollars, be discharged
only to the extent that on the Business Day following receipt by the Lender of
any sum adjudged to be so due in such other currency the Lender may in
accordance with normal banking procedures purchase Dollars with such other
currency; if the Dollars so purchased are less than the sum originally due to
the Lender in Dollars, such Obligor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Lender against such loss,
and if the Dollars so purchased exceed the sum originally due to the Lender in
Dollars, the Lender agrees to remit to such Obligor such excess.
SECTION 9.08. Governing Law; Submission to Jurisdiction. (a) This
Agreement and the Note shall be governed by, and construed in accordance with,
the laws of the State of New York.
(b) Each Obligor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each Obligor hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State Court or, to the extent permitted by law, in such Federal court.
Each Obligor agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Subject to the foregoing and to
paragraph (c) below, nothing in this Agreement shall affect any right that any
party hereto may otherwise have to bring any action or proceeding relating to
this Agreement against any other party hereto in the courts of any jurisdiction.
(c) Each Obligor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any New York State or Federal
court and the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court and any immunity from jurisdiction of any court
or from any legal process with respect to itself or its property.
(d) Each Obligor agrees that service of process may be made on it by
personal service of a copy of the summons and complaint or other legal process
in any such suit, action or proceeding, or by registered or certified mail
(postage prepaid) to its address specified in Section 9.02, or by any other
method of service provided for under the applicable laws in effect in the State
of New York.
SECTION 9.09. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS AND THE LENDER
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES OR THE ACTIONS OF THE LENDER
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
SECTION 9.11. Entire Agreement. This Agreement, the Note and the other
Loan Documents embody the entire agreement between the parties relating to the
subject matter hereof and supersede all prior agreements, representations and
understandings, if any, relating to such subject matter.
SECTION 9.12. Severability of Provisions. Any provision of the Loan
Documents that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining provisions thereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.12.Master Agreement and Collateral Documents. Effective as of
the Effective Date, each reference in the Master Agreement and any of the
Collateral Documents executed prior to the Effective Date to "Credit Agreement"
shall mean and refer to this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
EAGLE BULK SHIPPING INC. HAWK SHIPPING LLC
By:_______________________________ By:______________________________
Alan Ginsberg Alan Ginsberg
Chief Financial Officer Attorney-in-Fact
CARDINAL SHIPPING LLC HERON SHIPPING LLC
By:_______________________________ By:______________________________
Alan Ginsberg Alan Ginsberg
Attorney-in-Fact Attorney-in-Fact
CONDOR SHIPPING LLC JAEGER SHIPPING LLC
By:______________________________ By:______________________________
Alan Ginsberg Alan Ginsberg
Attorney-in-Fact Attorney-in-Fact
FALCON SHIPPING LLC KESTREL SHIPPING LLC
By:________________________________ By:______________________________
Alan Ginsberg Alan Ginsberg
Attorney-in-Fact Attorney-in-Fact
GRIFFON SHIPPING LLC KITE SHIPPING LLC
By:________________________________ By:______________________________
Alan Ginsberg Alan Ginsberg
Attorney-in-Fact Attorney-in-Fact
HARRIER SHIPPING LLC MERLIN SHIPPING LLC
By:______________________________ By:______________________________
Alan Ginsberg Alan Ginsberg
Attorney-in-Fact Attorney-in-Fact
OSPREY SHIPPING LLC SPARROW SHIPPING LLC
By:______________________________ By:________________________________
Alan Ginsberg Alan Ginsberg
Attorney-in-Fact Attorney-in-Fact
PEREGRINE SHIPPING LLC TERN SHIPPING LLC
By:______________________________ By:______________________________
Alan Ginsberg Alan Ginsberg
Attorney-in-Fact Attorney-in-Fact
SHIKRA SHIPPING LLC THE ROYAL BANK OF SCOTLAND PLC
By:______________________________ By:______________________________
Alan Ginsberg Leo Chang
Attorney-in-Fact Attorney-in-Fact
[SCHEDULES AND EXHIBITS HAVE BEEN OMITTED]
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